Bitcoin (BTC) mining companies such as Riot Platforms (RIOT) and Marathon Digital (MARA) are racing to make money before a “halving” event occurs, which is when the rewards for producing cryptocurrencies are cut in half.
Crypto miners and their stocks have been performing well this year as prices for digital coins and tokens have skyrocketed, with the price of Bitcoin more than doubling to $36,000 U.S.
Now, mining companies are scrambling to lock in profits before Bitcoin’s next halving event occurs in April 2024.
Halving events are designed to slow the release of Bitcoin, whose supply is capped at 21 million tokens, of which 19 million have already been mined.
Industry data shows that Bitcoin’s hashrate, a measure of the computing power needed to mine a single coin, is currently at an all-time high, meaning miners are working overtime to secure their supply of the largest cryptocurrency by market capitalization.
Analysts at JPMorgan Chase (JPM) have estimated that Bitcoin’s hashrate has hit record highs for 11 consecutive months, including the biggest surge ever seen that occurred in October of this year.
Miners use ultra-powerful computers to crack the puzzles and math equations needed for them to mint a new coin.
With six months until their rewards for minting new Bitcoin are cut in half, miners are working overtime to mint new tokens and keep their margins from declining.
April 2024 will mark the fourth halving event for Bitcoin. The previous halving event that occurred in 2020 brought down miner rewards to 6.25 Bitcoin per block, and the upcoming one is set to push it down to 3.125.
Bitcoin prices have rallied after past halving events. Six months after the first halving in 2012, the price of Bitcoin rose to $126 U.S. from $12 U.S.
After the last halving in 2020, Bitcoin’s price rose to $18,040 U.S. from $8,570 U.S. after about six months.
Riot Platforms’ stock has gained 190% this year and currently trades at $9.79 U.S. per share. The stock of Marathon Digital has risen 170% year-to-date and trades at $9.18 U.S. a share.
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