The Bitcoin Halving cycle is in its final countdown, with the event expected in less than three days, pending observation of block changes. Miner rewards will decrease from 6.25 to 3.125 coins. This has prompted aggressive short-selling by U.S. stock market investors, causing stock prices of listed crypto mining companies to plummet by 17-30% over the past month, with a total short interest balance of approximately $2 billion.
According to Bloomberg, shares of Marathon Digital Holdings Inc., Riot Platforms Inc., and CleanSpark Inc. fell by 17.84%, 24.95%, and 7.48% respectively by the close of trading on Tuesday, April 16. The Valkyrie Bitcoin Mining ETF also suffered significant losses.
S3 Partners LLC estimates that as of April 11, the short interest in 15 U.S. listed mining companies was about $2 billion, accounting for 15% of the total circulating shares of these mining companies—three times the U.S. average of 4.75%, reflecting strong bearish sentiment among traders.
As interest in shorting crypto mining stocks continues to rise, along with geopolitical tensions such as Iran's recent attacks on Israel, investors are moving towards safe-haven assets. Despite this, CEOs of these companies remain optimistic, claiming that low-cost operations, more efficient equipment, and increasing demand for the asset class could offset the annual revenue loss of $10 billion due to the software update.
Despite the decline in stock prices, executives of major U.S. bitcoin mining firms are optimistic about the post-halving growth trajectory of their companies, citing low operational costs, more efficient mining equipment, and growing demand for cryptocurrency assets as factors that can compensate for the reduced mining revenue post-halving.
Moreover, several mining companies believe that increased demand for Bitcoin spot ETFs will drive up Bitcoin prices during this cycle, mitigating the negative impact of the halving.
Jason Les, CEO of Riot Platforms, stated,
"Riot is here for the long haul, and our long-term investment thesis on Bitcoin is strong. I believe we are well-prepared for a very positive trend in Bitcoin in the coming months."
According to CoinDesk, a recent report by Wall Street investment bank and research firm Bernstein, which interviewed CEOs of Riot Platforms, CleanSpark, Marathon Digital, Cipher Mining, and Hut 8, revealed that these executives are optimistic.
They noted, "Mining companies' dollar revenues are at historic highs, providing a solid buffer for miners pre-halving, and their balance sheets carry relatively low debt."
The Bernstein report highlighted another significant change with this halving: increased network fees from applications on the Bitcoin blockchain and Layer2 developments, which provide additional revenue streams to miners. Additionally, Riot and CleanSpark expect their production capacity to double by the end of the year, offsetting the impact of the halving.
It is noteworthy that some mining executives emphasized the potential for industry consolidation and acquisitions, predicting that four giants will dominate the Bitcoin mining industry.
This implies that mining companies unable to enhance efficiency might face elimination or acquisition during this halving cycle.
The CEO of CleanSpark anticipates that the Bitcoin mining industry will consolidate into four leading miners, with Riot Platforms, CleanSpark, Marathon Digital, and Cipher Mining poised to take dominant positions.
Marathon Digital's CEO also emphasized the path of industry consolidation, similarly optimistic about these four companies maintaining their dominant positions.
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