Bitcoin Halving Event Set to Increase Demand for the Cryptocurrency
Bitcoin mining rewards are set to be halved in April, resulting in fewer bitcoins entering circulation and increasing demand for the asset. Analysts estimate that major publicly traded miners will be able to mine bitcoin at a cost below its current price. While this is good news for investors, it poses challenges for bitcoin miners as their rewards for mining activities will diminish.
One of the leading players in the bitcoin mining industry is Riot Platforms, a vertically integrated firm based in Castle Rock, Colorado. Riot focuses on mining bitcoin to support the bitcoin blockchain and operates the largest single bitcoin mining facility in North America, located in Rockdale, Texas. The company also has plans for further expansion and is developing the Corsicana Facility, which is expected to have a capacity of one gigawatt.
Riot Platforms operates in three segments: bitcoin self-mining, data center hosting for miners, and manufacturing equipment for mining. In 2023, the company mined 6,626 bitcoins and expects to have approximately 28 EH/s of total hash rate in operation by the end of 2024. Despite missing the consensus estimate, Riot reported full-year revenues of $280.7 million, an 8.3% increase from the previous year. The company’s GAAP EPS of -$0.28 exceeded expectations.
Marathon Digital, the largest U.S. bitcoin miner by hash rate and market cap, is another prominent player in the bitcoin mining industry. The company operates its mining rigs across 11 sites worldwide and held a total of 15,741 unrestricted BTC as of January. Marathon anticipates its hash rate to reach 35 to 37 exahash this year, with plans to expand its capacity to 50 exahash by the end of next year.
Marathon’s mining activity has seen significant growth, with 12,852 bitcoins mined in 2023, a 210.1% increase from the previous year. The company generated revenue of $156.7 million in Q4, surpassing consensus estimates. However, its adjusted EPS fell short of expectations at -$0.02.
The upcoming bitcoin halving event is expected to further drive the demand for the cryptocurrency, benefiting investors while presenting challenges for miners. With major miners able to mine bitcoin at a cost below its current price, efficiency gains in new rigs and higher bitcoin prices provide some margin cushion. As the industry prepares for the halving event, companies like Riot Platforms and Marathon Digital continue to play a crucial role in the bitcoin mining landscape.
Analyst comment
Positive news: The upcoming Bitcoin halving event is expected to increase demand for the cryptocurrency, benefiting investors.
As an analyst, I predict that the market will experience increased demand for Bitcoin due to the halving event, leading to higher prices. Major miners will be able to mine Bitcoin at a cost below its current price, providing some margin cushion. Companies like Riot Platforms and Marathon Digital will continue to play a crucial role in the Bitcoin mining industry.
