Bitcoin mining stocks staged some monster rallies last year. But this year, they’ve cooled off a bit – and that’s despite bitcoin’s price rise. Here are three reasons why they might be building up for a brand-new surge.
1. The Bitcoin halving.
Miners are responsible for processing bitcoin transactions and securing the blockchain. And in return, they earn newly generated bitcoins. The fourth “halving” event will happen sometime between April 18th and April 20th – with the amount of bitcoin that miners earn per transaction block getting chopped in half. At first, that could hurt miners’ profitability – as their electricity costs to produce the same number of coins will roughly double. But after a few lean months, they could start bringing in more profits (if history is anything to go by).
The Bitcoin Production Cost Indicator from Capriole Investments explains this below. The bottom red line estimates the average electricity cost to mine a single bitcoin, while the middle purple line is the total cost (electricity plus operating costs). The green line is what miners sell their coins for. So the higher the green line is above the middle line, the more profit miners bank on average.
The Bitcoin Production Cost Indicator shows how bitcoin mining costs have changed over time. Source: Capriole Investments. Chart drawn with TradingView.
Now, the biggest gaps between the green and purple lines started nine months after the 2016 halving (yellow rectangle) and six months after the 2020 halving (blue rectangle). That’s mostly because the bitcoin price went higher (and stayed higher for a while) after each halving. Per the indicator, it now costs around $50,000 to mine a bitcoin – that’s made up of “variable” electricity costs ($30,000) and “fixed” operating costs ($20,000). Later this month, the variable electricity costs will roughly double to $60,000, putting the total cost around $80,000. So in theory, if bitcoin’s price can break above $80,000 (and stay above it for a while), miners could be in a good spot after the halving.
2. Decent bang for your buck.
Time will tell how the halving affects miners’ balance sheets. But right now, their stocks aren’t that expensive. The Valkyrie Bitcoin Miners ETF (ticker: WGMI; expense ratio: 0.75%) invests in about 35 companies involved in bitcoin mining. That includes publicly traded mining companies and businesses that work with miners in some way (for example, data center providers or mining hardware producers).
Investors pay less for company earnings (green bars), book value (blue), and sales (yellow) for WGMI than they do for US stocks in general (SPY), making them relatively cheap by those metrics. But in terms of what they’re paying for company cash flow generation (white), mining stocks are on the pricier side.
Financial ratios of the Valkyrie Bitcoin Miners ETF (WGMI) vs the SPDR S&P 500 ETF Trust (SPY). Source: Morningstar.
3. Interesting technicals.
Looking at WGMI’s price chart can give you a general sense of investor sentiment toward bitcoin mining stocks. Notice how the $18 to $20 area (green box) has been a kind of unbreakable ceiling (resistance) for the past year or so. But, the yellow trendline shows you that the price lows have been trending higher – and that leaves you with a potential ascending triangle pattern. Ascending triangles tend to break above the resistance more often than not.
Price chart analysis of the Valkyrie Bitcoin Miners ETF (WGMI). Chart drawn with TradingView.
The logic here is that sellers eventually get tired of defending the price ceiling, giving buyers the power to push the price through it. Of course, that scenario could fall to the wayside if the price now makes a lower low instead of a higher one – and the yellow trendline starts to give way. The blue 20-week simple moving average (SMA) tracks the ETF’s average closing price over the past 20 weeks. It’s sloping upward for now, giving the buyers the upper hand.
What’s the opportunity here?
Let’s be clear. Bitcoin mining stocks won’t do well if bitcoin keels over from here. But historically, halvings have boosted bitcoin’s price. They’re usually followed by a year or more of good times for miners, with the money just rolling in.
As for which mining stocks to go for, well, you could take investor John C. Bogle’s legendary advice: “Don’t look for the needle in the haystack. Just buy the haystack.” Some miners will do better than others after the halving, so it makes sense to spread your bets around. You might also consider dollar cost-averaging your buys: buying a set amount at set intervals could help you take advantage if prices dip lower in the short run.
For US investors, the Valkyrie Bitcoin Miners ETF (WGMI) could do the trick. But if you can’t access it where you live, you could try investing instead in a few of the fund’s mining stocks. The table below shows WGMI’s top five mining stock holdings. If it were me, I’d put the same amount of cash in each miner, just to dial back on company-specific risks (rather than trying to echo this fund’s percentages).
The top five bitcoin mining company holdings in the Valkyrie Bitcoin Miners ETF (WGMI).
FAQs
Marathon Digital Holdings (MARA)
Marathon Digital Holdings (NASDAQ:MARA) is perhaps the best-known crypto mining stock of all. Its shares are among the most well-established by price and currently trade around $20. However, they are quite volatile and have traded between $15 and $31 in 2024.
What is the best Bitcoin miner stock in 2024? ›
Marathon Digital Holdings (MARA)
Marathon Digital Holdings (NASDAQ:MARA) is perhaps the best-known crypto mining stock of all. Its shares are among the most well-established by price and currently trade around $20. However, they are quite volatile and have traded between $15 and $31 in 2024.
What will Bitcoin do in 2024? ›
The next Bitcoin halving is set for ~April 19, 2024, bringing opportunities and uncertainties for the Bitcoin community. This event, built into Bitcoin's foundational code, changes the rewards for miners and could significantly influence Bitcoin's value and role within the broader ecosystem.
How many bitcoins will a miner be able to add to a block around may 2024? ›
Fourth halving: The Bitcoin fourth halving is anticipated to occur around mid-April 2024, reducing the block reward from 6.25 Bitcoins to 3.125 Bitcoins per block.
What will happen after Bitcoin halving in 2024? ›
After the halving, the rate of issuance of new bitcoin as well as the rewards for successful bitcoin miners are cut in half. There can only be 21 million bitcoin, and fewer new tokens entering circulation could impact bitcoin prices. That's why the halving is watched closely by miners and investors alike.
Will crypto mining be profitable in 2024? ›
Bitcoin is the largest crypto by market capitalization and the most popular cryptocurrency to mine, with a reward of 6.25 BTC per block - although this halved in April 2024. Due to competition, you'll need a top-of-the-line mining rig to mine Bitcoin successfully, as well as to join a mining pool.
Are bitcoin mining stocks a good investment? ›
Historically, though, miners' profits have increased in the months after each halving (as bitcoin's price increased). According to popular financial ratios (price-to-earnings, price-to-sales, and price-to-book), bitcoin mining stocks could be trading at good value vs the general US stock market.
Is Bitcoin a good investment in 2024? ›
A recent report predicts that Bitcoin will reach a new all-time high in 2024. Bitcoin (BTC) is expected to reach a new record of $88,000 (€82,000) throughout the year, before it settles around $77,000 at the end of 2024, according to a new report. The cryptocurrency's current price sits at around $43,000.
Which crypto will explode in 2024? ›
Dogeverse (DOGEVERSE) – A multi-chain Doge token expected to boom in 2024. WienerAI (WAI) – A prime meme coin contender for explosive growth in 2024. Slothana (SLOTH) – A hot Solana meme token raising over $550K in a few hours. Mega Dice (DICE) – A popular crypto casino offers daily rewards to token holders.
How much will 1 Bitcoin be worth in 2024? ›
Bitcoin Price Prediction 2024 – 2025
The average price in 2024 is roughly $40,000. The average price in 2025 is expected to be near $49,000.
The total number of bitcoins that can be mined in a single block is fixed, currently at 6.25 BTC per block. However, the actual amount of bitcoins that can be mined by a single machine will depend on the machine's hashrate relative to the total hashrate of the entire Bitcoin network.
Who benefits from bitcoin mining? ›
Miners who successfully add blocks to a blockchain automatically receive transaction processing fees and new digital tokens. Creates economic opportunities. The accessibility of crypto mining is creating new business opportunities for tech-savvy people around the world.
What happens to Bitcoin mining every 4 years? ›
This reward is reduced by half every four years, hence the term halving. It's akin to a predictable, scheduled pay cut for these miners. Halving not only adjusts miners' rewards. It also reduces the rate at which new coins are created, decreasing the new supply and influencing the market value.
How much will Bitcoin be worth in the next 5 years? ›
Bitcoin (BTC) Price Prediction 2030
| Year | Price |
|---|
| 2025 | $ 65,537.06 |
| 2026 | $ 68,813.91 |
| 2027 | $ 72,254.60 |
| 2030 | $ 83,643.74 |
1 more rowThere are expected to be 64 Bitcoin halvings before the 21 million cap is reached sometime around 2140, at which point halvings will cease and the blockchain will stop issuing new tokens. When that happens, Bitcoin miners will have to rely on transaction fees, their other revenue source besides mining rewards.
How much will 1 ethereum be worth in 2030? ›
Ethereum (ETH) Price Prediction 2030
According to your price prediction input for Ethereum, the value of ETH may increase by +5% and reach $ 4,306.32 by 2030.
What is the best bitcoin miner to buy? ›
1. Bitmain Antminer S19j Pro+ – The best Bitcoin miner overall. The Bitmain Antminer S19j Pro+ is a BTC miner with a formidable mining capacity of 120 terahashes per second (TH/s). The high hashing power allows for swift and efficient Bitcoin mining, potentially leading to increased mining returns.
Which crypto mining gives highest return? ›
Historically, Bitcoin (BTC) has been one of the most lucrative cryptocurrencies to mine due to its high market value. However, other cryptocurrencies like Ethereum (ETH), Litecoin (LTC), and Monero (XMR) have also been profitable for miners, depending on market conditions and mining hardware efficiency.
How much does Antminer S19 make per day? ›
How much does Antminer S19 make per day? Antminer S19 Pro can reach 110 TH/s hashrate and 3250 W power consumption for mining BTC (SHA-256) earning around 28.62 USD per day.
