The faith of investors in Bitcoin‘s mining industry is wavering due to the cryptocurrency’s reward reduction, causing a decline in Bitcoin mining companies’ shares in the U.S. and abroad. Nevertheless, Mitchell Askew, an analyst from Blockware Solutions, asserts that these concerns are largely unwarranted, stating, “Investors will come to understand that their fears were overblown.”
Mining companies’ stock prices have fallen due to two primary causes. First, investors are worried about these companies’ profitability following Bitcoin’s halving event. Second, Bitcoin’s own price has taken a hit, decreasing by 7.5%.
According to Askew’s prediction, the upcoming Bitcoin halving will trigger increased demand among public miners and the private ASIC market to buy Bitcoin.
According to Google Finance, the stock prices of Marathon Digital (MARA) and Riot Platforms (RIOT), two significant Bitcoin miners, have experienced a decline of approximately 53% for MARA and 54% for RIO since reaching their highest points for the year in February.
Recently, CleanSpark (CLSK) hit a three-year high of $23.40 on March 25th. However, since then, its price has dropped by approximately 38.1%, landing at $14.48. Despite this decline, the stock has experienced an impressive growth of nearly 250% in value throughout the year.
Companies based outside of the US that specialize in Bitcoin mining, such as Bitdeer Technologies (BTDR) in Singapore and Iris Energy (IRIS) in Australia, have experienced substantial declines in their share prices since mid-February.
The decrease in price for Bitcoin occurs around the same time as the forthcoming bitcoin halving in April. In this process, the compensation given to Bitcoin miners is cut in half, thereby reducing their profitability when mining Bitcoin.
In simple terms, investors have expressed concerns about the earnings from Bitcoin mining following the halving, as indicated by the Valkyrie Bitcoin Mining ETF (WGMI). This particular ETF is designed to follow the Bitcoin mining market, yet its performance in the year 2024 has shown minimal connection with the actual price of Bitcoin.
Experts, including Askew, predict that mining stocks will experience a rebound following the Bitcoin halving event, despite the ETF’s price approaching a past low in relation to Bitcoin.
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2024-04-17 09:40