Buy Bitcoin Miners Ahead of the Halving, Bernstein Says

The “miner fear factor” is at its peak ahead of the imminent halving, and investors should buy outperform-rated Riot Platforms (RIOT) and CleanSpark (CLSK) because the market will reward these companies for their superior execution and for being market leaders by self-mining hashrate, broker Bernstein said in a research report on Wednesday.

Bernstein notes that mining stocks have continued to underperform bitcoin (BTC) year-to-date as the halving raised concerns over profitability once rewards are slashed by 50%. The quadrennial event slows the rate of growth in bitcoin supply and is due around April 19-20. Hashrate refers to the total combined computational power that is being used to mine and process transactions on a proof-of-work blockchain.

“Historically, bitcoin price breakout has always followed the halving event and sometimes a few months after halving,” analysts Gautam Chhugani and Mahika Sapra wrote.

“However, in the current 2024 cycle, the exchange-traded fund (ETF) approvals in January led to a strong price appreciation pre-halving,” the authors wrote, noting that bitcoin has dropped as much as 15% only in the last 10 days, following slower ETF inflows.

The broker said it expects bitcoin’s bullish trajectory to resume after the halving once the mining hashrates have adjusted to the lower rewards and ETF inflows resume.

The rollout of spot bitcoin ETFs by wirehouses and registered investment advisors (RIAs) “will continue to provide structural demand for bitcoin,” Bernstein said. “We continue to expect bitcoin to touch a cycle high of $150K by 2025.”