Enhanced Positioning of Bitcoin Miners for Upcoming Halving: Benchmark

18 views 2:20 pm 0 Comments May 16, 2024

  • Miners are in a more advantageous position for this halving due to the substantial gains in bitcoin over the last six months, as stated in the report.

  • According to the broker, if history repeats itself, bitcoin is poised to experience a significant rally post the event.

  • Benchmark pointed out that a potential rise in network fees might counterbalance the impact of reduced rewards.

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Cryptocurrency miners, particularly bitcoin miners, are the most affected group by the reward halving. However, they are better positioned this time around due to the significant gains in the cryptocurrency over the past six months, according to a research report by broker Benchmark released on Thursday.

Bitcoin, the largest cryptocurrency by market value, has surged approximately 140% in the last two quarters, while the second-largest cryptocurrency, ether (ETH), has seen an 85% increase, based on CoinDesk Indices data. The broader crypto market, as measured by the CoinDesk 20 Index, has also gained 115%.

The halving event, which occurs approximately every four years, reduces the rate of growth in bitcoin supply by 50% and is anticipated to take place late today or early tomorrow UTC.

Bitdeer Technologies (BTDR)’s Chief Strategy Officer, Haris Basit, mentioned by Benchmark, highlighted that the recent BTC price surge could provide relief to many of the less-efficient miners on the Bitcoin network in the short term.

With bitcoin’s recent strong performance, the impact of the halving on retiring inefficient mining rigs and decreasing the network hashrate is expected to be less severe compared to a scenario without the rally, as noted by Basit during a Benchmark-hosted event.

Benchmark analyst Mark Palmer observed that most publicly traded bitcoin miners have either started or announced plans to boost their electricity and hashrate capacities to adapt to the reduced revenue and gross profit outlook. Despite a 46% increase in bitcoin’s price this year, the uncertainty surrounding the halving has led to a decline in the stocks of listed miners year-to-date.

Palmer also suggested that if history repeats itself and a robust rally in bitcoin’s price follows the event, the halving’s impact on bitcoin miners’ economics could be mitigated over time.

Additionally, the broker pointed out that a potential uptick in network fees could help offset the impact of reduced block rewards.

The report mentioned that the halving’s influence on bitcoin’s price might be amplified by the simultaneous demand shock from the introduction of spot bitcoin exchange-traded funds (ETFs) in the U.S. post their approval in January. The report anticipates a substantial increase in inflows into spot bitcoin ETFs once institutional investors actively engage with them.

Read more: Bitcoin Halving Partially Priced In With No Big Rally Expected Afterward: Deutsche Bank

Edited by Sheldon Reback.