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Important points
- The rise in Bitcoin miner stock prices is outpacing the price of Bitcoin.
- The halving, which will occur in April, could reduce rewards for miners and increase the price of Bitcoin as the supply of new coins decreases.
- The most efficient miners will be those best equipped to deal with the halving, industry insiders say.
Bitcoin miner stocks have outperformed the price of Bitcoin, which is at its highest since 2021, as cryptocurrencies go mainstream with the recent approval of Bitcoin exchange-traded funds (ETFs).
However, these gains may not stick for some miners, as the four-year halving will take place in April, when the rewards miners receive from mining will be cut in half to ensure Bitcoin’s scarcity. do not have. With the halving, the number of new coins created will be reduced by 50%, and the rewards for miners will be cut in half.
The decline in revenue could be partially compensated for by higher Bitcoin prices due to the reduced supply of new coins. However, companies with low machine and operational efficiency may struggle.
Ethan Vera, Luxor Technology’s chief operating officer, said miners with higher electricity costs and less efficient machinery “will find it difficult to mine profitably after the halving.” Stated. Luxor provides services and products for the mining industry. “Many companies are stuck with power contracts or are profiting from the highest gross revenue, so they may continue to mine even though they are not making a profit. It will determine how long you can survive.”
The halving comes after the Securities and Exchange Commission approved 11 Bitcoin ETF applications in January, paving the way for investors to more easily access the alternative asset. This was realized as the market is once again on the rise.
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winners and losers
Cantor Fitzgerald analyzed 13 Bitcoin miners in January and found that at the then-current Bitcoin price of $40,000, only two miners could profit from mining: CleanSpark (CLSK) and Bitdeer (BTDR). I discovered that. However, as it currently exceeds $50,000, more miners will benefit. Those facing the highest costs were Hut 8 (HUT) and Argo Blockchain (ARBK). Mining each coin will cost him $60,360 and $62,276 respectively.
Hut 8 and Argo Blockchain did not respond to requests for comment.
Riot Platforms (RIOT) said it is positioning itself as one of the “lowest cost miners” ahead of the halving. Cantor Fitzgerald said it has the third lowest cost, at about $44,000 per coin.
“Riot also intends to maintain a larger percentage of monthly Bitcoin production in the short term, leveraging our ability to obtain Bitcoin at a significant discount compared to current market prices.” the company said in a statement in January. “This is made possible by our strong liquidity profile and will further solidify our position as one of the largest holders of Bitcoin.”
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Marathon Digital (MARA) is preparing for the halving with plenty of cash on hand.
“We need to be resilient,” CEO Fred Thiel said in a video last month. “If the price of Bitcoin were to drop to $30,000 at the time of the halving, not many miners would be able to operate profitably and have enough cash on their balance sheets to survive from 6 a.m. to 12 p.m. How many miners have ‘it’s going to take a few months, maybe 24 months or so, before Bitcoin goes up and you can mine it again and make a profit?’
Marathon’s cost per coin is $50,559, which is a small profit at today’s prices.
Bitcoin miner CleanSpark, which makes a profit at a cost of nearly $37,000 per coin, according to Cantor Fitzgerald, is currently selling hashes, according to executive chairman Matthew Schultz. He said he expects about 30% of the machines that are running to be forced to disconnect. It’s an opportunity for growth.
“We are actively pursuing M&A opportunities” to purchase facilities and infrastructure, Schultz said.
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