As the Bitcoin halving event, scheduled to occur later this year by April, approaches, financial firm Cantor Fitzgerald has recently released a report indicating that post-halving, the profitability of major publicly traded BTC miners could be severely impacted.
Eleven out of thirteen of these miners, including notable names such as Argo Blockchain and Hut 8 Mining, may struggle to maintain profitability.
Assessing The Profitability Of Top Miners Post-Event
This impending halving will slash the reward miners receive by half, a mechanism intrinsic to BTC’s design to preserve its scarcity. While the event is often seen as a bullish catalyst for BTC’s price in the long run, it poses challenges for mining operations, especially those with substantial overheads.
Cantor Fitzgerald’s analysis, spotlighting the “all-in” cost per Bitcoin, estimates that only two miners, Bitdeer and CleanSpark, are likely to sustain profitability under the new reward structure, assuming BTC’s price stays above the $40,000 threshold.
Meanwhile, Argo Blockchain (ARBK) and Hut 8 Mining (HUT) are flagged as the most at-risk entities, facing a post-halving estimated cost per Bitcoin exceeding $60,000.
The report further indicates 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 struggle to maintain profitability.
Their predicted cost to produce a single BTC post-halving stands at roughly $50,559 for Marathon Digital and $43,913 for Riot Blockchain.
Furthermore, despite the impending challenges, there are bright spots in the report. Bitdeer and CleanSpark emerge as the most efficient miners, with lower “all-in” costs per Bitcoin, at $17,774 and $36,896, respectively.
*BREAKING – new today!
No matter the department, the entire team at @CleanSpark_Inc is committed to efficiency. EFFICIENCY of Uptime, Equipment, Capital, Operations, Community Engagement, Energy, Strategy, Growth, and other metrics.
Today’s brand new report from the research… pic.twitter.com/YgQ6XrIXh2
— S Matthew Schultz (@smatthewschultz) January 25, 2024
Bitcoin (BTC) Latest Price Action
Notably, the broader Bitcoin market is currently showing signs of recovery, which could positively impact the mining industry. Despite a recent slump, Bitcoin’s price has seen a modest increase, currently trading above $41,000.
This uptick, however, follows a period of downturn, where the asset saw a significant drop in the past two weeks falling from a peak above $48,000 leading to a 10.4% decline over this period.
Meanwhile, as the halving event draws near, Bitcoin miners are reportedly ramping up their selling pressure. On-chain data indicates a sharp spike in the Miners’ Position Index (MPI), suggesting increased selling activity.
The MPI tracks the ratio of miner outflows to the 365-day moving average. A value greater than 1 indicates potential heavy selling, which could exert bearish pressure on Bitcoin’s price.
Miners Selling Bitcoin Reserves Ahead of Halving – A Strategic Move
“In fact, the flow of #Bitcoin from miners to exchanges is now three times higher than the movement from exchanges to miners. This trend signals a strong selling pressure from the mining community.”
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— CryptoQuant.com (@cryptoquant_com) January 25, 2024
Featured image from Unsplash, Chart from TradingView