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Shares of Bitcoin mining companies fall sharply as miners faced reduced revenues due to halving

Miners may find it difficult to remain profitable in the face of reduced block awards and rising mining costs.

Date: 2024-04-17 Author: Marek Stiller
Shares of Bitcoin mining companies fall sharply as miners faced reduced revenues due to halving

Bitcoin mining companies are experiencing a significant drop in stock prices as they face reduced revenues due to an upcoming code update for the largest cryptocurrency.

Share prices of companies such as Marathon Digital Holdings Inc, Riot Blockchain Inc. and CleanSpark Inc. have fallen for three consecutive days. The Valkyrie Bitcoin Miners exchange-traded fund has also seen a drop of about 28% this month .

Geopolitical tensions and further pressure on mining company stocks

The downward trend in bitcoin mining company stock prices is further exacerbated by the accumulation of short-term interest in cryptocurrency mining company stocks and recent geopolitical tensions.

Iran ‘s retaliatory attack on Israel over the weekend caused a shift toward a risk-off environment for investors.

Despite these challenges, however, the CEOs of these companies remain optimistic about the future, highlighting low-cost operations, more efficient hardware and growing demand for cryptocurrencies as factors that could offset anticipated revenue losses from the upcoming software upgrade.

Jason Les, CEO of Riot Blockchain, expressed confidence in Bitcoin’s long-term prospects.

“Riot is here for the long term… Our long-term investment thesis on Bitcoin is strong, and I think we have the basis for very positive movement on Bitcoin over the next few months,” – he said in a recent interview with Bloomberg TV .

Bitcoin mining is an energy-intensive process that involves using specialized computers to validate transactions on the blockchain and earn token rewards.

Most of the revenue from mining comes from these rewards, which are halved every four years in an event called halving. The upcoming halving, the fourth since 2012, will reduce the daily production of Bitcoin rewards from 900 tokens to 450.

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Increased demand may mitigate the negative impact of halving

Miners are hoping that increased demand from new ETFs will help mitigate the negative impact of halving by boosting Bitcoin prices.

Since the launch of ETFs by traditional asset management firms in January, the digital asset has seen significant growth and attracted billions of dollars from a wider range of investors outside the cryptocurrency community.

“I think it’s very difficult to predict bitcoin prices in any short-term perspective,” – Tyler Page, CEO of Cipher Mining, said. “But I think you can see a steady process of adoption over the years… We can remain very, very optimistic about the adoption of the network.”

Kris Marszalek, CEO of Crypto.com, acknowledged the possibility of selling pressure in the near future due to the “buy rumor, sell news” trading phenomenon. However, he stressed that in the long term, halving will have a significant positive impact on the market.

“In the long term, halving will have a significant impact and will be a positive event for the market,” he said.

Moreover, Marathon CEO Fred Thiel said last week that Bitcoin’s long-awaited halving event may already be partially factored into the market.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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