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Bitcoin Mining Stocks Plummet as Miners Face Reduced Revenue Post Halving

Bitcoin mining firms are witnessing a notable drop in their stock values amidst dwindling revenue prospects attributed to an impending code upgrade for the leading cryptocurrency.

Entities like Marathon Digital Holdings Inc., Riot Blockchain Inc., and CleanSpark Inc. have observed consecutive declines in their stock prices over a three-day period.

Similarly, the Valkyrie Bitcoin Miners exchange-traded fund has experienced a downturn of around 28% this month.

Geopolitical Tensions Further Pressure Mining Stocks

The decline in Bitcoin mining stocks is exacerbated by the rising short interest in crypto-mining equities and recent geopolitical strains.

Iran’s retaliatory strike against Israel over the weekend has instigated a move towards a risk-averse atmosphere among investors.

Nevertheless, despite these obstacles, the CEOs of these mining enterprises maintain a positive outlook on the future. They emphasize factors such as cost-effective operations, enhanced equipment efficiency, and increasing cryptocurrency demand as potential mitigating factors against the projected revenue declines from the impending software update.

Jason Les, Riot Blockchain’s CEO, conveyed his unwavering confidence in Bitcoin’s long-term potential.

“In a recent Bloomberg Television interview, I mentioned that Riot is firmly committed to the long term. Our investment thesis on Bitcoin remains robust, and I foresee a highly positive trajectory for Bitcoin in the coming months,” stated Jason Les.

Bitcoin mining is an energy-intensive process involving specialized computers validating transactions on the blockchain to earn token rewards. The primary revenue stream for miners is these rewards, which undergo halving every four years. The upcoming halving, the fourth since 2012, will cut daily Bitcoin reward production from 900 tokens to 450.

Increased Demand Could Mitigate Negative Impact of Halving

Miners are optimistic that the increased demand stemming from new spot exchange-traded funds (ETFs) will help counterbalance the negative effects of the halving by propelling Bitcoin prices upward.

Since the introduction of these ETFs by traditional asset management firms in January, the digital asset has witnessed significant expansion, drawing in billions of dollars from a broader spectrum of investors beyond the cryptocurrency community.

Tyler Page, CEO of Cipher Mining, remarked, “Predicting Bitcoin prices in the short term is quite challenging. However, over the span of years, we’ve witnessed a consistent trend of adoption… We remain highly optimistic about the network’s adoption.”

Kris Marszalek, CEO of Crypto.com, has acknowledged the potential for selling pressure in the short term due to the “buy-the-rumor, sell-the-news” trading phenomenon surrounding the halving.

However, he stressed that the halving will yield significant positive effects on the market in the long run. “Over a longer period, the halving will make a substantial difference and is a positive development for the market,” Marszalek emphasized.

Last week, Marathon CEO Fred Thiel suggested that Bitcoin’s highly anticipated “halving” event may already be partially priced into the market.

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