Bitcoin Halving to Slash Miner Revenue, Yet $60K+ BTC Cushions Blow

Key Takeaway

• Bitcoin halving, cutting miners' revenue in half, is imminent; yet, major public miners are poised to thrive with bitcoin above $60,000-$65,000.
• Mining stocks like Marathon Digital and Riot Platforms saw significant YTD declines despite a previous surge; CleanSpark and Iris Energy are top picks for the halving.
• Miners have bolstered their positions with strong cash balances and investments in efficiency ahead of the halving, indicating potential for future growth.

Halving Horizon: Miners Brace for Impact

The crypto community is on the edge of its seat as the Bitcoin halving event draws near, a pivotal moment that will slash miners' primary revenue stream by half. Despite the daunting outlook this presents, leading publicly traded miners appear well-equipped to weather the storm. Needham analyst John Todaro's recent client note highlights a critical threshold for Bitcoin's price, suggesting that a stable price above $60,000-$65,000 effectively mitigates halving risks for most public miners. Currently, the cost to mine a single Bitcoin ranges between $36,000 and $52,700, positioning miners favorably as Bitcoin trades above $61,000. Todaro emphasizes the attractive margins miners enjoy at these levels, with significant pressure on margins only expected if Bitcoin falls below $50,000 or if the hash rate surges beyond 800 EH.

Mining Stocks: A Volatile Pre-Halving Landscape

Despite Bitcoin's impressive year-over-year gain of 110%, mining stocks have experienced a notable downturn. Companies like Marathon Digital, Riot Platforms, and CleanSpark have seen their stock values dip into the red, erasing the previous year's gains of 300% to 600%. This decline is attributed to profit-taking by investors, heightened by the volatility introduced by Bitcoin ETFs. However, analysts like Mike Colonnese from H.C. Wainwright remain optimistic, citing miners' robust cash balances, growing Bitcoin reserves, and strategic investments in efficiency-enhancing equipment as factors bolstering their resilience against the halving's effects.

CEOs Maintain Bullish Stance Amid Challenges

In the face of declining stock prices and the looming revenue cut from the halving, Bitcoin mining CEOs express unwavering confidence in their operations' long-term viability. Riot Platforms' CEO, Jason Les, and Cipher Mining's CEO, Tyler Page, emphasize their strong investment theses on Bitcoin and anticipate positive market movements post-halving. Their optimism is partly based on the expectation that new spot ETFs will drive up Bitcoin demand, offsetting the halving's impact. Furthermore, Bernstein's research underscores miners' upbeat outlook, noting their comfortable financial positions and the potential for industry consolidation, which could see leading miners like CleanSpark and Marathon Digital emerge as dominant players.

Street Views

• John Todaro, Needham (Bullish on publicly traded miners):

  "We believe a bitcoin price above $60,000-$65,000 means the halving is de-risked for nearly all public miners."

• Mike Colonnese, H.C. Wainwright (Bullish on CleanSpark and Iris Energy):

  "The large public miners are right now much better off than in prior cycles... They have much stronger cash balances, they’re growing their bitcoin reserves, there’s much more liquidity going into this halving. In addition, a lot of the bigger guys have been putting out these large purchase orders with Bitmain [and] MicroBT to really enhance their fleet efficiency to lower their operating costs."