Investing.com -- As the Bitcoin halving approaches in just five days, a new report from Bernstein sheds light on the sentiments and strategies of leading Bitcoin mining CEOs.
Despite a recent 15% drop in Bitcoin prices triggered by geopolitical tensions, the industry remains optimistic about the upcoming halving event, which will cut the block reward for miners in half.
According to the report, the downturn in Bitcoin's price over the weekend saw a recovery to $65,000, with analysts viewing these levels as attractive for investors awaiting entry points, assuming geopolitical stability.
CleanSpark 's (NASDAQ:CLSK) CEO revealed that they acquired three sites in Mississippi for roughly $20 million, while Marathon Digital Holdings Inc (NASDAQ:MARA) secured sites equivalent to 590 MW at a cost of around $265 million. Both companies have active acquisition strategies, with MARA transitioning from an asset-light model to a self-mining approach to enhance operational efficiency and cost-effectiveness.
Riot Platforms (NASDAQ:RIOT) CEO said that the firm is concentrating on organic expansion, with plans to execute a 1 GW acquisition site in Corsicana, bringing its capacity to target levels for 2024 and 2025. Meanwhile, CLSK CEO plans to address a capacity gap of 5 EH/s by actively seeking further acquisitions.
The industry anticipates doubling capacity by the end of 2024 to mitigate the impact of BTC rewards halving. Pre-contracted mining equipment at attractive prices and strong negotiation positions with manufacturers support RIOT and CLSK's expansion efforts, CEOs reveal.
A big change in the Bitcoin network lately has been all the new apps and layer 2 solutions coming online, which has pushed up network fees. CEOs in the Bitcoin mining world see this as a steady income source after the halving, helping to smooth out the ups and downs in the market.
Financially speaking, the top mining companies are doing well because they keep their debt low and avoid over-leveraging their equipment. Furthermore, heightened activity on the blockchain is introducing additional revenue avenues for miners, helping to offset the decline in block rewards following the halving.
However, Bitcoin mining stocks have not fared as well, underperforming compared to Bitcoin itself. Over the last month, mining stocks have dropped between 15-22%, with analysts attributing this to the diversion of retail liquidity from mining stocks to spot Bitcoin and ETFs.
The report also highlights a consolidation in the mining industry post-halving, as larger miners with robust balance sheets and low debt levels may look to acquire smaller players struggling to adjust to the new economic realities of reduced block rewards.
Key players like RIOT and CLSK are noted for their proactive strategies, focusing on acquisitions and capacity expansion to mitigate the impact of the halving. Bernstein points out that these companies are well-positioned to leverage technological advancements, including the integration of artificial intelligence, to improve their operational efficiencies.
Despite the challenges brought on by the halving, the report highlights that leading miners are well-prepared to handle these changes. They have diversified revenue streams and are strategically positioned to take advantage of the industry consolidation that may follow the halving event.
Meanwhile, Bitcoin miners are ramping up their computing power to record levels as they prepare for the code adjustment that will seriously slash their earnings.
The measure of computing power needed to mint new tokens, known as mining difficulty, hit a record high on Wednesday. This latest bi-weekly update is the final one before the "halving" event, scheduled for around April 20. Since the last halving in 2020, this difficulty metric has surged by nearly 600%, while the rate of energy consumption by miners has also seen a steep increase during this period.