Bitcoin.Photo: depositphotos.
Six months after the halving of the fee for confirming transactions on the bitcoin network, crypto mining companies are forced to adapt their strategies to maintain viability. According to Bloomberg, bitcoin miners such as MARA Holdings, Riot Platforms, and CleanSpark are trying to find a balance between storing cryptocurrency and investing in new technologies.
Two ways to survive
Following a blockchain software update in April that led to a halving event – an event that reduces miners’ rewards by 50% every four years – the industry has found itself at a crossroads. The main purpose of halving is to control bitcoin inflation, which limits the total number of coins to 21 million.
Midstream analyst Wolfie Zhao notes that the decline in yields encourages miners to hold bitcoin in anticipation of higher prices. This allows them to keep potential losses unrealised, which in the case of a positive market can lead to gains. Instead, some companies are investing in data processing infrastructure, focusing on the growing demand for artificial intelligence (AI).
Stocks fall and AI investments
Despite the fact that most public companies have lost 20-36% of their value in 2023 and their shares do not track the growth of bitcoin, traders prefer companies that invest in AI. For example, Core Scientific, which recovered from bankruptcy, recorded an increase in shares after announcing a multibillion-dollar contract with CoreWeave, which is engaged in AI technologies.
Is mining profitable?
Despite the difficulties, some large miners, such as MARA and CleanSpark, continue to make a profit. Paul Golding, a senior analyst at Macquarie Capital USA, emphasises that due to the increased efficiency of hardware and the potential growth of the bitcoin exchange rate, miners remain viable even after the halving.
Currently, the buy-and-hold strategy has gained popularity among bitcoin miners. Although it can be profitable in a rising price environment, the risks are high. Ethan Vera, Chief Operating Officer at Luxor Technology, warns that this strategy can be catastrophic in the event of a sharp drop in bitcoin prices. Experience shows that flexibility and adaptation to new conditions remain key to survival in this dynamic industry.
