The persistent buzz about #Bitcoin ( $BTC ) reaching a six-figure price before the close of the upcoming year remains undeterred, despite recent dips that saw BTC lose the $30,000 support level.
However, for publicly-listed Bitcoin miners, a price tag surpassing $100,000 might not just be a mere projection but rather an imperative for their continued profitability.
The Challenge of Bitcoin Halving for Public Miners
Bitcoin mining stocks have been on a remarkable rally throughout the year, surpassing BTC’s performance in the past few months with a striking surge of almost 100%.
While Bitcoin has embraced a phase of decreased volatility and consolidation, the stocks of Bitcoin mining companies have undergone a rapid ascendancy.
One comprehensive report by “Made Easy – Finance” on Seeking Alpha delves deep into this realm, focusing particularly on Riot Blockchain, Inc.
( #RIOT ) – a prominent player in the mining sector.
It suggests that despite RIOT’s plans to triple its mining capacity by 2024, both the company and the broader landscape of Bitcoin miners could be confronted by significant challenges stemming from the halving.
The halving mechanism, which entails a 50% reduction in BTC block rewards, directly slashes miners’ primary revenue stream in half.
Moreover, miners like RIOT often resort to issuing new equity shares to raise capital for their operations.
However, this dilution of existing shares could potentially hinder share price growth even if the company’s underlying fundamentals remain strong.
Adding to these complexities, the report underscores the potential overvaluation of many miners at present, which could hint at an impending decline in momentum.
Amid these complexities, the scenario for public Bitcoin mining stocks appears less than optimistic.
The Quest for Six-Figure Bitcoin
What’s the critical threshold for BTC’s price to sustain the profitability of miners at their current valuations?
The above-mentioned report concludes that a price level approaching $100,000 might be necessary for miners to continue operating optimally:
“Unless Bitcoin outperforms our Bitcoin thesis, we don’t see any way where the Bitcoin sector can come out unscathed.
Even with RIOT’s ambitious 35 EH/s, our model suggests that Bitcoin needs to trade above $98,000 to justify RIOT’s current valuation (post-halving).”
This insight raises a red flag for those who “ #hodl ” BTC mining stocks, as underlying fundamentals, could potentially lag behind valuations that may not be accounting for next year’s impending Bitcoin halving event.
Read more: https://perseuscrypto.com/bitcoin/btc-price-must-exceed-98k-ahead-of-the-halving/