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Which Crypto Stocks Could Surge with the Bitcoin Halving?

The bitcoin halving event in April, which cuts the mining reward in half, will produce both winners and losers. Here is a collection of crypto stocks to watch ahead of the event.

  • Riot Platforms has warned that the halving event may not be “favourable” for its profitability.
  • Cipher Mining believes it’ll be “one of the industry winners coming out of the halving”.
  • Core Scientific is “well-positioned heading into the halving” after strengthening its balance sheet.

As the bitcoin price hits record high after record high, MicroStrategy [MSTR] CEO Michael Saylor has continued to buy the cryptocurrency.

Just last week, Saylor purchased 9,245 bitcoins, taking his total holding to 214,246. This means he owns more than 1% of all the bitcoins in circulation, which, at the time of writing, comprise a total of approximately 19.7 million.

“I’m going to be buying the top forever. Bitcoin is the exit strategy. It is the strongest asset,” Saylor declared to Bloomberg TV in February. Unlike bitcoin, he added, the popular ‘magnificent seven’ stocks like Apple [AAPL], Google [GOOGL] and Microsoft [MSFT] don’t have the capital structure “to hold $10trn- or $100trn- worth of capital”.

MicroStrategy’s share price is up 478.4% over the past 12 months and up 141.1% year-to-date as of 25 March.

While the bitcoin price has cooled in the last couple of weeks, both Anthony Scaramucci, Founder and Managing Partner at SkyBridge Capital, and Dan Tapiero, Founder, CEO and Chief Investment Officer at 1Roundtable Partners and 10T Holdings, believe that the price could top $200,000 in the 18 months following the halving event.

Speaking at the Blockworks Digital Asset Summit in London last week, Tapiero said it was “reasonable” to assume this, because the bitcoin price has had a tendency of quadrupling following past halving events.

Ahead of the halving event, here are some other crypto stocks to keep an eye on.

Galaxy Digital’s AUM Milestone

Galaxy Digital’s [GLXY:TO] asset management unit reported a record $10.1bn in assets under management (AUM) in the month of February, a 24.8% increase from the month prior. Galaxy has attributed the surge to growing enthusiasm for digital assets among institutional investors.

Speaking to CNBC earlier in March, Galaxy Digital CEO Michael Novogratz cautioned investors that a bitcoin correction may be round the corner. However, he doesn’t expect the price to fall below $50,000–55,000. “I think that’s the new floor, unless something dramatic happens.”

The Galaxy Digital share price is up 206.1% in the past year and up 30.7% year-to-date.

Riot Platform’s Profitability Warning

Riot Platforms [RIOT] has warned its shareholders that there’s “no guarantee” that the bitcoin halving event will be favourable for its profitability.

“If a corresponding and proportionate increase in the price of bitcoin does not follow future halving events, the revenue we earn from our bitcoin mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial condition,” said the miner in its annual report, released at the end of February.

The Riot Platforms share price is up 20.4% in the past year, but down 26.3% year-to-date.

Cipher Mining’s Capacity Expansion

Cipher Mining [CIFR] boosted its capacity in January with the purchase of 16,700 mining rigs on “favourable” payment terms. The machines will be delivered in Q2 and will bring its self-mining capacity to approximately 8.4 exahashes per second.

“These expansions … position us for strong growth, and I expect Cipher to be one of the industry winners coming out of the halving,” said CEO Tyler Page in a press release.

The Cipher Mining share price is up 97.4% in the past year and up 11.9% year-to-date.

Core Scientific’s Strengthening Balance Sheet

Core Scientific [CORZ] has emerged from Chapter 11 “with a strengthened balance sheet”, the miner announced at the end of January. It followed a year-long restructuring process to reduce its debt by $400m, after falling bitcoin prices, soaring energy costs and unpaid debt from the beleaguered crypto lender Celsius had weighed on the company’s reserves.

A spokesperson for Core Scientific told Cointelegraph earlier in March that it’s “well-positioned heading into the halving”. The miner reported a net loss of $246.5m for 2023, a significant improvement on the $1.9bn loss in 2022.

Since relisting on the Nasdaq in late January, the Core Scientific share price is down 38.9%.

Another Way to Invest in Crypto

The Amplify Transformational Data Sharing ETF [BLOK] holds MicroStrategy, Galaxy Digital, Riot Platforms, Cipher Mining and Core Scientific as of 25 March. As of 31 December 2023, software and information technology services account for 29% and 21% of the portfolio respectively.

The fund is up 90% in the past year and up 16.9% year-to-date.

The Bitwise Crypto Industry Innovators ETF [BITQ] also holds all five stocks as of 21 March. As of 31 December 2023, mining accounts for 46.8% of the portfolio; trading & custody follows at 28.6% and infrastructure & hardware has been allocated 11.4%; treasury holding and asset management both have single-digit weightings.

The fund is up 122.9% in the past year and up 6.6% year-to-date.

Disclaimer Past performance is not a reliable indicator of future results.

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