Bitcoin Miners Experience Declines Following ETF Launch
The launch of spot bitcoin exchange-traded funds (ETFs) has led to a decline in bitcoin miners since last Thursday, according to Bernstein. The decrease in mining stocks can be attributed to the pullback in the bitcoin price, which has dropped around 6% during the same period. Additionally, there is lower investor interest in mining stocks now that ETFs are available. However, Bernstein remains optimistic about high-quality miners such as Riot Platforms and CleanSpark. The firm believes that these miners will continue to generate strong revenues from the higher bitcoin price and transaction fees, offering a higher beta trade in the future.
Impact of Spot Bitcoin ETFs on Mining Stocks
Since the introduction of spot bitcoin ETFs in the U.S., mining stocks like Riot and CleanSpark have experienced declines of over 20%. Marathon Digital has also seen a drop of nearly 30%, while Iris Energy and Cipher Mining are down by more than 21%. The upcoming bitcoin halving event, which reduces mining rewards, further affects miners’ revenues. If the price of bitcoin does not rise to a range of $50,000 to $55,000, higher-cost miners may struggle to grow and sustain their operations due to insufficient capital.
Opportunities for Bitcoin Miners
Bernstein suggests that the next two months present a buying opportunity for bitcoin miners, similar to bitcoin itself. However, caution is advised during the halving period as higher-cost miners may face difficulties if the price of bitcoin remains flat. It is recommended to invest in low-cost miners to mitigate risks. In 2021, bitcoin miners outperformed bitcoin itself, with Riot and CleanSpark gaining 356% and 440%, respectively. Marathon witnessed an impressive growth of 586%, while bitcoin finished the year with a 157% increase.
Hot Take: Bitcoin Miners Face Challenges Amidst ETF Launch
The launch of spot bitcoin ETFs has caused declines in mining stocks, mainly due to the pullback in bitcoin prices and decreased investor interest. However, there are still opportunities for high-quality miners, such as Riot Platforms and CleanSpark, who are expected to generate strong revenues. The upcoming bitcoin halving event poses challenges for miners, particularly if the price of bitcoin does not rise sufficiently. Despite these challenges, the next few months could provide a dip buying opportunity for miners. It is advisable to be cautious during the halving period and consider investing in low-cost miners to mitigate risks.
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