Financial firm Cantor Fitzgerald has released a report warning that the upcoming Bitcoin halving event, expected in April, may severely impact the profitability of major publicly traded Bitcoin (BTC) miners.
The report highlights that eleven out of thirteen miners, including well-known names such as Argo Blockchain and Hut 8 Mining, could struggle to maintain profitability after the halving event.
Bitcoin Halving event looms, threatening miner profitability
The Bitcoin halving event, an integral part of the cryptocurrency’s design to maintain scarcity, will reduce the reward that miners receive by half. While this event is often viewed as a bullish catalyst for BTC’s long-term price, it poses significant challenges for mining operations, particularly those with substantial overhead costs.
Cantor Fitzgerald’s analysis focuses on the “all-in” cost per Bitcoin and predicts that only two miners, Bitdeer and CleanSpark, will likely remain profitable under the new reward structure, provided BTC’s price remains above the $40,000 threshold.
According to the report, Bitdeer and CleanSpark are the most efficient miners, boasting lower “all-in” costs per Bitcoin. Bitdeer’s estimated cost per Bitcoin post-halving is just $17,774, while CleanSpark’s is $36,896. These figures position them as potential survivors in a post-halving environment.
At-risk entities: Argo blockchain and hut 8 mining
Conversely, Argo Blockchain (ARBK) and Hut 8 Mining (HUT) are highlighted as the most vulnerable entities, facing estimated post-halving costs per Bitcoin exceeding $60,000. These alarming projections place them at significant risk in a market where profitability is poised to become increasingly challenging.
The report also points out that major players in the industry, Marathon Digital (MARA) and Riot Blockchain (RIOT), with market values of $3.62 billion and $2.19 billion, respectively, may also face uphill battles to maintain profitability. Their projected cost to produce a single BTC post-halving is approximately $50,559 for Marathon Digital and $43,913 for Riot Blockchain.
Impact of Bitcoin price fluctuations
One critical factor in determining the profitability of these mining operations post-halving is the price of Bitcoin itself. If BTC’s price remains above the $40,000 mark, as Cantor Fitzgerald’s analysis assumed, some miners may weather the storm more effectively. However, the cryptocurrency market is known for its price volatility, making it challenging to predict how these miners will fare in the coming months.
The Bitcoin halving event, which takes place roughly every four years, has far-reaching implications for the entire cryptocurrency ecosystem. Beyond the immediate impact on miners, it underscores the importance of Bitcoin’s deflationary nature and its role as a digital store of value.
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