The highly anticipated Bitcoin [BTC] halving, scheduled for April 2024, holds significant importance as it is projected to generate increased gains for the overall market. The Bitcoin bulls, including Michael Saylor’s MicroStrategy, are expected to be the primary beneficiaries of this event. The value of MicroStrategy’s BTC holdings is likely to rise. Alongside, the company’s stock [MSTR] is also anticipated to experience an upward trend.
Berenberg Capital Markets, an investment firm based in New York, has issued a positive forecast for MicroStrategy. They have set a price target of $430 for Saylor’s firm. At present, MicroStrategy shares are trading at $408, demonstrating growth of approximately 180% since the start of 2023.
MicroStrategy derives its value from a substantial amount of Bitcoin holding, totaling around 152,333 BTC. Berenberg suggested that a rally resulting from the Bitcoin halving could lead to an increase in the price of MicroStrategy shares. The investment firm added,
“[It] is our expectation that the price of Bitcoin will repeat its historical pattern of rallying both ahead of and following each Bitcoin halving.”
A majority of the predictions regarding Bitcoin after the halving show a positive trajectory. However, there is a particular group of entities in the market that may face challenges.
Here’s why the halving won’t be all that bullish for miners
Significant concerns have arisen regarding the Bitcoin mining economics preceding the upcoming halving. Jaran Mellerud, a crypto-mining analyst at Hashrate Index, foresees that the increased costs associated with the mining process will have a notable effect on the majority of miners. He said,
“Nearly half of the miners will suffer given they have less efficient mining operations with higher costs.”
According to Mellerud, the break-even electricity price for the typical mining machine is projected to decrease from $0.12 per kilowatt-hour [kWh] to $0.06/kWh following the halving. However, he noted that about 40% of Bitcoin miners operate at a higher cost per kWh than $0.06/kWh.
As a result, miners with operating costs exceeding $0.08/kWh. Additionally, miners who do not possess their own mining rigs are expected to face significant consequences as a result of the halving. Wolfie Zhao, head of research at TheMinerMag chimed to this notion as well. Zhao said,
“If you count in everything, the total cost for certain miners is well above Bitcoin’s current price. Net profits will turn negative for many miners with less efficient operations.”