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Major Bitcoin mining stocks have experienced a healthy price drop as Bitcoin price moves towards an all-time high. Reasons and movements are discussed.
Mitchell Askew, head analyst at Blockware Solutions, said in 2023, the opportunity to buy Bitcoin mining stocks at a discount occurred twice. A similar opportunity may have resurfaced in 2024.
Bitcoin mining stocks have dipped 27% in the last three days of February. Prices of Bitcoin mining stocks are falling despite Bitcoin rallying nearly to the $64,000 mark.
One analyst suggests that one of the reasons for this discrepancy could be related to the impacts of the upcoming Bitcoin halving, which hints that it could be a great opportunity to buy cheap stocks.
Stock-wise Performance of Major Bitcoin Mining Stocks
The two largest Bitcoin miners, Riot Platforms (RIOT) and Marathon Digital Holdings (MARA) have fallen 28% and 23%, respectively, since February 27, as per the data from Investing(dot)com.
CleanSpark Inc. (CLSK) plummeted 38% from $23.07 to $16.72 in three days, while Terawulf Inc. (WULF) fell by 35%.
The charts of all the above-discussed companies are showing similar chart patterns of downtrend.
Bitcoin Price Action
Bitcoin shot up from around $51,000 to $63,700 before settling at the current price of $61,493. It has experienced a tremendous gain of 18% in a similar period. It is around 10% away from its ATH – $68,789, which was seen in November 2021.
Peter Schiff, a gold proponent and crypto skeptic, was the first among the prominent players to highlight this trend on X, signaling whether the Bitcoin mining stock drop was a sign of trouble ahead for Bitcoin.
Chris, a crypto trader, said on X, that he had invested in CleanSpark but quickly changed his tune on miners as Bitcoin rose towards $65,000.
Reasons for the BTC Price Jump
Mitchell Askew noted that the most logical explanation for the divergence in the movement of BTC mining stocks and BTC is that investors are deploying capital in Bitcoin to benefit from the upcoming Bitcoin halving.
Bitcoin halving will effectively reduce the mining reward for miners by half. This is an update encoded into the original design of bitcoin. 3 halving events have occurred so far, and the 4th is expected to occur on April 19, 2024. In the 4th halving event, mining reward will be slashed from 6.25 BTC to 3.125 BTC, that is.
Askew further noted two similar major divergences in the last twelve months between Bitcoin and Bitcoin mining stocks. Both times turned out to be opportunities for investors to earn desirable, significant returns. Such downfalls are considered healthy and promote higher future growth.
Conclusion: Expectations from the Near Future
The three to four months following Bitcoin’s halving are considered crucial, as Bitcoin halving is scheduled for the next month, which is April 20. It would be especially crucial for publicly listed Bitcoin miners in the USA- said Jaran Mellerud, founder of Hashlabs and chief mining strategist.
He also added that some high-cost miners may move offshore to remain profitable.
However, Askew contradicted this viewpoint and stated upfront that it is foolish to think that halving will risk miners’ profitability. To prove his point, he added that miners are already working at some of the lowest energy costs possible and have been acquiring the latest-generation hardware to improve their efficiency as it will decrease block subsidy.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
