The Bitcoin halving event (BTC-USD) is approaching, likely taking place this weekend, and could result in reduced rewards for Bitcoin miners. Since crypto assets have fallen from all-time highs, could they face further price pressure from the halving? How will miners react to the sudden rise in profit margins?
CleanSpark CEO Zach Bradford (CLSK) joins Yahoo Finance to provide insight into the Bitcoin halving and what crypto traders can expect from Bitcoin price, crypto mining, and the larger crypto environment. Masu.
Mr. Bradford commented on CleanSpark's operating margin after the halving:
“That said, the production of new Bitcoins per day will increase from around 900 to 450. This means that efficient miners with sufficient profits will continue to have very healthy profits.” “But perhaps smaller miners didn't.” Their small scale and inefficient energy use made them more expensive and they couldn't keep the machines running. As a result, fewer participants get a piece of the pie, resulting in larger miners. Our pie should be even larger after it is halved. 10%, 15%, even he's thinking up to 20%. ”
Want to learn more about Bitcoin halving? Watch this video from Yahoo Finance for a quick explanation. Bitcoin Halving: Explained
For more expert insights and the latest market trends, click here to watch the entire episode.
This post was written by Nicholas Jacobino
video transcript
Sheena Smith: We are seeing Bitcoin rebound this morning. It remains at just under $65,000. It has now recouped some of the losses incurred earlier in the session and is just above $64,000.
Now, being able to recoup some of those losses early in the session was caused by the tensions that are unfolding in the Middle East. Now, the price rally is occurring ahead of the long-awaited Bitcoin halving, which is expected to occur this week and possibly as early as tonight.
So what happens to cryptocurrencies and miners? We'd like to welcome Zach Bradford, CEO of Bitcoin mining company CleanSpark. Zach, I'm glad you're here.
So first of all, let's talk about the price action that we've seen in Bitcoin, especially this week in response to some of the rising tensions overseas in the Middle East. So what is the indication that Bitcoin is here to stay in terms of its volatility?
Zach Bradford: Bitcoin has always been a volatile asset. And it trades as much on macro events as it trades on inflows and outflows. So we see this as just a macro reaction. But what we're seeing is a rebound, which we believe indicates very strong support.
And as I mentioned earlier in the last segment, this rebound is coming amid a net outflow of ETFs due to Grayscale. So we really believe that this is Bitcoin showing considerable resilience even in a risk environment, that's our perception. Therefore, we feel that good things will happen to Bitcoin.
Brad Smith: Zack, what do you think about grayscale spills?
Zach Bradford: My view is, who wants to stay in the ETF with the highest fees? We believe that it is just capitalism at its best, and that the outflow is likely going to other avenues to lower fees. However, ETF settlements can be t plus 1, t plus 2, or t plus 3, so there is always a lag in the movement of capital.
And since the levels have been low since the beginning of the year, we believe that Bitcoin miners are gradually being affected. And, hopefully, some people see an opportunity there.
Sheena Smith: Zack, let's talk about what this means specifically for your business and what it means for the other Bitcoin miners on screen. Because when this halving happens, you essentially get about half of what you have now. . So please talk to us about how this will impact your business in the short and long term and why you see the long term as an opportunity.
Zach Bradford: In fact, we're very excited. The important thing to understand is that this is about the elegance of the Bitcoin network itself. And we all knew this was going to happen for four years. And the big miners like us who have been able to plan for this are actually going to have a bigger piece of the pie.
This is because new Bitcoins generated per day will increase from approximately 900 Bitcoins to 450 Bitcoins. This means that efficient miners with solid margins will continue to have very healthy margins.
However, miners are small and inefficient in their energy usage, making them expensive and unable to keep their machines running. As a result, fewer participants compete for a piece of the pie. So our pie, being large miners, should get even bigger after the halving.
Think 10%, 15%, even 20%.
Brad Smith: That means you know your share of production. But even if we think about it, cutting the cost of mining in half today essentially means that compared to the output or productivity of the amount of Bitcoin you're producing. , doesn't that mean it costs twice as much to mine?
Zach Bradford: No, that's exactly right. Costs double, so it's very important to be prepared for a profit margin well above 50%. So when this happens, the margin could rise from 70% to 35%. But again, we're hopeful that changes and adjustments will occur and that we'll get at least some of that back.
But in addition to that, I believe that in the long run, Bitcoin was built this way to create even more scarcity. We know exactly how many Bitcoins will exist in the future. As a result, there should be an economic supply shock at some point in the cycle. And the cycle repeats continuously.
So, once again, we believe Bitcoin will continue to rise. So margins may decline between today and tomorrow, but thinking long-term, we believe margins will regain that space and get even better as Bitcoin enters its next bull market. I think we are just at that stage. The beginning of.
Brad Smith: Would you be a buyer for a business that would have to be retired as a result of the market share and production capacity that companies like CleanSpark have that you're talking about?
Zach Bradford: absolutely. Our company has been actively involved in the M&A field over the past few years. And we believe this halving event creates a buying opportunity. Because the point is, your servers may not be energy efficient or not running well, which could leave you unprofitable. But we did a great job. Over the past four years, we've been able to move two sites from inefficient to highly efficient operations by upgrading our servers and training our personnel.
So we're just looking for opportunities right now. There are many things we are considering. And that amount is expected to grow even further in the coming months as we see more failures and missteps from other companies. We think there's a huge opportunity to come in as part of the portfolio, buy it, preferably at a cheap price, and rebuild it into a better, stronger business.
Sheena Smith: Okay, CleanSpark CEO Zach Bradford. Thank you for taking the time to join us on Yahoo Finance ahead of the halving.
Zach Bradford: Hey, thanks for inviting me.
