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With the upcoming “halving” set to reduce mining rewards by half, crypto miners are still fairly optimistic about the long-term trajectory of Bitcoin and the broader crypto scene. They are switching to more efficient mining equipment, reducing costs, seeking cheaper energy sources, and even exploring mergers and acquisition opportunities to stay competitive.
A new report from JP Morgan highlights the perspectives of the CEOs of major Bitcoin mining companies ahead of the major event. The document reflects the general optimism among industry leaders from companies such as Cipher Mining (NASDAQ:), Riot Blockchain (NASDAQ:) and Bitdeer Technologies, despite the upcoming challenges that the halving poses to mining profitability and operational efficiency.
“We believe recent weakness provides an attractive entry point and are particularly bullish on RIOT and IREN, which we believe offer attractive relative valuations,” analysts wrote in a note.
The report said CEOs are “increasingly investing in advanced technological capabilities, including AI, to optimize mining efficiency and energy consumption.”
Contrary to popular belief, this upcoming halving is unlikely to result in a major drop in the network’s hashrate. After the first three Bitcoin halvings, the hashrate dropped by 25%, 11%, and 25%. It seems that many analysts and miners are expecting – or perhaps even hoping for – a similar decline this time.
Additionally, the hash rate is expected to quickly recover from this small drop. In the last three halvings, the network recovered back to pre-halving hash rate levels in an average of just 57 days.
The document also cites insights on the regulatory environment: “CEOs are closely monitoring regulatory developments, which are increasingly seen as an important factor influencing market dynamics and investment decisions.”
Crypto miner executives are implementing strategies to increase operational efficiency, expand mining capacity, and secure advantageous energy contracts to offset the expected decline in mining rewards.
Additionally, the focus is on leveraging technological advances. Several companies are investing in AI and other innovative technologies to gain a competitive advantage.
The report also points to the financial strength of these companies, noting that many have kept their balance sheets healthy with minimal debt. This strong financial base puts them in a good position to deal with the economic impact of the halving.
Additionally, these companies are diversifying their investment strategies, venturing into other cryptocurrencies, and exploring blockchain-related projects beyond traditional Bitcoin mining.
Regarding the economic landscape, one section states: “The halving is seen as both a challenge and an opportunity, as the potential for market consolidation offers well-capitalized companies the opportunity to expand their market share.”
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