The stocks of leading publicly listed Bitcoin mining firms have experienced a significant drop in value, coinciding with the impending Bitcoin halving event set for April 20. With just three days remaining until the highly anticipated event, which will halve miners’ rewards, expectations of reduced revenue are putting pressure on mining company stocks.
Bitcoin Mining Firms Face the Heat of Halving
Shares of top Bitcoin miners such as Marathon Digital Holdings Inc., CleanSpark Inc., and Riot Blockchain Inc., have all experienced declines for the third consecutive day as of Tuesday. Additionally, the Valkyrie Bitcoin Miners exchange-traded fund (ETF) has witnessed a decline of approximately 28% this month.
Furthermore, the rising geopolitical tensions over the weekend, have fostered a risk-off sentiment among investors. However, despite these challenges, the chief executives of these companies remain optimistic. They highlight factors such as low-cost operations, advancements in equipment efficiency, and growing demand for cryptocurrency assets, which they believe can offset the anticipated $10 billion annual revenue losses resulting from the software update. Speaking to Bloomberg, CEO of Riot Platform Jason Les said:
“Riot is here for the long term. Our long-term investment thesis on Bitcoin is strong and I think we have the setup for a very positive movement in Bitcoin over the next several months here.”
With the upcoming Bitcoin halving, the daily production of BTC will drop to 450 from the existing 900. Bitcoin miner Hut 8 has already announced a cut in the production costs by 30%.
BTC Price Action
The Bitcoin price is performing exactly as expected around the halving period. Before the halving event, the BTC price entered a strong pre-halving retrace correcting 18% from its all-time high, in tune with historical trends.
For a few weeks following the Bitcoin halving, analysts expect no major movement in the BTC price as miners could sell their Bitcoins to cover the revenue slump. However, after a few weeks, investors could be kicking off a mega bull for Bitcoin going ahead.
Miners are also placing their bets on increased demand stemming from the new spot ETFs, which is expected to drive Bitcoin prices upwards and counteract the negative effects of the halving. Tyler Page, CEO at Cipher Mining said:
“I think it is very hard to predict Bitcoin prices on any kind of short-term time frame. But over the course of years, I think you have seen a steady course of adoption. I think in large, sort of longer time frames, we can remain very very bullish on the adoption of the network.”