Bitcoin miners brace for earnings, analyst sees buying opportunity

H.C. Wainwright & Co. recently released its latest Bitcoin mining update, showing a mixed performance for miners during the third quarter, impacted by broader market uncertainties and the approaching April 2024 Bitcoin halving event.

According to the analyst note shared with crypto.news, Bitcoin (BTC) prices remained volatile throughout Q3 2024, affected by concerns surrounding the U.S. economy, international tensions, and the upcoming presidential election.

After falling to a low of $49,100 in August, BTC prices rebounded following the Federal Reserve’s decision to cut interest rates in September. This rate cut, the first in four years, ignited a rally that pushed BTC prices to approximately $63,250 by the end of the quarter.

Spot Bitcoin ETFs

A key driver of demand for Bitcoin was the surge in U.S.-based spot Bitcoin ETFs, which saw net inflows of $4.3 billion in Q3, up from $2.4 billion in Q2. Notably, a third of these inflows occurred in just eight days following the Fed’s rate cut. Analysts anticipate that the upcoming U.S. presidential election, set for November 5, could have a significant impact on BTC prices. A victory for Donald Trump is expected to push Bitcoin to new highs, while a win for Vice President Kamala Harris might lead to a short-term price correction.

Bitcoin Miner Operations

Public Bitcoin miners ramped up their operations in Q3, adding 35 exahashes per second to the global network hash rate—representing a 4.5% increase from the previous quarter. However, miners faced challenges due to the upcoming Bitcoin halving in April 2024. The halving, which occurs every four years, cuts the reward miners receive by half, making mining less profitable unless Bitcoin prices rise.

Bitcoin halving is a key feature of Bitcoin’s design, aimed at controlling inflation and ensuring that the total supply never exceeds 21 million BTC. Following a halving, miners need to become more efficient or rely on higher Bitcoin prices to maintain profitability.

Despite these challenges, miner revenues dropped 29% in Q3, falling to $2.6 billion, with the average earnings per terahash decreasing significantly. However, analysts see potential opportunities in the sector. The combined market capitalization of public BTC miners fell by 7%, signaling a possible buying opportunity, especially given that the sector has already rebounded by 12% in the current quarter.

With earnings season for miners now underway, market watchers are closely monitoring how these companies perform, especially as BTC prices surge above $73,000 this week.