The upcoming bitcoin halving is causing a stir in the mining community as it is expected to cut miners’ revenue by half. Despite the initial apprehension, analysts believe that publicly traded miners are well-equipped to navigate through this event and even thrive. The recent dip in mining stocks presents an opportunity for investors to capitalize on the situation.
According to Needham analyst John Todaro, a bitcoin price above $60,000-$65,000 would de-risk the halving for most public miners. It currently costs miners between $36,000 and $52,700 to mine a single bitcoin, but with bitcoin trading above $61,000, miners are enjoying attractive margins. Todaro also mentioned that for margins to compress significantly, bitcoin prices would need to drop below $50,000 or the hash rate would need to rise substantially.
Mining stocks have been on a downward trend this year, with investors locking in profits ahead of the halving after the impressive gains they made last year. Companies like Marathon Digital, Riot Platforms, CleanSpark, Iris Energy, and Cipher Mining have all experienced losses amidst bitcoin volatility. These mining stocks offer investors amplified exposure to bitcoin’s price movements, which have been more volatile due to the introduction of bitcoin exchange-traded funds.
Analysts like Mike Colonnese from H.C. Wainwright believe that large public miners are better positioned in this cycle compared to previous ones. They have stronger cash reserves, are increasing their bitcoin holdings, and are making strategic investments to enhance their operational efficiency. Colonnese recommends CleanSpark and Iris Energy as top picks, citing their high efficiency levels.
JPMorgan reports that CleanSpark mined the highest number of bitcoins per exahash in March. Meanwhile, Todaro favors Riot, Cipher, and Bitdeer, as he prefers low-cost bitcoin producers. The halving occurs every 210,000 blocks mined or approximately every four years. It traditionally marks the beginning of a new cycle for bitcoin and sets the stage for a bull run. However, this year, bitcoin is already well into the current cycle and has reached new all-time highs ahead of the halving.
The bitcoin halving is a significant event for miners and investors alike. While it presents challenges for miners in terms of revenue reduction, it also opens up opportunities for savvy investors to capitalize on the market dynamics. With careful analysis and strategic investments, miners and investors can navigate through the halving period successfully and potentially benefit from the long-term growth prospects of bitcoin.