Approximately every four years Bitcoin (BTC-USD) Mining companies are eagerly anticipating the halving event. According to the latest estimates, the closest one could be in April 2024, when miners' remuneration will be cut twice, putting pressure on mining companies' margins. This could also lead to a decline in the value of major cryptocurrencies, which could have a negative impact on crypto stocks that sell ahead of Bitcoin's halving.
Hut 8 (HUT-USD)
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In Canada's majestic landscape, Hut 8 Mining Corporation(NASDAQ:hut) Facility. This climate allows cooling costs to be kept to a minimum. Hydroelectric and nuclear power plants provide electricity and make mining more cost-effective and environmentally friendly.
The company focuses on mining digital assets, mainly Bitcoin. Data center services and support for other miners are also part of Hut 8's profit margin, but the ready-made business line is still related to the mining of the first cryptocurrency. Therefore, the prosperity of the company directly depends on the market conditions and the exchange rate of the coins.
Since its inception, the company has gained experience in unfavorable conditions. The halving in 2020 and the subsequent drop in cryptocurrency prices left a huge mark on its history. The company's stock has increased 13% over the past year, but is still down from its 52-week high. Increased trading activity shows that there is demand from investors. They were focused on the company's recent power plant acquisitions, but may have missed the impact of the Bitcoin halving.
For now, things may look rosy. A high market capitalization of $1.2 billion, the construction of a new digital asset mining site in Texas, and an optimistic two-week stock price chart should reassure holders of this asset.
Nevertheless, HUT is one of the crypto stocks to sell before Bitcoin halving due to weaker reserves compared to previous halving events. After the reward for mining a new block was halved from 12.5 BTC to 6.25 BTC in May 2020, it was only the company's operational activity that compensated for the drop in profitability. In 2024, Hut8 has a stable stock price and he hasn't diversified his earnings enough to get through April.
It is also worth noting that the company trades in a competitive environment and cannot guarantee that Bitcoin corrections will not coincide with coin sales.
Riot Platform (RIOT)
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Blockchain technology is at the heart of this riot platform (NASDAQ:riot) universe. Until 2023, the company was called Riot Blockchain, and the rebrand affected both its focus on blockchain platforms and its brand positioning. What remained constant was the presence of Bitcoin mining in the company's revenue structure. The project's mining capacity has increased over the years as Riot has chosen to increase its share of the Bitcoin network's hashrate. To this end, the company is constantly optimizing its processes and purchasing new equipment.
From 2017 to the last halving, RIOT fell over 97% to $1.14. Issues with the Securities and Exchange Commission (SEC) reinforced the impression that the company was a significant debtor. For example, in 2018, his net loss amounted to $60.2 million.
The company continues to face financial challenges. In 2024, we are struggling with rising costs and strategic uncertainty. The cost of Bitcoin mining is rising, and the rewards for this work are set to be cut in half in the coming weeks. Strategically, the company is working towards his hashrate of 100 exahash operations per second (EH/s). The downside to this plan is that equipment depreciation can double after the halving.
In less than two years, Riot's cost of doing business per Bitcoin mined has increased by 2.5x. In Q4 2021, this figure was $44,400 and in Q3 2023, it was $110,000. If this trend continues, RIOT could reach a stalemate, which is why it is one of the crypto stocks to sell before the Bitcoin halving.
Canaan Creative Co., Ltd. (CAN)
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The words “mining” and “artificial intelligence” are mainly used to Canaan Co., Ltd. (NASDAQ:can). The company develops high-performance microchips that meet the needs of these fields, and (as its mission statement states) seeks to apply that technology to enrich society.
After falling below $2 in 2020, the company's stock has soared to more than $34. This rise in 2021 was not repeated during the initial AI hype. CAN has gradually fallen to its current level (near $1.5).
Four years ago, experts also warned that CAN was one of the crypto stocks to sell before Bitcoin halved. 2020 brought challenges for Canaan in the form of logistics disruptions around the Lunar New Year, a 48% decline in cash reserves, and a decline in overall investment attractiveness. Net losses reached $5.6 million in early 2020, prompting investors to consider investing in other companies.
Spring 2024 welcomes the company with a tense geopolitical situation. Canaan's location in China has not affected the company due to changes in supply chains and increasing bans imposed by Western countries. Although the coronavirus is no longer as damaging as it was in 2020, competition from powerful players and the impending Bitcoin halving could result in unpleasant surprises for CAN holders.
On the date of publication, Julia Magas did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
