Why Bitcoin's 2024 Halving Could Benefit Michael Saylor's MicroStrategy, But Not So Much The Miners

Berenberg Capital Market has presented a compelling bull case for Microstrategy Inc MSTR, the Virginia-based software company helmed by Michael Saylor. 

What Happened: With a price target of $430 for Microstrategy, Berenberg Capital Market wrote in a research note, seen by The Block, that the company’s substantial value derived from its extensive Bitcoin holdings, which currently exceed 150,000 BTC. 

The research note posits that the established historical pattern of Bitcoin BTC/USD surging after halving events is likely to repeat, bolstering Microstrategy’s prospects.

Bitcoin halvings are periodic occurrences that reduce the rate of new coin issuance by 50%, effectively slowing down the pace at which fresh tokens enter the market. The fourth Bitcoin halving is anticipated to take place on April 26, 2024. 

Berenberg Capital Market emphasizes that if the historical trend observed after the previous three halvings persist, a pre-halving rally could commence in approximately four months.

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Why It Matters: The firm states, “If a rally were to occur after the fourth halving, and if it were as long-lived as the rallies that occurred after the past couple of halvings, then it would continue until around October 2025.”

According to a report by Bloomberg on July 8, the upcoming Bitcoin halving could have a detrimental effect on miner profits. 

Jaran Mellerud, a crypto mining analyst at Hashrate Index, revealed that nearly half of Bitcoin miners currently operate with suboptimal efficiency. As a result, these miners are expected to face significant challenges following the halving event. Mellerud explained that the break-even electricity price for the most common mining machines is projected to decrease from $0.12/kilowatt-hour to $0.06/kWh after the halving. 

However, approximately 40% of BTC miners operate at costs higher than $0.06/kWh, leaving them particularly vulnerable to the halving’s impact. This situation could particularly affect miners with operating costs above $0.08/kWh and those who do not possess their mining rigs.

Price Action: MicroStrategy shares continued their upward trajectory on Monday, recording a 7.1% increase and closing the day at $407.71. Bitcoin was seen trading at $30,367.71 at the time of publishing, according to Benzinga Pro data.

Photo Courtesy: Shutterstock.com

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