Bitcoin miners need BTC price over $98K by the halving — Analysis

To avoid being in the red, publicly-listed Bitcoin mining companies will need the BTC price to be at least $98,000 by the 2024 halving.

Predictions that Bitcoin (BTC) will see a six-figure price by the end of 2024 continue to surface despite the BTC price losing the $30,000 level recently. 

For publicly-listed Bitcoin miners, in particular, a price north of $100,000 may be more of a necessity than a forecast if their business models are to remain profitable.

Bitcoin halving: Bad news for public miners?

Bitcoin mining stocks have been on a tear this year, outperforming BTC by a wide margin in recent months. While BTC has seen reduced volatility and a period of consolidation, Bitcoin mining companies’ stocks have risen by nearly 100% in a matter of months.

A recent report by Seeking Alpha explores BTC mining by examining one popular miner in particular: Riot Platforms.

It notes that despite Riot being expected to triple its mining capacity in 2024, the company and Bitcoin miners, in general, could face serious headwinds from the halving. A 50% decrease in BTC block rewards cuts miners’ main source of revenue in half.

Miners like Riot can also issue new equity shares to fund their operations. This dilutes existing shares, meaning that even if the company’s underlying fundamentals are sustained, the share price may not keep up.

Related: $160K at next halving? Model counts down to new Bitcoin all-time high

Combine this with the fact that many miners could already be overbought at current valuations, and things don’t look too rosy for public Bitcoin mining stocks. Although public mining stocks have outperformed Bitcoin in 2023, an increase in BTC being sent to exchanges could indicate a decline in momentum. 

A big increase in Bitcoin’s price will therefore be required for miners to remain profitable at today’s hash rate levels.

Bitcoin miners have had a banger of a year.

RIOT is up 457%
MARA is up 421%
BITF is up 337%
CLSK is up 246%

Both Bitcoin and Nvidia rose by less than public miners this year — 80% and 222% respectively.

The best way to get leveraged/high-beta exposure to BTC.

h/t @zackvoell pic.twitter.com/xTsJqikh0L

— Joe Consorti ⚡ (@JoeConsorti) July 18, 2023

Miners might need six-figure Bitcoin to stay afloat

How high does the BTC price need to go for miners to maintain their current valuations? The report mentioned above concludes that nearly $100,000 could be required for miners to carry on as usual:

“Unless Bitcoin outperforms our Bitcoin thesis, we don’t see any way where the Bitcoin sector can come out unscathed. Even with RIOT’s ambitious 35 EH/s, our model suggests that Bitcoin needs to trade above $98,000 to justify RIOT’s current valuation (post-halving).”

Based on this, the report warns that “hodling” BTC mining stocks is “extremely risky,” as underlying fundamentals may not keep pace with current valuations that may not be pricing in next year’s Bitcoin halving yet.

BTC price to $125,000 in 2024?

Meanwhile, a recent report from Matrixport entitled “Matrix on Target: Prepare for the Soaring 2024 Year-End Bitcoin Target of $125,000” describes how BTC could reach $45,000 by year-end and $125,000 by the end of 2024.

The significance of Bitcoin price reaching a one-year high for the first time in a year is emphasized by the authors.

This signal has marked the beginning of a new bull market every time in the past:

“On June 22, 2023, Bitcoin made a new one-year high, marking the first time in a year. This signal has historically indicated the end of bear markets and the start of new crypto bull markets. Previous occurrences took place in August 2012, December 2015, May 2019, and August 2020, with the actual bull markets materialising in 2013, 2017, and 2021.”

It continues:

“This signal has been triggered four times and in all four cases, the bull market fully unfolded within 12-18 months. If history is any guide, then, there is now a 100% probability that by the end of 2024, Bitcoin will experience another massive bull market with a price target of $125,000 (+310%) - based on the previous three signals.”

This six-figure Bitcoin price prediction echoes numerous others. Standard Chartered, for example, forecasts a $120,000 Bitcoin price by the end of 2024. Interestingly, this is largely based on BTC miners not selling Bitcoin before the halving.

Bitcoin may reach $120,000 by the end of 2024, Standard Chartered forecasts, as an expected improvement in crypto miners' fortunes allows them to hold on to more of the tokens https://t.co/Z9z0BbKCqS

— Bloomberg Crypto (@crypto) July 11, 2023

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.