Investor confidence in the profitability of Bitcoin mining has been shaken following the halving of the cryptocurrency’s rewards. This has led to a decline 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 about profitability after the halving are not supported by evidence. He attributed the drop in miners’ stock prices to these post-halving profitability concerns, as well as Bitcoin’s recent 7.5% price decrease.
According to Google Finance, two of the largest BTC miners, Marathon Digital (MARA) and Riot Platforms (RIOT), have seen their share prices plummet by around 53% and 54% respectively since reaching their year-to-date highs in February. Similarly, CleanSpark (CLSK) reached a three-year high of $23.40 on March 25 but has since dropped by 38.1% to $14.48, although it is still up by nearly 250% this year.
Bitcoin miners outside of the United States have also experienced significant declines in their share prices. Singapore’s Bitdeer Technologies (BTDR) and Australia’s Iris Energy (IRIS), both listed on the Nasdaq, have fallen by 40.8% and 47.6% respectively since reaching their year-to-date highs in mid-February.
These price drops coincide with Bitcoin’s upcoming fourth halving, scheduled for April 20. During the halving, Bitcoin mining rewards will be cut in half to 3.125 BTC, which is currently worth around $200,000.
Askew pointed out that the performance of the Valkyrie Bitcoin Miners ETF (WGMI), an actively managed fund that tracks the Bitcoin mining market, has shown a “near zero” correlation with Bitcoin in 2021. However, he anticipates a rebound in mining stocks shortly after the halving.
Concerns about profitability after the halving were first raised in late January when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners would not be profitable if Bitcoin’s price remained around $40,000, which was its price at the time.
If Bitcoin’s price fails to rise after the halving, it could lead some U.S. Bitcoin miners to consider migrating or expanding offshore in order to take advantage of cheaper electricity costs, according to Jaran Mellerud, founder and chief mining strategist of Hashlabs Mining.