Bitcoin miners have had a rocky start in 2023 after being battered by a severe market downturn the previous year. But as prices recovered over the last several months, they have been at significant capacity, according to Bernstein.
The brokerage firm’s latest report weighs in on how large miners are poised to reap substantial benefits from such a growing trend.
Where do Miners Stand Ahead of Bitcoin Halving?
The report suggests that the 16 largest publicly listed mining firms collectively contributed to 16% of the overall mined BTC. The collective mining capacity of the companies was found to be at 72 exahashes per second (EH/s) and is expected to amplify the capacity by 182% within the upcoming 2-3 years.
According to Bernstein analyst Gautam Chhugani, the larger miners with low cost of production and low debt are poised to be “the big beneficiaries of the expansion, with greater capacity,” to be resilient in the event of high volatility and cost surges resulting from the upcoming Bitcoin halving that is slated for April 2024.
With Bitcoin currently hovering near $29,000, 15 of the aforementioned Bitcoin miners have production costs below $15,000 per BTC, according to Bernstein’s estimation.
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The analyst leading the report stated,
“With the upcoming halving, that would double the cost of production, and would push a few miners to break even, assuming no price increase from here.”
Approval of Bitcoin ETFs Could be a Silver Lining
On the bright side, the approval of the Bitcoin exchange-traded fund (ETF) could come as a relief for miners. Bernstein’s report argued that the market could witness a “positive momentum” from the subsequent increased institutional participation in case the United States Securities and Exchange Commission (SEC) deviates from its rigid stance.
In such a case, miners would enjoy enough “margin room” for the 2024 halving event since the “lower the cost of production, better the miner positioning for the bitcoin halving impact.”
It is also important to note that three of the aforementioned miners have a debt-to-equity ratio of over 1, which reduces their ability to hold the line against depressed Bitcoin prices. Four prominent Bitcoin mining companies – Riot (RIOT), Marathon Digital (MARA), Hut 8 (HUT), and Hive Digital (HIVE) – retain the crypto in their financial portfolio. This strategic choice empowers them to wait for more favorable prices before engaging in sales. Such a move ultimately leads to amplified realized profits from the BTC they have extracted, according to the report.
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