Bitcoin Miner CEOs Are Upbeat Ahead of the Halving, Expect M&A: Bernstein

Bitcoin (BTC) miners may have underperformed the cryptocurrency this year, but their CEOs remain upbeat as the reward halving approaches, broker Bernstein said in a research report on Monday.

The underperformance has been caused by strong moves in spot bitcoin and exchange-traded funds (ETFs), which have sucked "retail liquidity" from mining stocks, and by concerns about the impact of the halving on miner revenues, analysts Gautam Chhugani and Mahika Sapra wrote.

The quadrennial halving is when miner rewards are reduced, slowing the rate of growth in bitcoin supply. The next halving is due around April 19-20.

The broker interviewed the CEOs of Riot Platforms (RIOT), CleanSpark (CLSK), Marathon Digital (MARA), Cipher Mining (CIFR) and Hut 8 (HUT). The companies are in a relatively comfortable financial position this cycle and so are better prepared to withstand the impact of the halving, Bernstein said.

The "CEOs point to miner dollar revenues at all-time highs, providing a solid cushion to miners pre-halving," and they also noted the "relatively low debt on the balance sheet."

Some of the CEOs highlighted the potential for miner consolidation, the report said.

"The CEO of CleanSpark expects the industry to consolidate to 4 leading miners and believes RIOT, MARA, CLSK and CIFR to be in the lead," the note said, adding that the "CEO of MARA also highlighted a path to industry consolidation and named CLSK as their arch competitor in the race for acquisition targets."

Another notable change this time round has been application and layer 2 development on the Bitcoin blockchain, which has led to an increase in network fees that flow back to miners as incremental revenue streams, the report noted.

Riot and CleanSpark expect to have doubled capacity by the end of the year, which will offset any impact of the halving, the report added.

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