Predictions continue to surface that Bitcoin (BTC) will reach a six-figure price by the end of next year, despite recent price fluctuations causing BTC to lose the $30,000 level. However, for publicly-listed Bitcoin miners, a price above $100,000 may be more of a necessity than a mere forecast if they want to remain profitable.
Bitcoin mining stocks have been performing exceptionally well this year, outperforming BTC itself over the past few months. While BTC has experienced reduced volatility and consolidation, stocks of Bitcoin mining companies have surged by nearly 100% in just a matter of months.
A recent report by “Made Easy – Finance” on Seeking Alpha delves into this subject by examining one popular miner, Riot Platforms, Inc. (RIOT). Despite RIOT’s plans to triple its mining capacity in 2024, the report emphasizes that the company, along with other Bitcoin miners, could face serious challenges due to the upcoming halving. As the block rewards for miners decrease by 50%, their main source of revenue will be cut in half.
Furthermore, miners like RIOT have the option to issue new equity shares to fund their operations. However, this dilutes existing shares and may hinder the share price from keeping pace with the company’s underlying fundamentals, even if they are sustained.
Considering these factors, along with the possibility that many miners are already overvalued at current levels, the outlook for public Bitcoin mining stocks appears less favorable. Although these stocks have outperformed BTC in 2023, increased BTC flows to exchanges suggest a potential decline in momentum.
To sustain their profitability at current hash rate levels, miners will require a significant increase in Bitcoin’s price. According to a report, the price would need to surpass $98,000 to justify RIOT’s current valuation after the halving.
The report warns that holding BTC mining stocks is extremely risky as current valuations may not account for the upcoming halving. It suggests that investors should be cautious and assess whether the underlying fundamentals align with the current valuations.
In a separate report, Matrixport predicts that BTC could reach $45,000 by the end of this year and soar to $125,000 by the end of 2024. The report highlights the significance of BTC reaching a one-year high for the first time in a year, which historically signals the end of bear markets and the beginning of new bull markets. Based on previous patterns, there is a 100% probability of another massive bull market materializing by the end of 2024.
The prediction of a six-figure Bitcoin price aligns with other forecasts, including Standard Chartered’s forecast of a $120,000 Bitcoin price by the end of 2024. Interestingly, Standard Chartered’s forecast is largely based on BTC miners refraining from selling their Bitcoin before the halving.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making financial decisions.