Bet Against Bitcoin Miners Stands at $2BN

Image © Adobe Images

Crypto miners are expected to feel the sting of the Bitcoin halving, with the industry seeing revenues potentially falling by roughly $10 billion a year, according to a new analysis.

Lukman Otunuga, Senior Market Analyst at FXTM, says those miners who want to stay in the game will need to adapt quickly to remain operational and profitable.

"Mining rewards are essentially halved while the costs of running could remain the same or even go up. Such a development may result in a massive shakeup for the industry, forcing miners to modify their business models to counter the impacts of halving. Marathon Digital, one of the largest U.S. Bitcoin mining companies, is already making moves to keep costs low post-halving," says Otunuga.

The Bitcoin halving happens roughly every four years, the latest of which is expected this week, is a change in bitcoin's underlying blockchain technology designed to reduce the rate at which new bitcoins are created in order to limit supply to 21 million tokens.

At the halving, the amount of bitcoin available as rewards for miners is cut in half.

Markets are betting heavily against miners in anticipation of reduced revenues, with the total short interest in 15 crypto-mining stocks almost $2BN, according to FXTM.

"It is safe to say that sentiment is bearish. A hefty $867.4 million of these bearish bets are focused on Marathon Digital which has seen its shares fall almost 50% since the start of 2024," says Otunuga. "Everything is on the table with crypto mining stocks set for potential big moves."

The halving does, nevertheless, create a prop for Bitcoin value, which in turn underpins the wider market.

Alex Kuptsikevich, senior market analyst at FxPro says the crypto market was relatively quick to digest the sell-off that gripped markets following Israel's attack on Iran. The capitalisation rose 4.7% in 24 hours to $2.33 trillion, but this is down from $2.62 trillion seven days earlier.

"Halving and strong technical support are supporting a 'buy on dips' pattern in Bitcoin, and this is affecting the rest of the cryptocurrencies. The halving will take place on Saturday night. The technical picture now suggests that BTCUSD is successfully holding within a corrective pattern, finding support on dips to the 61.8% Fibonacci retracement level of the rally from the January lows," says Kuptsikevich.

He cautions that bullish positions are not as strong as they were earlier in the month, with the 50-day moving average acting as resistance. "A strong rally above $67 will be needed to overcome this bearish signal".