Investor confidence in the profitability of the Bitcoin (BTC) mining sector has been shaken following the halving of cryptocurrency rewards. As a result, Bitcoin mining shares have plummeted both in the United States and abroad. However, industry analyst Mitchell Askew argues that these fears are largely unfounded.
Askew, the head analyst at Bitcoin mining firm Blockware Solutions, believes that investors will soon realize that their concerns about post-halving profitability and the recent 7.5% drop in Bitcoin’s price are not justified. Despite this reassurance, the share prices of major BTC miners Marathon Digital (MARA) and Riot Platforms (RIOT) have fallen by approximately 53% and 54% respectively since their year-to-date highs in February.
CleanSpark (CLSK), on the other hand, reached a three-year high of $23.40 on March 25 but has since experienced a 38.1% decline to $14.48. Nevertheless, it remains up by nearly 250% this year. Similarly, non-U.S. Bitcoin miners like Bitdeer Technologies (BTDR) in Singapore and Iris Energy (IRIS) in Australia have seen their share prices drop by 40.8% and 47.6% respectively since reaching their year-to-date highs in mid-February.
These price declines coincide with Bitcoin’s upcoming fourth halving, expected to occur on April 20. This halving will result in mining rewards being cut in half to 3.125 BTC, equivalent to around $200,000. Askew points to the performance of the Valkyrie Bitcoin Miners ETF (WGMI) as evidence of post-halving profitability fears. This actively managed fund, which tracks the Bitcoin mining market, has shown a “near zero” correlation with Bitcoin in 2024.
Although WGMI’s price relative to Bitcoin is approaching a previous low point, Askew anticipates a rebound in mining stocks shortly after the halving. Profitability concerns first emerged in late January when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners would struggle to remain profitable post-halving if Bitcoin’s price remained around $40,000. If the price of Bitcoin does not continue to rise after the halving, some U.S. Bitcoin miners may be compelled to seek cheaper electricity costs offshore or consider expanding their operations internationally, according to Jaran Mellerud, founder and chief mining strategist of Hashlabs Mining.