SUPERNEWS

Crypto

Bernstein Favors RIOT, CLSK Before Bitcoin Halving, Sees $150K BTC

Bernstein advises buying Bitcoin miners before 2024 halving, predicting a post-event price surge and industry consolidation.

By Alex P. Chase

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4/17, 09:59 EDT
Bitcoin / U.S. dollar
Riot Blockchain, Inc
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Key Takeaway

  • Bernstein recommends buying Riot Platforms (RIOT) and CleanSpark (CLSK) ahead of the bitcoin halving, citing their market leadership and execution.
  • Mining stocks underperform BTC year-to-date due to halving concerns; however, a post-halving price breakout is anticipated as historically observed.
  • Bitcoin's price expected to hit $150K by 2025, with spot ETF approvals and resumed inflows seen as key drivers.

Miner Fear Peaks Before Halving

The crypto market is currently experiencing what Bernstein analysts have termed the "miner fear factor" at its zenith, as the Bitcoin halving event looms on the horizon, expected around April 19-20, 2024. This event, which occurs every four years, will see Bitcoin mining rewards halved, sparking concerns over profitability among miners. Despite these fears, Bernstein recommends buying outperform-rated Riot Platforms (RIOT) and CleanSpark (CLSK), citing their superior execution and leadership in self-mining hashrate. The report highlights that mining stocks have underperformed compared to Bitcoin itself, which has seen a 43% increase year-to-date and a 130% rise in the last six months. This underperformance is attributed to the anticipation of the halving and its impact on miner revenues.

ETFs and Bitcoin's Bullish Trajectory

Bernstein's analysis suggests that the introduction of exchange-traded funds (ETFs) in January 2024 has already led to significant price appreciation for Bitcoin, pre-halving. However, a recent 15% drop in Bitcoin's price, attributed to slower ETF inflows, has not deterred the firm's bullish outlook. They predict that Bitcoin's price will resume its upward trajectory post-halving, as mining hashrates adjust to the new reward structure and ETF inflows pick up. The firm continues to see a structural demand for Bitcoin, driven by the rollout of spot Bitcoin ETFs by wirehouses and registered investment advisors (RIAs), projecting a cycle high of $150K by 2025.

CEOs Remain Upbeat Amidst Challenges

Despite the market's apprehension and the recent downturn in mining stocks, CEOs of leading mining companies like Riot Platforms, CleanSpark, and others remain optimistic. They point to high miner dollar revenues and relatively low debt levels as factors cushioning the impact of the halving. Some CEOs are even anticipating industry consolidation, with CleanSpark's CEO expecting the market to narrow down to four leading miners. Additionally, developments on the Bitcoin blockchain, such as application and layer 2 development, are expected to provide incremental revenue streams through increased network fees.

Street Views

  • Gautam Chhugani and Mahika Sapra, Bernstein (Bullish on Riot Platforms (RIOT) and CleanSpark (CLSK)):

    "The market will reward these companies for their superior execution and for being market leaders by self-mining hashrate." "Historically, bitcoin price breakout has always followed the halving event and sometimes a few months after halving... We continue to expect bitcoin to touch a cycle high of $150K by 2025."