Five Bitcoin mining CEOs on how the halving will play out

The halving is only a few days away, and Bitcoin miners are ready for it.

The CEOs of five major Bitcoin mining companies — Marathon Digital, Riot Platforms, CleanSpark, Hut 8, and Cipher Mining — spoke with analysts from research firm Bernstein about the impact the event will have on the mining industry.

Expected on April 19, the halving will automatically slash in half the amount of Bitcoin that miners receive for maintaining the Bitcoin blockchain.

Although the resulting reduction in supply should be a positive catalyst for Bitcoin’s price, miners will have to keep running with the same operational costs and less revenue.

Strong balance sheet

Bitcoin rose to new all-time highs this year off the back of the immensely successful spot exchange-traded funds, which were launched in early January.

And even after the top cryptocurrency slumped to $64,000 from its all-time high of $73,798 in March, miner revenues remain near all-time highs. According to Bernstein and Glassnode data, the industry is raking in almost $80 million in revenue a day just from mining Bitcoin.

Historically high revenues will provide a “solid cushion to miners pre-halving,” Bernstein wrote.

Some of that revenue is due to Bitcoin’s network fees. The development of new Bitcoin layer 2 platforms and NFT trading has pushed Bitcoin transaction fees higher over the past year.

This revenue stream won’t be affected by the halving. Fees now make up 10% of Bitcoin mining rewards, and that number has spiked to 40% in the past, according to Bernstein.

“Bitcoin miners point to a relatively comfortable financial position this cycle to withstand the impact of the halving,” Bernstein wrote.

Marathon vs. CleanSpark

The mining CEOs also talked to Bernstein about their acquisition plans.

Inefficient or poorly capitalised mining operations may struggle in the wake of the halving, and their rivals may take advantage of the situation to buy distressed assets.

CleanSpark CEO Zach Bradford told Bernstein that he expected the mining industry to consolidate around four miners — CleanSpark, Marathon, Riot, and Cipher.

Last month, CleanSpark acquired three new sites in Mississippi for $20 million and is still looking for more, Bernstein said. Marathon, meanwhile, has spent $265 million on new mining plants. The firm told DL News in February that it was shopping for opportunities ahead of the halving.

It’s not just new facilities. Both CleanSpark and Riot expect to double their computer power by the end of the year, meaning they will likely earn just as much Bitcoin then as prior to the halving.

And while Marathon is still the biggest firm in the pack in terms of market capitalisation and computer power, CleanSpark is gaining ground in both aspects. Marathon CEO Fred Thiel called CleanSpark the firm’s “arch competitor,” according to Bernstein.

Stock performance

“Bitcoin mining stocks have dragged Bitcoin all of 2024 and more recently into halving,” Bernstein wrote. “As of today, not a single Bitcoin miner has outperformed Bitcoin” since January 1.

Part of the problem is that Bitcoin mining companies were used as Bitcoin proxies in the past by investors who couldn’t get direct exposure to the top cryptocurrency. The situation changed, however, after the spot ETFs were launched, and that reduced demand for mining stocks.

However, Bradford told Bernstein he expected mining stocks to perform better after the halving. Once the dust settles, investors will be able to differentiate between the efficient and inefficient mining operations, Bradford argued.

The halving may therefore “be the catalyst for industry consolidation and investors would then long leading market consolidators,” in Bernstein’s words.

“We expect investors with a 12-month window to outperform Bitcoin here onwards,” the firm added.

Tom Carreras is a markets correspondent at DL News. Got a tip about Bitcoin mining? Reach out at tcarreras@dlnews.com