Predictions that Bitcoin (BTC) will see a six-figure price by the end of next year continue to surface despite BTC price losing the $30,000 level in recent days.
But for publicly-listed Bitcoin miners, in particular, a price north of $100,000 may be more of a necessity than a forecast if their business models are to remain profitable.
Bitcoin halving: Bad news for public miners?
Bitcoin mining stocks have been on a tear this year, outperforming BTC in recent months by a wide margin. While BTC has seen reduced volatility and a period of consolidation, Bitcoin mining companies’ stocks have risen by nearly 100% in a matter of months.
A recent report by “Made Easy – Finance” on Seeking Alpha goes into detail on the subject by examining one popular miner in particular: Riot Platforms, Inc. (RIOT).
It notes that despite RIOT being expected to triple its mining capacity in 2024, the company and Bitcoin miners in general could face serious headwinds from the halving. A 50% decrease in BTC block rewards, of course, cuts miners’ main source of revenue in half.
Miners like RIOT can also issue new equity shares to fund their operations. This dilutes existing shares, meaning that even if the company’s underlying fundamentals are sustained, the share price may not keep up.
Related: $160K at next halving? Model counts down to new Bitcoin all-time high
Combine this with the fact that many miners could already be overbought at current valuations, and things don’t look too rosy for public Bitcoin mining stocks. Although public mining stocks have outperformed Bitcoin in 2023, an increase in BTC being sent to exchanges could be pointing toward a decline in momentum.
A big increase in Bitcoin’s price will therefore be required for miners to remain profitable at today’s hash rate levels.
Bitcoin miners have had a banger of a year.
RIOT is up 457%
MARA is up 421%
BITF is up 337%
CLSK is up 246%Both Bitcoin and Nvidia rose by less than public miners this year — 80% and 222% respectively.
The best way to get leveraged/high-beta exposure to BTC.
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— Joe Consorti ⚡ (@JoeConsorti) July 18, 2023
Miners might need six-figure Bitcoin to stay afloat
How high does BTC price need to go for miners to maintain their current valuations? The above-mentioned report concludes that nearly $100,000 could be needed for miners to carry on as…
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