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Bitcoin Miners Are Overvalued Warns Analyst, Stocks Could Plummet Further
- Bitcoin mining stocks have taken a hit over the past few weeks, amid BTC’s price slide and the impending supply drop cutting profitability.
- Anthony Power warns that mining stocks could fall further – but this may present a buying opportunity for savvy investors.
- He believes that in the long-term, Bitcoin mining will recover from the current bearish conditions, especially once the halving has been properly priced-in.
The Bitcoin halving event is almost within our grasp – and its potential impact on the industry is being hotly debated. As the market succumbs to freefall in the buildup, many are wondering whether the supply shock will halt the BTC decline. However, the influence of Bitcoin’s halving will extend far beyond price action, with one part of the industry set for a significant shake-up. Miners will have their block rewards slashed in half, forever changing the landscape of Bitcoin mining. And with the coin dropping in value, the profitability of mining operations is set to take a big hit – but just how big will it be?
Related: Banks Want to Buy BTC from Miners, Indicating Supply Shortage, Says Hut8 Mining CEO
Mining Companies Set for Turbulent Waters…For Now
In a podcast released on YouTube, analyst Anthony Power interrogated the current state of Bitcoin mining ahead of this week’s block reward halving. Power looked at some of the industry’s most prominent mining companies – particularly those based in the United States – to determine their true value amid tumbling stock prices across the board.
It makes sense that the market is jumping ship from mining stocks. Bitcoin has fallen well below its all-time high, and the halving event will only make mining earnings harder to come by in the near future. So, unless BTC turns things around in the next month or two, mining stocks may continue to slide. But what about the future?
Power actually believes that mining stocks aren’t in that bad of a position. In fact, he contends the current correction presents an excellent buying opportunity, making several interesting arguments:
- Bitcoin has fallen close to 20% from its all-time high – yet is still trading over USD $60K (AUD $93K). It’s easy to be a prisoner of the moment, but only a few months ago BTC was struggling to break out of $40K (AUD $62K). Ultimately, 2024 has been a strong Bitcoin market.
- The BTC halving juxtaposed with a short-term price correction is the primary reason for mining stocks’ struggles. Once the dust settles from the halving and (if) BTC retraces all-time highs, mining companies may be quick to rebound.
- The current drop in price for many mining stocks has created a value “mismatch” between their net assets and the company’s share price. Several have a ratio of above 3:1.
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No matter what happens, the outcome of the biggest Bitcoin halving to date is set to make waves throughout the crypto industry.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
