Bitcoin halving has come and gone, but it has not met the expectations of the crypto market. The price of Bitcoin did not skyrocket as promised, leaving many investors disappointed. Unfortunately, it is the BTC miners who are suffering the most from this situation. These miners have invested everything they had to mine the blocks created by Satoshi Nakamoto. Some even argue that BlackRock is the entity holding the industry together.
The recent halving event resulted in a 3.4% decline in the price of Bitcoin over the past week. However, thanks to a 4.7% recovery in the last 24 hours, the industry narrowly avoided a more severe collapse.
According to data from S&P Global Market Intelligence, Riot Platforms experienced a decline of 13.8% during the week, while Marathon Digital saw a decrease of 11.8% and Cleanspark experienced a larger drop of 16.2%. As of now, these stocks have declined significantly by 12.5%, 10.1%, and 15.2%, respectively.
This week, the major news includes an inflation report that exceeded expectations and the decision by the Federal Reserve to maintain interest rates. The Fed has expressed concerns about the possibility of inflation resurfacing, which could dampen economic activity and limit available funds for high-risk assets like Bitcoin.
There is also a decrease in optimism about the impact of exchange-traded funds (ETFs) on the Bitcoin market, as there has been lackluster demand for launches in Hong Kong and a significant slowdown in U.S. fund flows.
Miners are facing the brunt of this week’s events for several reasons. These companies rely on BTC to generate revenue, so a decrease in price leads to a decrease in revenue and margins. Additionally, the presence of Bitcoin on these companies’ balance sheets amplifies the effect, benefiting them when Bitcoin rises but significantly impacting them when it drops.
The halving event has led to speculation among investors about a potential price surge, but if that scenario fails to materialize, Bitcoin miners may face margin pressure.
Historical data shows that in bullish market conditions, BTC miners generate higher returns compared to the crypto itself. However, in recent months, miners have faced challenges due to the popularity of spot Bitcoin ETFs. The halving has further reduced their primary income stream.
Miners are currently struggling to stay afloat and maintain their stock prices unless there is a substantial price surge. Investing in this industry is challenging as halving typically happens before significant increases in BTC’s price, causing mining stocks to rise as well.
It will be crucial to monitor whether these companies can generate profits with only half of the Bitcoin reward. Expect an increase in costs and a decrease in margins. However, there is a potential positive scenario where the remaining players in the market could gain a larger market share and benefit from the upward trend in Bitcoin prices.
If Bitcoin fails to increase in value soon, miners will face more challenges in the financial landscape. Rising electricity costs and the impact of BTC’s price and halving will add to their financial burden.