Bitcoin (BTC) should cost more than $98,000 for miners to stay afloat after halving – Seeking Alpha
Date: 2023-08-06 Author: Karina Ziganova Categories: BLOCKCHAIN
Seeking Alpha analysts have calculated that public mining companies will suffer losses if the price of bitcoin (BTC) does not rise to $98,000 in 2024.
Despite the fact that Bitcoin started August with another fall, analysts continue to give positive BTC price predictions for 2024. However, for public mining companies that want to maintain the profitability of their business models, the rise of the main cryptocurrency to the six-figure mark looks like an absolute must.
Bitcoin halving may negatively affect the business of miners
Mining stocks have been on the rise this year, well ahead of BTC in growth rates. Securities of a number of companies rose by almost 100% in just a few months.
The Seeking Alpha analytical platform considered a possible scenario for the development of events after the Bitcoin halving using the example of Riot Platforms (RIOT). A recently released report notes that even though Riot is expected to triple its capacity in 2024, the company could face serious challenges.
The BTC halving scheduled for April next year will reduce block mining rewards by 50%. In order to stay afloat, Riot is likely to issue new shares and thereby dilute the market supply. This means that even in the presence of stable fundamental indicators, securities quotes may not react with growth.
Given that many shares of mining companies are already overbought, the situation does not look too rosy. An increase in the number of bitcoins entering the exchanges may also affect their price dynamics. Therefore, in order for the miner business to remain profitable at today's hash rate, BTC must not only update the current historical maximum, but exceed $98,000.
“We do not see a scenario in which mining companies will be able to emerge from the situation unscathed,” the report says. “Even with the ambitious 35 EH/s offered by RIOT, our model suggests that to justify the current RIOT valuation, Bitcoin needs to trade above $98,000 post-halving.”
Based on these calculations, Seeking Alpha analysts warn that it is extremely risky to buy shares of public miners now. After all, fundamental indicators may not correspond to current estimates, which, perhaps, do not yet take into account the Bitcoin halving.
