Bitcoin mining giants are struggling before the halving

The shares of industry giants have been falling for several days as the bitcoin halving takes place this Saturday, April 20.

Cold sweats for bitcoin miners. A few days before the halving, the shares of certain giants of the mining industry (Marathon Digital Holding, Riot Platforms, CleanSpark – which are listed on Nasdaq) fell for the third day in a row. Over one month, the trend is no better, their shares falling by 25%, 29% and 17% respectively.

This trend goes against the grain of their bosses’ statements that their business is profitable thanks to the rise of bitcoin since the start of the year. “Riot is here to stay. We have a necessary setup here for a very positive move for bitcoin over the next few months,” said Jason Les, head of Riot Platforms at Bloomberg.

As a reminder, halving takes place approximately every four years and more precisely every 210,000 blocks validated on the Bitcoin blockchain. This is a halving of the number of bitcoins issued to the market as rewards to miners who validate transactions on the blockchain.

This Saturday, April 20, the number of bitcoins distributed to each miner will increase from 6.25 to 3.125 bitcoins. In total, the number of bitcoins issued will increase from 900 bitcoins to 450 bitcoins each day after the 2024 halving.

Calculation of profitability

However, these 450 bitcoins will not all be put into circulation on the market from April 2024. To finance their activity (in particular the cost of electricity, mining machines, etc.), miners must certainly sell certain acquired bitcoins but not necessarily right away. The calculation of their profitability depends on different factors: cost of energy or price of bitcoin. For example, if the price of bitcoin is too low, the miner will have an interest in keeping it to resell it later if its price increases.

If halving will reshuffle the cards within the industry, by strengthening the giants of the mining industry against smaller players, it will be interesting to see the impact that halving will have on the actions of the behemoths of the mining industry. sector.