To The Moon

Bitcoin is one year away from a major technical event. History suggests the start of another bull run.

History shows the cryptocurrency tends to perform well in the run-up to its so-called “halving.”

The bitcoin halving, which occurs every four years, reduces rewards for successfully mining new bitcoin by 50%. The aim is to reduce the supply of bitcoin over time.

Before the last halving, on May 11, 2020, the price of bitcoin increased by 19% from the same day a year earlier.

Halving is not the only factor impacting price, but it’s an important event for investors and core to the investment case for bitcoin as a store of value with limited supply.

The 2024 halving will likely occur between February 2024 and June 2024.

I am writing this article to share on how we can take this opportunity to benefit for a potential rise in Bitcoin price and what Bitcoin halving entails and the impact it has on crypto stocks.

Understanding Bitcoin Halving

Bitcoin halving, also known as the "halvening," is a pre-programmed event that occurs approximately every four years.

It is a mechanism built into Bitcoin's code that reduces the rate at which new Bitcoins are created. More specifically, the number of new Bitcoins generated through mining is halved.

The halving occurs after every 210,000 blocks, which is roughly equivalent to four years, given the Bitcoin network's block generation time of around 10 minutes.

The initial reward for mining a block was 50 Bitcoins, and it has gone through two halvings so far, reducing the block reward to 25 Bitcoins in 2012 and then to 12.5 Bitcoins in 2016.

The most recent halving took place in May 2020, reducing the reward to 6.25 Bitcoins per block.

The next one is expected to happen between Feb to Jun 2024.

Impact on Bitcoin Price

Historically, Bitcoin halving events have had a significant impact on the price of Bitcoin.

The reduction in block rewards effectively reduces the rate of new Bitcoin supply entering the market. With a fixed supply of 21 million Bitcoins, halving acts as a mechanism to control inflation and create scarcity.

The reduced supply, combined with consistent or growing demand, often leads to a supply-demand imbalance that tends to drive the price of Bitcoin upward.

This effect has been observed in previous halvings, with substantial price rallies occurring both before and after the event.

However, it is essential to note that past performance does not guarantee future results, and Bitcoin's price is influenced by numerous factors beyond the halving.

Impact on Crypto Stocks

While Bitcoin halving directly affects the Bitcoin market, its impact extends to the broader crypto ecosystem, including crypto stocks.

Crypto stocks are shares of companies that operate in the cryptocurrency industry, such as crypto exchanges, mining hardware manufacturers, and blockchain technology providers.

The relationship between Bitcoin halving and crypto stocks is not necessarily straightforward. On one hand, the increased attention and excitement surrounding Bitcoin halving may drive investor interest in the broader crypto sector.

This heightened interest can lead to increased investment in crypto stocks as individuals seek exposure to the potential benefits of Bitcoin's price surge.

Additionally, the increased price of Bitcoin following halving events can benefit crypto-related companies. For instance, mining hardware manufacturers may experience higher demand for their products as miners seek to capitalize on the reduced block rewards.

Similarly, crypto exchanges may witness increased trading volumes and user activity, potentially driving revenue growth.

On the other hand, the impact on crypto stocks may vary depending on the specific company and its business model.

Some crypto-related companies may be more directly influenced by Bitcoin's price movements, while others may derive value from other aspects of the crypto market, such as blockchain technology development or providing specific services.

Bitcoin Operational Updates For MARA, RIOT, HUT as of June 2023

$Marathon Digital Holdings Inc(MARA)$

If we look at the Bitcoin reserve of these major miners who listed. We can see that MARA has a better hash rate and the bitcoin produced is the highest among the 4.

This is what I would expect MARA to increase their capacity to mine more Bitcoin and looking at their reserve (12,538 BTC), it looks like MARA does not need to offload their BTC to pay off their debt.

This is how MARA FA look like.

Cash capability is something we need to look at when Bitcoin halving comes and happen, this would be important for the company to be able to do medium/long term financing.

MARA Cash capability have improved significant as of its last financial report for Mar 2023, I would believe the next earnings report would be better.

$Riot Blockchain, Inc.(RIOT)$

The public listed crypto miner would be RIOT, it has a pretty good hash rate which should enable them to produce more BTC to increase their reserve prior to Bitcoin halving in 2024.

This would mean we need to see how their current cash capability stands and whether they have the mean to increase their production means.

This is how RIOT FA look like.

RIOT has a good cash capability which I hope they can put in use to increase their production prior to Bitcoin halving. This would be a good chance to catch up before 2024 where we will see more and more smaller miners being pushed out of market.

$Hut 8 Mining Corp(HUT)$

HUT has the second largest bitcoin reserve among the 4 crypto stocks I am monitoring, and what is worrying is their low hash rate and low bitcoin produced in June 2023.

This could be due to the earlier issue faced in their Alberta facility, I will look at their July operational updates to see if their hash rate can be improved and also more bitcoin to be produced.

What is still exciting is HUT has quite a high bitcoin reserve which they can take advantage of the increase of Bitcoin price which is coming pretty soon.

This is how HUT FA look like.

HUT has their cash capability and profitability improved and keep stable. This would be useful for them as they have just recovered from one of their facilities.

I think their July operational report would be improvement to see if there is an improvement of their BTC hash rate and more bitcoin produced.

Summary

Bitcoin halving is a significant event within the cryptocurrency world that has far-reaching effects. It directly impacts the supply and demand dynamics of Bitcoin and often results in price rallies. While the primary impact is on Bitcoin itself, the event can also influence the broader crypto market, including crypto stocks.

As we have explore these 3 crypto stocks, MARA, RIOT, HUT and how the bitcoin halving would have positive or negative impact on them.

We should approach Bitcoin halving and its potential impact on crypto stocks with caution. It is crucial to conduct thorough research, consider the specific business models of the companies in question, and be aware of the inherent volatility and risks associated with the cryptocurrency market.

Appreciate if you could share your thoughts in the comment section whether you think Bitcoin Halving would provide long term benefit to crypto stocks?

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.)