According to a recent report by MadeEasy – Finance, Bitcoin BTC -0.40% miners around the world are currently facing a critical moment.
The upcoming halving event could seriously impact the profitability of the mining industry, so the cryptocurrency must maintain a price of at least $98,000 before the halving to fend off potential losses. The importance of this particular price point cannot be underestimated as it is a key safeguard against the adverse impact of the halving on Bitcoin miners, including major public companies such as RIOT.
The halving event, expected to take place in 2024, will slash Bitcoin’s block reward by 50%, effectively halving the main source of income for miners.
This inevitable reduction creates a huge financial headwind that could destabilize the industry, especially if the bitcoin price does not rise to the projected $98,000 threshold. RIOT, a well-known player in the bitcoin mining industry, has plans to tackle this challenge.
The company has publicly stated its ambitious plans to triple mining capacity by 2024, a bold move that could face turmoil due to the upcoming halving event. Other bitcoin miners are also expected to address this issue, with the magnitude of the impact directly related to the price of bitcoin before the halving.
In addition, the report highlights another important strategy that Bitcoin miners such as RIOT may adopt, which is to issue new shares to fund their operations and mitigate potential losses. While on the face of it an effective strategy, this approach comes with its own set of challenges.
While it provides much-needed working capital, it also dilutes existing shares, potentially causing the stock price to fall. Even when a company’s underlying financial structure appears sound, investors must consider this.
Public mining stocks have outperformed Bitcoin in 2023, but trends suggest a possible shift in momentum. As the amount of bitcoin sent to exchanges increases, this could be a harbinger of a downturn in bitcoin’s overall performance. As a result, bitcoin miners may face increased pressure to keep their operations profitable.
Given the current situation, a significant increase in the price of Bitcoin is not only desirable, but critical to the survival of the mining industry. Only a surge to the aforementioned $98,000 mark will ensure that Bitcoin miners working at today’s levels of hashrate can remain profitable and weather the impending financial storm brought on by the halving event.
