Bitcoin mining stocks have experienced a significant decline of up to 27% in the past three trading days, despite the recent rally of Bitcoin (BTC) which almost reached $64,000. An analyst suggests that this drop may be due to misplaced concerns about the upcoming halving, but also sees it as an opportunity to acquire mining stocks at a lower price. The two largest Bitcoin miners, Marathon Digital Holdings (MARA) and Riot Platforms (RIOT), have fallen by 18.5% and 21.9% respectively since February 27, according to Google Finance. CleanSpark (CLSK) and TeraWulf (WULF) have also experienced significant declines of 27.5% and 25.4% respectively. On the other hand, Bitcoin’s price has risen from around $51,000 to a yearly high of $63,700, before cooling off slightly to its current price of $61,350.
Peter Schiff, a gold proponent and crypto skeptic, has noticed the trend and wonders if the drop in Bitcoin mining stocks is a sign of trouble for Bitcoin. A crypto trader named “Chris” also expressed a change in sentiment towards mining stocks as Bitcoin approached $65,000, stating that he sold his investment in CleanSpark due to concerns about frothy market conditions.
Mitchell Askew, the head analyst at Blockware Solutions, believes that the most logical explanation for this divergence is investor caution ahead of the halving event. The halving will reduce Bitcoin miner rewards from 6.25 BTC (worth $586,800) to 3.125 BTC (worth $293,400 at current prices). Askew noted that there have been two previous instances in the past year where Bitcoin and Bitcoin mining stocks experienced significant declines, which turned out to be great opportunities to acquire mining stocks at a discount.
The period of 3-4 months following the halving, scheduled for April 20, could be crucial for publicly-listed miners in the United States. Jaran Mellerud, one of the founders and chief mining strategists at Hashlabs Mining, believes that some high-cost miners may move offshore to remain profitable. However, Askew disagrees and believes it is foolish to think that the halving will make mining unprofitable for these miners, as they have low energy costs and have been acquiring the latest-generation hardware in anticipation of the decreasing block subsidy.