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Investing.com – As the halving approaches in just five days, a new report from Bernstein sheds light on the views 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, which will halve the block reward for miners.
According to the report, Bitcoin price rebounded to $65,000 after the weekend's decline, with analysts seeing these levels as attractive for investors waiting for entry points and assuming geopolitical stability.
CleanSpark The CEO of (NASDAQ:) announced that they have acquired three sites in Mississippi for approximately $20 million, while Marathon Digital Holdings Inc (NASDAQ:) secured 590 MW equivalent sites for approximately $265 million has. Both companies are pursuing active acquisition strategies, with MARA transitioning from an asset-light model to a self-mining approach to improve operational efficiency and cost effectiveness.
The CEO of Riot Platforms (NASDAQ:) said the company is focused on organic expansion and plans to build a 1 GW acquisition site in Corsicana to bring capacity to 2024 and 2025 targets. Meanwhile, CLSK CEO plans to close a capacity gap of 5 EH/s by actively seeking further acquisitions.
The industry expects capacity to double by the end of 2024 to mitigate the impact of the BTC rewards halving. Pre-contract mining equipment at attractive prices and strong negotiating positions with manufacturers support RIOT and CLSK's expansion efforts, CEOs reveal.
A big change in the Bitcoin network recently has been the introduction of new apps and Layer 2 solutions that have driven up network fees. CEOs in the Bitcoin mining world see it as a stable post-halving revenue stream that will help smooth out the market's ups and downs.
Financially, the top mining companies are doing well because they keep their debt low and avoid overleveraging their equipment. Additionally, the increased activity on the blockchain opens up additional revenue opportunities for miners and helps offset the drop in block rewards post-halving.
However, Bitcoin mining stocks did not perform as well and underperformed compared to Bitcoin itself. Over the past month, mining stocks have fallen 15-22%, with analysts attributing this to the diversion of retail liquidity from mining stocks to spot Bitcoin and ETFs.
The report also highlights consolidation in the mining industry post-halving, as larger miners with robust balance sheets and low debt may look to acquire smaller companies that are struggling to adapt to the new economic realities of reduced block rewards.
Major players like RIOT and CLSK are known for their proactive strategies focused on acquisitions and capacity expansions to mitigate the impact of the halving. Bernstein points out that these companies are well-positioned to take advantage of technological advances, including the integration of artificial intelligence, to improve their operational efficiency.
Despite the challenges posed by the halving, the report emphasizes that leading miners are well prepared for these changes. They have diversified revenue streams and are strategically positioned to benefit from the industry consolidation that could follow the halving.
Meanwhile, Bitcoin miners are increasing their computing power to record levels as they prepare for code customization that will significantly reduce their revenue.
The measure of computing power needed to mint new tokens, called mining difficulty, hit a record high on Wednesday. This final bi-weekly update is the last before the “halving,” scheduled for around April 20th. Since the last halving in 2020, this difficulty has increased by almost 600%, while miners' energy consumption has also seen a sharp increase over this period.
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