Bitcoin mining shares in the U.S. and globally have experienced a significant decline in value, attributed to concerns about mining profitability following the cryptocurrency reward halving. However, Mitchell Askew, chief analyst at Blockware Solutions, believes these concerns are largely unfounded and expects investors to realize this soon. He emphasized that the post-halving earnings concerns and the recent drop in Bitcoin prices were the primary factors contributing to the decline in miner share prices.
Major Bitcoin mining companies such as Marathon Digital (MARA) and Riot Platforms (RIOT) have seen their shares plummet by approximately 53% and 54%, respectively, since reaching year-to-date highs in February. Similarly, CleanSpark (CLSK), which hit a three-year high in March, has experienced a 38.1% decrease in its share price since then, despite still being up nearly 250% for the year. Non-U.S. miners like Bitdeer Technologies (BTDR) and Iris Energy (IRIS) have also faced significant declines, dropping by 40.8% and 47.6%, respectively, since mid-February.
The decline in share prices coincides with expectations for the upcoming fourth Bitcoin halving on April 20, which will reduce Bitcoin mining rewards by half to 3.125 BTC. Askew highlighted the performance of the Valkyrie Bitcoin Miner ETF (WGMI) as an indication of concerns about post-halving profitability, noting its low correlation coefficient with Bitcoin in 2024. However, he anticipates a rebound in mining stocks shortly after the halving.
The profitability of Bitcoin mining operations resurfaced as a concern in late January when Cantor Fitzgerald reported that 11 publicly traded Bitcoin miners might not remain profitable after the halving if Bitcoin prices remained around $40,000. Jaran Mellerud, founder of Hashlabs Mining, suggested that if Bitcoin prices do not continue to rise post-halving, some U.S. miners may consider relocating or expanding overseas to access cheaper electricity costs. This reflects the ongoing uncertainty surrounding mining profitability and its impact on the industry's future direction.
