Analyst identifies buying opportunity as Bitcoin miners prepare for earnings
H.C. Wainwright & Co. has unveiled its latest report on Bitcoin mining, revealing a mixed third quarter for miners impacted by wider market uncertainties and the upcoming April 2024 Bitcoin halving.
According to the analyst note shared with crypto.news, Bitcoin (BTC) prices experienced volatility throughout Q3 2024, influenced by concerns about the U.S. economy, international tensions, and the upcoming presidential election.
After reaching a low of $49,100 in August, BTC prices rebounded following the Federal Reserve’s decision to cut interest rates in September. This rate cut, the first in four years, sparked a rally that pushed BTC to around $63,250 by the end of the quarter.
A significant driver of demand was U.S.-based spot Bitcoin ETFs, which saw net inflows of $4.3 billion during Q3, up from $2.4 billion in Q2, according to the analysts. One-third of these inflows occurred within just eight days following the Fed’s rate cut. Analysts anticipate that the upcoming election on November 5 will have a major impact on BTC prices. They predict that a Trump victory could push BTC to new highs, while a win by Vice President Harris might lead to a short-term price correction.
Bitcoin miner operations expanded significantly in Q3, with public miners adding 35 exahashes per second to the global network hash rate, resulting in a 4.5% increase from the previous quarter. However, miners faced challenges due to the April 2024 Bitcoin halving. This event, which takes place every four years, cuts the reward miners receive by half, making it more difficult to profit from mining.
For those unfamiliar, Bitcoin halving refers to the reduction in the number of new Bitcoins miners earn for adding new blocks to the blockchain. This is part of Bitcoin’s design to control inflation and ensure that there will never be more than 21 million Bitcoins in circulation. As a result, miners must become more efficient or rely on higher Bitcoin prices to remain profitable.
Despite these obstacles, miner revenues declined by 29% in Q3 to $2.6 billion, with the average price miners earned per terahash dropping significantly. However, analysts see opportunities on the horizon. The combined market capitalization of public BTC miners decreased by 7%, indicating a potential buying opportunity for investors, especially as the sector has already rebounded by 12% in the current quarter, according to analysts.
With earnings season for miners commencing this week, all eyes will be on how companies perform, particularly as BTC surges to over $73,000 this week.
