Analyzing the top stocks to sell after Bitcoin halving, with insights into mining revenue and shareholder impact
the 4th Bitcoin (BTC-USD) The halving, scheduled for mid-April 2024, will have a major impact on the virtual currency market. Understanding how the halving affects Bitcoin price trends and cryptocurrency mining is important, especially when choosing which stocks to sell after the halving.
The three picks we explore focus on different niches. Two are crypto miners and one is a company that believes Bitcoin is better than gold. Assuming the price of Bitcoin remains stable, the two miners will see their profits decrease immediately after the halving. This is because miners performing the same amount of computing power will get fewer Bitcoins after the halving. Two other factors make the stock less attractive: shareholder dilution and declining Bitcoin production.
Microstrategy (MSTR)
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micro strategy (NASDAQ:MSTR) exemplifies the types of companies to look at when researching stocks to sell after a halving. Known for its aggressive stance in buying and holding Bitcoin, MSTR's aggressive, debt-fueled Bitcoin acquisition path will have a significant impact following the Bitcoin halving.
I'm starting to figure out the strategy. When MSTR issued a new $500 million convertible note in early March, the market reacted negatively. After the announcement, the company's stock price reportedly fell by 7%, indicating that investors are tired of borrowing money to accumulate digital assets.
However, MicroStrategy founder Michael Saylor remains an avid supporter of Bitcoin accumulation. He believes digital assets will “eat” gold. This is because gold has all the advantages of metals and none of the disadvantages.
With recent acquisitions, MicroStrategy now owns approximately 1% of all Bitcoins, or 214,246 Bitcoins. To put things into perspective, a total of 21 million Bitcoins are available for mining and 19.7 million are in circulation. Overexposure to any asset class is bad, but it's even worse when it's as volatile as Bitcoin.
short seller Kerrisdale Capital MicroStrategy has also criticized Bitcoin for being overvalued due to its large holdings. The investment firm claims that the soaring share price is a result of MicroStrategy's decision to value its Bitcoin assets at $177,000 per token, much higher than the current market price. According to Kerrisdale, there are more attractive investment options than MicroStrategy when it comes to digital asset exposure.
The report suggests MSTR stock is valued at $700 to $800 per share. This number is significantly lower than the most recent closing price of around $1,700.
Argo Blockchain (ARBK)
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algo blockchain (NASDAQ:ARBK) has the potential to be one of the biggest losers as mining efficiency slows at a critical juncture as we approach the Bitcoin halving event in mid-April.
ARBK revealed that daily Bitcoin production decreased by 20% in January. As a result, mining revenue decreased by 19% from $6.6 million in the previous quarter to $5.3 million in January.
A 16% drop in Bitcoin's hash price and, to a lesser extent, weather delays contributed to the decline.
It is worth noting that the increase in network difficulty and the reduction in transaction fees on the Bitcoin network caused the hash price to decline. These factors represent a difficult operating environment for miners. Changes in transaction fee income and network difficulty can have a significant impact on profitability. Given the current situation, things will not get better for Argo Blockchain even after the halving event.
Shareholder dilution is another major issue that Argo investors are dealing with. ARBK currently has 523.5 million shares outstanding, a significant increase from his 293.8 million shares as of December 2018. This is not a cryptocurrency-specific issue. Rather, it deals with management's growth strategy. However, with the market volatile ahead of Bitcoin's fourth “halving'' in April, this is a stock to sell.
Iris Energy (IREN)
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iris energy (NASDAQ:Airen) is in the same position as ARBK, suffering from a slowdown in Bitcoin production and significant shareholder dilution.
IREN mined 310 Bitcoins in February, compared to 341 Bitcoins mined in January. The operational hash rate was 7 exahash/second (EH/s) throughout the month.
Mining revenue increased from $14.5 million in January to $15.2 million this month. The main reasons for this increase in revenue are a higher average hash rate of 6.3 EH/s and an increase in the price of Bitcoin to $49.1,000. These factors suggest that although the amount of Bitcoin mined was lower, the value of the output was higher due to favorable market conditions.
IREN is also known for its use of equity issuance to drive organic growth. According to the latest report, there are 84.4 million shares outstanding, which is a 660% increase over the 11.1 million shares reported in June 2019.
Finally, not owning Bitcoin is probably another factor for investors to avoid IREN. These key holdings will likely benefit peers such as: riot blockchain (NASDAQ:riot), Marathon Digital Holdings (NASDAQ:Mara), and clean spark (NASDAQ:CLSK). All have large amounts of Bitcoin in their portfolios to supplement their mining activities. If a halving occurs, Bitcoin is expected to rise.
As a result, companies such as RIOT, MARA, and CLSK will benefit more from the halving event. This could make it a better investment than IREN.
On the date of publication, Faizan Farooq 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.
