Despite Investor Concerns, Industry Analyst Predicts Post-halving Rebound for Bitcoin Miners
Summary:
Investor fears about Bitcoin mining's profitability following the cryptocurrency's halving have driven down related stocks in the U.S. and elsewhere. Despite this trend, industry expert Mitchell Askew believes the concerns are largely groundless. Companies like Marathon Digital and Riot Platform have seen significant declines in shares since February, and Bitcoin's fourth halving, expected on April 20, could see mining rewards drop to 3.125 BTC. In the wake of this, Askew anticipates a rebound in mining stocks and the potential for bitcoin miners to seek cheaper electricity costs offshore if prices remain low.
Declining confidence among investors about the profitability of the Bitcoin (BTC) mining sector following the cryptocurrency's forthcoming reward halving, have resulted in a downward trend in Bitcoin mining shares both domestically and internationally. However, one industry expert believes these concerns are largely unfounded. Mitchell Askew, chief analyst at Blockware Solutions, a Bitcoin mining company, argues that the concerns over profitability post-halving and the 7.5% drop in Bitcoin's value over the past week are the key contributors to the downturn in mining shares. He suggests that the halving will eventually prove to be a purchasing trigger for both public Bitcoin miners and the private ASIC market.
Two prominent BTC miners according to Google Finance, Marathon Digital (MARA) and Riot Platforms (RIOT), have seen their shares plummet by 53% and 54% consecutively, since their peak levels in February. CleanSpark (CLSK) reached its highest in three years at $23.40 on March 25 but has since dipped 38.1% to $14.48, albeit still enjoying about 250% increase this year.
Bitcoin miners outside the U.S. such as Singapore's Bitdeer Technologies (BTDR) and Australia's Iris Energy (IRIS), both listed on the Nasdaq, have experienced a drop of 40.8% and 47.6%, respectively, from their mid-February peak prices.
These dips occur as Bitcoin prepares for its fourth halving on April 20, which will reduce mining rewards by 50% to 3.125 BTC, approximating to around $200,000. Askew identifies the plunges to fears of post-halving profitability, which is mirrored by the performance of the Valkyrie Bitcoin Miners ETF (WGMI) – a fund actively tracking the Bitcoin mining market – showing almost no correlation with Bitcoin in 2024.
Despite WGMI’s price nearing a recent local low point relative to Bitcoin, Askew anticipates a bounce back in mining stocks soon after halving. Related: CoinShares suggests Riot, TeraWulf, and CleanSpark as miners best positioned for Bitcoin halving.
These anxieties resurfaced in late January when Cantor Fitzgerald revealed that 11 public Bitcoin miners would not mine profitably post-halving if Bitcoin's price remained around the then $40,000. If Bitcoin prices do not ascend after halving, certain U.S. Bitcoin miners might consider migrating or expanding to other locations with lesser electricity costs, suggests Jaran Mellerud, founder and key mining strategist at Hashlabs Mining.
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Published At
4/17/2024 6:36:06 AM
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