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Five Bitcoin mining CEOs explain how the halving will unfold – DL News
- The Bitcoin halving will take place this week.
- Large Bitcoin mining companies are well prepared for the event.
- Mining Stocks Could Outperform Bitcoin After Halving.
The halving is just a few days away and Bitcoin miners are ready.
The CEOs of five major Bitcoin mining companies – Marathon Digital, Riot Platforms, CleanSpark, Hut 8 and Cipher Mining – spoke with analysts from research firm Bernstein about the impact the event will have on the mining sector.
The halving is expected on April 19th it will automatically cut in half the amount of Bitcoin miners receive for maintaining the Bitcoin blockchain.
While the resulting reduction in supply should be a positive catalyst for the price of Bitcoin, miners will have to continue operating with the same operating costs and lower revenue.
Strong balance sheet
Bitcoin has risen to new all-time highs this year thanks to the immense success of spot Exchange Traded Funds, launched in early January.
And even after the leading cryptocurrency plummeted to $64,000 from its all-time high of $73,798 in March, miners’ revenues remain near all-time highs. According to data from Bernstein and Glassnode, the industry is reaping nearly $80 million in revenue per day from Bitcoin mining alone.
The historically high revenues will provide a “solid cushion to miners ahead of the halving,” Bernstein wrote.
Part of this revenue is due to Bitcoin network fees. The development of new Bitcoin layer 2 platforms and NFT trading have increased Bitcoin transaction fees over the past year.
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This revenue stream will not be affected by the halving. According to Bernstein, fees now account for 10% of Bitcoin mining rewards, and in the past that figure has risen to 40%.
“Bitcoin miners are aiming for a relatively comfortable financial position in this cycle to withstand the impact of the halving,” Bernstein wrote.
Marathon vs. CleanSpark
Mining CEOs also spoke to Bernstein about their acquisition plans.
Inefficient or poorly capitalized mining operations could find themselves in trouble following the halving, and their rivals could take advantage of the situation to buy distressed assets.
Zach Bradford, CEO of CleanSpark, told Bernstein that he expects the mining sector to consolidate around four miners: CleanSpark, Marathon, Riot and Cipher.
CleanSpark acquired three new sites in Mississippi for $20 million last month and is still looking for more, Bernstein said. Marathon, meanwhile, spent $265 million on new mining facilities. The company said so DL News in February that it was shopping for opportunities before the halving.
It’s not just about new structures. Both CleanSpark and Riot expect to double the power of their computers by the end of the year, meaning they will likely earn the same amount of Bitcoin as before the halving.
And while Marathon is still the largest company in the group in terms of market capitalization and computing power, CleanSpark is gaining ground in both respects. Marathon CEO Fred Thiel has called CleanSpark the company’s “main competitor,” according to Bernstein.
Stock performance
“Bitcoin mining stocks have dragged Bitcoin through 2024 and more recently towards halving,” Bernstein wrote. “To date, no Bitcoin miner has outperformed Bitcoin” since January 1st.
Part of the problem is that Bitcoin mining companies they have been used as Bitcoin proxies in the past from investors who failed to gain direct exposure to the leading cryptocurrency. This, however, changed after the launch of spot ETFs, which reduced demand for mining stocks.
However, Bradford told Bernstein he expects mining stocks to perform better after the halving. Once the dust settles, investors will be able to distinguish between efficient and inefficient mining operations, Bradford said.
The halving could therefore “be the catalyst for consolidation in the sector and investors would then become market consolidators for the long term”, in the words of Bernstein.
“We expect 12-month window investors to outperform Bitcoin from here on out,” the firm added.
Tom Carreras is a markets correspondent at DL News. Do you have a tip on Bitcoin mining? Contact tcarreras@dlnews.com