Will Bitcoin Mining Stocks Crash After the Next Halving Event? Here’s What Happened Last Time

A Bitcoin (CRYPTO: BTC) halving even is likely to happen within just a few months. In previous halving events, that has typically resulted in a higher value of Bitcoin in the following months.

But what will the impact be on the stocks of companies that mine for Bitcoin? A halving event means that they will receive fewer Bitcoins, which, in turn, means less revenue for their operations — unless, of course, the digital currency rises in value and offsets those losses.

Does this mean crypto mining stocks could be headed lower this year? Here’s a look at what happened the last time there was a halving event.

Halving isn’t necessarily bad news for mining stocks

Mining companies earn Bitcoins, which are essentially rewards, for validating transactions. But because there is a finite supply of Bitcoin (21 million coins), there is a need to cut those rewards in half periodically. That has happened every four years, starting with 2012. The next event is likely to happen in April.

The last time a halving event occurred on May 11, 2020, here’s what happened to some of the more popular crypto mining stocks over the following 150 days:

 

Stock Price on May 11, 2020

Stock Price on Oct. 8, 2020

Return

Marathon Digital

$0.76

$2.14

182%

Riot Platforms

$1.59

$2.93

84%

Bitfarms

$0.42

$0.22

(47%)

Hut 8

$4.60

$3.69

(20%)

In the 150 days after the halving event, there is a significant disparity in how these popular crypto-mining stocks performed. Marathon Digital and Riot Platforms both generated significant returns, while Bitfarms and Hut 8 saw declines.

There were many factors to consider during that time frame (e.g. earnings reports, broader market developments, and COVID-19 relief bills) so it can be difficult to assess just how much weight the Bitcoin halving event had on their respective stock performances. And even Bitcoin’s price gain during that period is modest compared with how well Marathon and Riot performed.

MARA Chart

MARA data by YCharts

Story continues

There were no significant news developments relating to Marathon Digital that would have suggested it should have achieved significantly higher returns than its peers in August 2020….

..

Source

Recommended For You

About the Author: nftstocks

Leave a Reply

Your email address will not be published. Required fields are marked *