Investor confidence in the profitability of the Bitcoin mining sector has been shaken following the halving of cryptocurrency rewards. This has resulted in a significant drop in Bitcoin mining shares both in the United States and abroad. However, industry analyst Mitchell Askew believes that these fears are largely unfounded.
Askew, who is the head analyst at Bitcoin mining firm Blockware Solutions, stated that investors will soon realize that their concerns were not based on solid evidence. He believes that the main catalysts behind the fall in miners’ stock prices are concerns about profitability after the halving and Bitcoin’s recent 7.5% price decline.
According to Google Finance, Marathon Digital and Riot Platforms, two of the largest BTC miners, have seen their share prices plummet by around 53% and 54% respectively since reaching their year-to-date highs in February. CleanSpark, on the other hand, reached a three-year high of $23.40 on March 25, but has since dropped by 38.1% to $14.48. Nevertheless, it is still up nearly 250% for the year.
The situation is similar for non-U.S. Bitcoin miners. Bitdeer Technologies from Singapore and Iris Energy from Australia, both listed on the Nasdaq, have seen their share prices fall by 40.8% and 47.6% respectively since reaching their year-to-date highs in mid-February.
These price declines come ahead of Bitcoin’s fourth halving, which is expected to occur on April 20. This halving will result in a reduction of Bitcoin mining rewards to 3.125 BTC, which is currently worth about $200,000.
Askew pointed to the performance of the Valkyrie Bitcoin Miners ETF 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. However, Askew expects a rebound in mining stocks shortly after the halving.
In late January, concerns about profitability resurfaced when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners would not be able to mine profitably after the halving if Bitcoin’s price remained around $40,000, its price at the time.
If Bitcoin’s price does not continue to rise after the halving, it could force some U.S. Bitcoin miners to seek cheaper electricity costs by migrating or expanding offshore, according to Jaran Mellerud, founder and chief mining strategist of Hashlabs Mining.