Equities

Bitcoin Halving in 2024: Miners, ETFs Brace for Impact

Bitcoin Halving in 2024 Expected to Impact Miners and Prices Amidst Rising ETF Influence and Record Highs

By Max Weldon

4/13, 04:11 EDT
Marathon Digital Holdings, Inc.
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Key Takeaway

  • Bitcoin's upcoming halving in April 2024, reducing mining rewards to 3.125 BTC, historically triggers price surges; impact uncertain amid high current prices.
  • Miners face revenue cuts post-halving; efficient operations like Marathon Digital may remain profitable, with costs rising to $46,000 per Bitcoin.
  • Spot Bitcoin ETFs' introduction and $58 billion in assets underline growing investor interest, potentially influencing market dynamics pre and post-halving.

Bitcoin Halving Approaches

The Bitcoin network is preparing for a significant event known as the "halving," expected around April 20, 2024. This event will reduce the reward for mining a block of transactions from 6.25 Bitcoins to 3.125 Bitcoins. Historically, such halvings have led to increased attention and price surges in Bitcoin. The last halving in 2020 saw Bitcoin's price rise by 33% in three months and over 500% in a year. However, with Bitcoin already in the spotlight due to recent ETF approvals and its price reaching record highs, the impact of the upcoming halving remains a topic of speculation among investors and analysts.

Stéphane Ouellette, CEO of FRNT Financial, highlighted that while the halving draws attention, macroeconomic factors like interest rate expectations could play a significant role in Bitcoin's price movements. J.P. Morgan analysts suggest that the 2024 halving event might already be priced into Bitcoin's current valuation.

Miner Dynamics Post-Halving

Bitcoin miners, who validate transactions and secure the network, will see their rewards halved, directly impacting their revenue. This change could lead to less efficient miners exiting the market, potentially benefiting those with more efficient operations. Marathon Digital Holdings CEO Fred Thiel mentioned that despite the halving, high Bitcoin prices would still allow for profitable mining operations, with costs expected to rise from just above $20,000 to $46,000 per Bitcoin post-halving.

Analysts and industry insiders are watching how the halving will affect miners, especially with Bitcoin's price volatility. Midtier miners like Iris Energy and Bitfarms are considered favorable by some due to their lower valuations compared to larger companies.

Market Reactions and ETF Influence

Bitcoin's price surged to a record high of over $73,000 recently, with expectations of further gains post-halving. The introduction of spot Bitcoin ETFs by firms like BlackRock and Fidelity Investments has fueled demand, contributing to the bullish outlook. However, the actual impact of the halving on Bitcoin's price and the broader cryptocurrency market remains uncertain, with some analysts suggesting that the event's effects may already be reflected in current prices.

Assets managed by Bitcoin ETFs have reached $58 billion since their introduction in January 2024, indicating significant investor interest. The rapid growth of Bitcoin ETFs contrasts with the slower adoption of gold ETFs, highlighting the increasing mainstream acceptance of Bitcoin as an investment asset.

Street Views

  • Stéphane Ouellette, FRNT Financial (Neutral on Bitcoin):

    "The halving fundamentally doesn’t change supply-demand dynamics, but it does draw attention to the space." "So far, Bitcoin seems to be following the pattern of other halvings, which could suggest more gains this time. But he noted that other macroeconomic factors such as expectations for interest-rate cuts will also likely have a heavy influence."

  • J.P. Morgan (Neutral on Bitcoin):

    "The 2024 bitcoin halving event is more than priced in on our calculations."

Management Quotes

  • Fred Thiel, CEO of Marathon Digital Holdings:

    "Right now, it costs Marathon just above $20,000 to mine Bitcoin, a figure that will jump to $46,000 per Bitcoin after the halving. With prices of Bitcoin above $70,000, there will be plenty of room for profit."