As the fourth Bitcoin halving approaches, mining companies are bracing themselves for a significant drop in stock prices. Scheduled for later this week, the halving will cut mining rewards in half to 3.125 BTC, currently valued at approximately $200,000. Key players in the Bitcoin mining industry, such as Marathon Digital (MARA) and Riot Blockchain (RIOT), have already seen their stock prices plummet by around 53% and 54%, respectively, from their peak values earlier this year in February.
CleanSpark (CLSK) also experienced a surge in stock price to a three-year high of $23.40 on March 25, only to drop by 38.1% to $14.48 since then. However, despite this decline, CleanSpark remains up by almost 250% for the year. The Valkyrie Bitcoin Miners exchange-traded fund (ETF) has also taken a hit, dropping by approximately 28% just this month alone. Non-U.S. Bitcoin miners, including Singapore’s Bitdeer Technologies (BTDR) and Australia’s Iris Energy (IRIS), both listed on the Nasdaq, have witnessed significant declines of 40.8% and 47.6%, respectively, since reaching year-to-date highs in mid-February.
Despite the challenges faced by Bitcoin mining companies, the CEOs are maintaining a positive outlook. Factors such as low-cost operations, advancements in equipment efficiency, and the increasing demand for crypto assets are believed to help offset the anticipated $10 billion annual revenue losses from the upcoming halving. They are banking on increased demand from new spot Bitcoin ETFs to drive BTC prices higher, counteracting the negative effects of the halving.
Concerns about profitability arose in late January when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners could face challenges post-halving if Bitcoin’s price remained around $40,000. Jaran Mellerud, founder and chief mining strategist of Hashlabs Mining, suggested that if Bitcoin’s price doesn’t continue to rise after the halving, some U.S. miners may need to relocate or expand operations offshore to access more affordable electricity costs.
The upcoming Bitcoin halving poses challenges for mining companies, as evidenced by the significant drop in stock prices experienced by key players in the industry. Despite this, CEOs are optimistic about the future, pointing to cost-effective operations and increasing demand for crypto assets as potential solutions to offset revenue losses. As the halving approaches, it remains to be seen how mining companies will navigate these challenges and adapt to the changing landscape of the Bitcoin market.
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