Stock prices of major miners show declines ahead of halving

What’s new? Shares of the largest mining companies show a sharp decline in rates as halving in the Bitcoin network approaches. Following this the reward for mining blocks and the volume of new coins entering circulation will be halved on April 20. Thus, securities of Marathon Digital (MARA) and Riot Platforms (RIOT) for the last five days fell in price by 16% and 17% respectively. Shares of the WGMI exchange-traded fund (ETF) from investment firm Valkyrie, which tracks miner stocks, have fallen by 11,2% over the same period, according to TradingView.

Halving is code’s embedded cut in half of the reward to miners for a mined block on the blockchain, which occurs approximately every four years. Initially, miners received 50 BTC; on November 28, 2012, the number dropped to 25 BTC, on July 9, 2016, to 12,5 BTC, and on May 11, 2020, to 6,25 BTC. In April 2024, the award will be cut to 3,125 BTC

What else is known? Despite the price drop, mining executives are optimistic. Speaking to Bloomberg, they stated low cost of operations, improved equipment efficiency, and growing demand for bitcoin. Riot Platforms CEO Jason Les believes that there are all the necessary prerequisites for a positive movement of the bitcoin rate over the next few months.

The overwhelming part of miners’ income is made up of rewards for mining blocks, and transaction fees are insignificant in comparison. At the end of March, industry companies received a record monthly revenue of over $2 billion, and then in the middle of the month, BTC renewed its historic high at above $73 500.

The reduction of the award coupled with the correction of the BTC exchange rate may lead to the fact that companies will not be able to cover the costs of mining coins. Marathon Digital CEO Fred Thiel previously said that to maintain profitability after the halving, the company should spend no more than $46 000 on mining one coin.

Miners are counting on increased demand from new US spot bitcoin ETFs. Already now their issuers buy an average of 2450 coins daily, while after the halving the number of coins mined during the same period will decrease from 900 to 450. In combination, these factors could lead to a rate hike due to high supply and low demand, according to Hashlab Mining strategist Jaran Mellerud.

Cipher Mining CEO Tyler Page did not predict the movement of the BTC exchange rate in the near term, but in the long term, he believes we should definitely expect a steady increase in network usage and adoption.

Earlier, Santiment recorded a sharp increase in the number of bitcoin wallets with non-zero balances. According to analysts, this trend will continue until halving.

Analyst Willy Woo allows the possibility for the onset of a bear market when BTC falls below $58 900

During the week, the rate of the first cryptocurrency fell by more than 8%

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Santiment later noted that traders are increasingly discussing the advisability of holding bitcoins due to a potential prolonged post-halving correction. With altcoins in the AI, DeFi, gamification, and meme sectors recovering, panic around BTC will increase, experts said.