Following the recent drop in BTC’s price below $30,000, there have been numerous forecasts about Bitcoin (BTC) ‘s price action. Some analysts predict that it will trade at a six-figure value by the end of 2024.
However, many analysts noted that publicly traded Bitcoin miners might see this potential surge beyond $100,000 as more than just a prediction and more as a critical requirement for maintaining their profitability and business models.
How The Next Bitcoin Halving Will Affect Miners
This year has been remarkable for Bitcoin mining stocks. They have outperformed BTC by a significant margin in recent months.
While the leading digital asset experienced low volatility and a period of consolidation, stocks of Bitcoin mining companies soared to new highs, gaining nearly 100% in a few months. This massive rise in the price of Bitcoin mining stocks has attracted interest from investors and analysts.
In addition, the performance disparity between Bitcoin and its mining stocks has sparked debate in the crypto community. According to a recent study, the changing dynamics of the cryptocurrency mining landscape could be responsible for this difference.
Mining firms are in a good position as the demand for Bitcoin continues to rise. Bitcoin miners play an essential role in the network by verifying transactions and adding new blocks to the blockchain ecosystem.
Recent research by the on-chain analytics platform, Seeking Alpha states that BTC mining success or failure is more than an individual move. For instance, Riot (a Bitcoin mining firm) plans to triple its mining capacity by 2024, just one of the many moves made by crypto mining platforms.
While this expansion plan appears promising, it didn’t consider a potential stumbling block Riot and other Bitcoin miners may likely face – the halving event. This event occurs every four years and is designed to reduce BTC block rewards by 50%, effectively halving miners’ primary source of earnings.
Moreover, the anticipated drop in rewards will pose a significant challenge to companies such as Riot since it directly impacts their profitability. Accordingly, the report suggests that miners may need to adjust their strategies to remain profitable after the halving.
Miners In Post-Halving Era
Furthermore, the report provides a compelling view of how high the BTC price must rise to sustain miners’ current valuations. It stated that nearly $100,000 per Bitcoin may require miners to continue their operations without interruption after the halving.
According to the analysis, the Bitcoin market faces significant challenges unless it is positively affected by the positive performance of the broader cryptocurrency sector. Hence, there are doubts over whether Bitcoin miners will remain in business after the halving event.
Even with Riot’s ambitious plans to reach a hash rate of 35 EH/s, projections from their model indicate that Bitcoin’s price must exceed $98,000 post-halving for this prediction to become a reality. Meanwhile, the report warned investors about “holding” BTC mining stocks, stating that such an investment strategy has harmful implications.
The report also raises concern that these mining stocks’ current valuations may not accurately reflect the potential impact of next year’s Bitcoin halving on their underlying fundamentals. The report “Matrix on Target: Prepare for the Soaring 2024 Year-End Bitcoin Target of $125,000” also offers intriguing insights into the potential price trajectory for Bitcoin.
The Matrix report projects a $45,000 year-end price for BTC and a $125,000 price by the end of 2024 for BTC. Meanwhile, this report’s six-figure Bitcoin price prediction is consistent with other market analysts’ forecasts.
Notably, financial institution Standard Chartered has also predicted that BTC’s price would trade at $120,000 by the end of 2024. Nevertheless, this upbeat outlook heavily relies on the actions of Bitcoin miners, specifically whether they decide to hold or sell their Bitcoin holdings before the upcoming halving event.
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