The persistent buzz about Bitcoin (BTC) reaching a six-figure price before the close of the upcoming year remains undeterred, despite recent dips that saw BTC lose the $30,000 support level.
However, for publicly-listed Bitcoin miners, a price tag surpassing $100,000 might not just be a mere projection but rather an imperative for their continued profitability.
Bitcoin miners have had a banger of a year.
RIOT is up 457%
MARA is up 421%
BITF is up 337%
CLSK is up 246%
Both Bitcoin and Nvidia rose by less than public miners this year — 80% and 222% respectively.
The best way to get leveraged/high-beta exposure to BTC.
— Joe Consorti ⚡ (@JoeConsorti) July 18, 2023
The Challenge of Bitcoin Halving for Public Miners
Bitcoin mining stocks have been on a remarkable rally throughout the year, surpassing BTC’s performance in the past few months with a striking surge of almost 100%.
While Bitcoin has embraced a phase of decreased volatility and consolidation, the stocks of Bitcoin mining companies have undergone a rapid ascendancy.
One comprehensive report by “Made Easy – Finance” on Seeking Alpha delves deep into this realm, focusing particularly on Riot Blockchain, Inc.
(RIOT) – a prominent player in the mining sector.
It suggests that despite RIOT’s plans to triple its mining capacity by 2024, both the company and the broader landscape of Bitcoin miners could be confronted by significant challenges stemming from the halving.
The halving mechanism, which entails a 50% reduction in BTC block rewards, directly slashes miners’ primary revenue stream in half.
Moreover, miners like RIOT often resort to issuing new equity shares to raise capital for their operations.
However, this dilution of existing shares could potentially hinder share price growth even if the company’s underlying fundamentals remain strong.
Adding to these complexities, the report underscores the potential overvaluation of many miners at present, which could hint at an impending decline in momentum.
Amid these complexities, the scenario for public Bitcoin mining stocks appears less than optimistic.
The Quest for Six-Figure Bitcoin
What’s the critical threshold for BTC’s price to sustain the profitability of miners at their current valuations?
The above-mentioned report concludes that a price level approaching $100,000 might be necessary for miners to continue operating optimally:
“Unless Bitcoin outperforms our Bitcoin thesis, we don’t see any way where the Bitcoin sector can come out unscathed.
Even with RIOT’s ambitious 35 EH/s, our model suggests that Bitcoin needs to trade above $98,000 to justify RIOT’s current valuation (post-halving).
This insight raises a red flag for those who “hodl” BTC mining stocks, as underlying fundamentals, could potentially lag behind valuations that may not be accounting for next year’s impending Bitcoin halving event.
The Journey to a $125,000 Bitcoin
Concurrently, an intriguing report from Matrixport titled “Prepare for the Soaring 2024 Year-End Bitcoin Target of $125,000” offers a unique perspective on BTC’s trajectory.
It paints a picture of BTC scaling up to $45,000 by the year’s end and subsequently surging to $125,000 by the conclusion of 2024.
The significance of Bitcoin recently reaching its one-year high is emphasized by the authors of the report, as this particular signal has historically marked the onset of a new bull market:
“On June 22, 2023, Bitcoin made a new one-year high, marking the first time in a year. This signal has historically indicated the end of bear markets and the start of new crypto bull markets. Previous occurrences took place in August 2012, December 2015, May 2019, and August 2020, with the actual bull markets materializing in 2013, 2017, and 2021.”
The report goes on to note:
“This signal has been triggered four times and in all four cases, the bull market fully unfolded within 12-18 months.
If history is any guide, then, there is now a 100% probability that by the end of 2024, Bitcoin will experience another massive bull market with a price target of $125,000 (+310%) – based on the previous three signals.
Bitcoin may reach $120,000 by the end of 2024, Standard Chartered forecasts, as an expected improvement in crypto miners' fortunes allows them to hold on to more of the tokens https://t.co/Z9z0BbKCqS
— Bloomberg Crypto (@crypto) July 11, 2023
Echoes of Six-Figure Bitcoin Predictions
This six-figure Bitcoin price projection aligns harmoniously with a chorus of similar forecasts.
For instance, Standard Chartered has prognosticated a $120,000 Bitcoin valuation by the close of 2024.
Interestingly, this forecast hinges largely on the assumption that BTC miners will refrain from selling their Bitcoin holdings before the halving event.
As the cryptocurrency community keeps a watchful eye on both the dynamics of the market and the strategies of miners, the anticipation for Bitcoin’s potential surge continues to intensify.
As the cryptocurrency ecosystem remains on high alert, closely observing market dynamics and miners’ strategic moves, the anticipation of a potential Bitcoin price surge continues to gain momentum.
In the midst of this dynamic landscape, the path forward for BTC remains captivatingly uncertain yet undeniably exciting.