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Deflationary Effects of Halving are Starting

Exploring public miner performance, general mining activity and how it is handling the post-halving environment, and what to watch in network traffic numbers

Bitcoin Magazine Pro and Ansel Lindner

May 17

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This week, we take a closer look at the current state of the Bitcoin network as it stabilizes following last month’s halving. Our analysis highlights the resilience and adaptability of miners, the emerging effects of the halving on revenue, and shifts in Layer 2 token activity. By examining the performance of public Bitcoin miners, the latest mining activity metrics, and changes in network traffic, we provide valuable insights for investors seeking to understand and navigate these developments.

Public Miner Performance

Performance of public Bitcoin miners was mixed this week, but are showing resilience in this tough post-halving period. Despite the reduced block subsidy, miners have adapted their operations to maintain profitability. On average, public miners saw a 6% gain in their stock prices against the USD, although performance against Bitcoin was marginally negative. This highlights the adaptability of these miners amidst shifting economic realities and reduced transaction fees.

CleanSpark Inc. (CLSK) and Northern Data (NB2) particularly stand out for their production efficiency, producing at an efficiency of 41 and 46 BTC/EH respectively. These companies demonstrate effective management and operational efficiency, crucial for maintaining profitability in a challenging post-halving environment. Meanwhile, Marathon Digital Holdings (MARA) and Riot Platforms Inc. (RIOT) continue to leverage their substantial hash rates to sustain production levels, further underscoring the diverse strategies within the industry to navigate the new reward structure.

Investor Insights

Miners Still Outperforming Spot Bitcoin: MARA and RIOT have shown strong resilience in the wake of the halving, likely benefiting from investors’ positive view on their high level of bitcoin reserves. Even the diversified Valkyrie Bitcoin Miner ETF has outperformed spot bitcoin.
HUT8’s (HUT) Legal Struggles: HUT’s legal issues have not affected their share price negatively post-halving. They have also outperformed spot bitcoin since the halving, up 17%. HUT is facing a class action lawsuit you can read more about here. Allegations include a ownership conflict of interest in the November merger and undisclosed issues with assets acquired in that merger. These undisclosed issues allegedly caused their former CEO to short their stock. They replaced him in February.
Bitfarms CEO Leaves Abruptly After Filing Lawsuit: “Bitfarms announced that Morphy was terminated as CEO and President. This decision came ahead of a previously planned transition. Morphy’s lawsuit, filed on May 10 in the Superior Court of Ontario, claims “breach of contract, wrongful dismissal, and aggravated and punitive damages” amounting to $27 million.” - CoinMarketCap...

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