Bitcoin Halving Sparks Concerns of Mining Stock Blood Bath

1. Concerns rise over potential consequences for high-cost public miners in the United States.

2. Jaran Mellerud warns “mining stock blood bath” if Bitcoin’s price doesn’t substantially rise post-halving.

3. Investors wary as Bitcoin halving could impact U.S. miners

As the next Bitcoin halving approaches on April 24, concerns arise about the potential consequences for high-cost public miners in the United States. Jaran Mellerud, Hashlabs Mining co-founder, warns of a possible “mining stock blood bath” if Bitcoin’s price doesn’t rise substantially post-halving.

The reduction of miner rewards from 6.25 BTC to 3.125 BTC might lead to a significant drop in profitability for some miners.

Post-Halving Profitability Pressures U.S. Miners

Mellerud eyes the three to four-month window following the halving to gauge the impact on miner profitability. If Bitcoin does not undergo a substantial price surge during this period.

Particularly for miners paying high hosting rates of $0.07 per kWh or more, they may be compelled to shut down.

“My company, Hashlabs, is currently seeing significant demand from US-based miners who want to move their machines to Ethiopia, where hosting rates are 30-40% lower than in the United States.”

Jaran Mellurd

Cantor Fitzgerald’s report suggests that 11 publicly-listed Bitcoin miners could face challenges if Bitcoin’s price remains around $40,000 post-halving.

“We might see a mining stock blood bath as investors realize these companies are barely making money,”

Jaran Mellerud

Askew opposed Mellerud’s claim that the majority of inefficient miners are located in the U.S., asserting that they constitute only a minor portion of Bitcoin’s total hash rate. Consequently, any hash rate lost in the U.S. would be inconsequential. Nevertheless, even in scenarios of unprofitability, Askew suggests that several factors will hinder U.S. miners from relocating offshore.

“[Many of them] are locked into a fixed hosting contract in which they must continue to mine regardless of profitability,”

Askew

The possibility of unprofitability has some U.S. miners considering a move offshore to countries with cheaper electricity rates. Mellerud notes a demand from U.S. miners to relocate machines to Ethiopia. The hosting rates are 30-40% lower than in the United States.

Ethiopia, Nigeria, and Kenya Emerge as Frontrunners

Mellerud identifies Ethiopia, Nigeria, and Kenya as promising African countries to capture a larger share of the hash rate. Ethiopia, with a substantial hydropower surplus, is expected to attract Chinese miners and potentially acquire 5-10% of Bitcoin’s total hash rate in the coming years. Meanwhile, Argentina and Paraguay are highlighted as the most promising mining countries in South America.

While some express concerns about the potential impact on U.S. miners, others argue that most U.S. miners, with low electricity rates and efficient machines, will likely remain profitable. Additionally, contractual obligations and non-profit-driven mining activities may hinder a significant exodus offshore, despite the challenges posed by the halving.

As the cryptocurrency community eagerly awaits the upcoming halving, the industry braces for potential shifts in mining landscapes and global hash rate distribution.

BTC Monthly Close Brings Uncertainty

Bitcoin’s recent monthly close at $51,700 offers little inspiration, raising concerns for market participants amid a narrow trading range.

Material Indicators highlight a “red W close” for BTC with a new downward Trend Precognition signal, anticipating potential volatility leading up to the Monthly Close.

“Signal is tentative until this new candle closes. I do expect it to validate, however we do have some wild cards with Thursday’s U.S. Economic Data coinciding with the Monthly Close. Expecting more volatility as we approach the M Close.”

Despite the stagnant BTC price, some, including social media pundit Bitcoin Munger, remain optimistic, suggesting that market makers are eyeing $53k shorts.

Inflation concerns and the Fed’s stance on interest rates add complexity to the market dynamics. This follows previous increases and aligns with the upcoming block subsidy halving in April.

Analysts Assess Bitcoin’s Pre-Halving Scenario

Analysts like Rekt Capital and Venturefounder consider the historical context of Bitcoin halvings, anticipating potential corrections. Speculator profit-taking and short-term holders’ metrics raise caution with a suggested $48,000 BTC price target.

Despite the uncertainty, Bitcoin’s overall accumulation surpasses issuance, providing a broader perspective on the cryptocurrency’s resilience amid market fluctuations.