Bitcoin Mining Sector Brushes Off Halving Concerns

Bitcoin mining stocks have experienced a sharp decline in recent weeks as investors voice concerns about profitability post-halving. However, industry analyst Mitchell Askew believes these fears are unfounded and that post-halving profitability remains robust. Despite a 7.5% drop in Bitcoin's price over the past week, Askew anticipates a "buy the news" event for public Bitcoin miners and the private ASIC market.

Bitcoin Mining Sector Responds to Halving Concerns

The impending halving of Bitcoin mining rewards has triggered a decline in Bitcoin mining stock prices both in the United States and internationally. However, industry experts maintain that these fears are unsubstantiated and that profitability will remain sustainable in the aftermath.

Mitchell Askew, Head Analyst at Bitcoin mining firm Blockware Solutions, attributes the market's pessimism to post-halving profitability concerns and a recent 7.5% decline in Bitcoin's price. Despite these headwinds, Askew believes investors will soon realize that their apprehensions were misplaced.

"The halving will be a 'buy the news' event for public Bitcoin miners and the private ASIC market," Askew stated.

Indeed, the share prices of Marathon Digital (MARA) and Riot Platforms (RIOT), two prominent Bitcoin miners, have plummeted by approximately 53% and 54%, respectively, since their year-to-date highs in February.

CleanSpark (CLSK) also experienced a significant drop, falling 38.1% from a three-year high of $23.40 on March 25 to $14.48 on April 12. Notably, the company's stock price remains up nearly 250% year-to-date.

The decline is not limited to U.S.-based miners. International players such as Singapore's Bitdeer Technologies (BTDR) and Australia's Iris Energy (IRIS), both listed on the Nasdaq, have witnessed declines of 40.8% and 47.6%, respectively, since their mid-February highs.

The price drops coincide with the anticipated Bitcoin halving on April 20, which will reduce Bitcoin mining rewards by half to 3.125 BTC, currently worth approximately $200,000.

Askew cited the performance of the Valkyrie Bitcoin Miners ETF (WGMI), an actively managed fund tracking the Bitcoin mining market, as evidence of post-halving profitability fears. WGMI has exhibited a "near zero" correlation coefficient with Bitcoin in 2024, indicating market uncertainty about the sector's future prospects.

However, Askew anticipates a "rebound" in mining stocks shortly after the halving.

Concerns over profitability resurfaced in late January when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners would cease to be profitable after the halving if Bitcoin's price remained around $40,000.

Jaran Mellerud, Founder and Chief Mining Strategist of Hashlabs Mining, warned that if Bitcoin's price fails to appreciate post-halving, some U.S. miners may be forced to relocate or expand offshore in pursuit of lower electricity costs.

Despite these uncertainties, industry experts remain confident that Bitcoin mining will continue to be a viable business post-halving. The halving is a scheduled event that has occurred twice before in Bitcoin's history, and each time, the market has eventually recovered and reached new highs.