Brokerage firm Bernstein has advised buying Bitcoin mining stocks to gain indirect exposure to the cryptocurrency ahead of the upcoming BTC halving.
In a research report, Bernstein analysts recommended Riot Platforms (RIOT) and CleanSpark (CLSK) as the firm's preferred picks among Bitcoin mining stocks, noting that, "most of the U.S. listed miners look relatively well positioned," at Bitcoin's current price level, "even if their costs double post halving."
The Bitcoin halving, which takes place roughly every four years, sees the rewards received by Bitcoin miners for successfully completing a block halved. In the next halving, expected to take place in April 2024, the reward will be slashed from 6.25 BTC to 3.125 BTC.
Citing "positive ETF flows momentum, resilient BTC price action and healthy miners adding capacity into the halving," the report's authors said that they see the institutional narrative led by spot Bitcoin ETFs driving demand, adding, "we expect higher price will bring higher ETF inflows, leading to new highs in 2024."
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CleanSpark, one of Bernstein's recommended picks, recently announced that it had purchased three Bitcoin mining facilities in Mississippi for $19.8 million in cash, boosting its capacity by 2.4 exahashes per second (EH/s) ahead of the halving. The firm also entered agreements to acquire a mining facility under construction in Dalton, Georgia, expected to operate at 0.8 EH/s, with about $6.9 million in further investment.
Riot Platforms, meanwhile, announced plans to partner with China-based mining equipment manufacturer MicroBT, with a long-term purchase agreement that will see the mining firm buy an initial order of 33,280 machines at a price of $21.50 per terahash, roughly $163 million, with an option for 66,560 machines before the end of the year at the same price. Riot's 400-megawatt Corsicana facility in Texas is set to come online in March 2024, just ahead of the halving.
Riot's Corsicana Facility is underway!⚡️The 400MW substation is expected to be energized by the end of March 2024, and the first 100MW building, A1, will commence operations immediately thereafter. Additional buildings comprising the 400MW Phase 1 buildout of the Corsicana… pic.twitter.com/in1rWQLf4w
The Bernstein report authors also identified Bitcoin ETF inflows as an additional bullish indicator, noting that, "the overall market will lean bullish and reflexivity should ensure a higher price-higher inflows feedback loop."
