InvestorPlace – Stock Market News, Stock Advice & trading Tips
Every few years, eager anticipation fills the air as Bitcoin mining companies gear up for the halving event. The upcoming one, estimated to occur in April 2024, will see miners’ rewards slashed, putting pressure on mining companies’ margins. This event often coincides with a drop in Bitcoin’s value, which can spell trouble for crypto stocks ahead of the impending bitcoin halving.
Hut 8’s Vulnerability
Source: rafapress / Shutterstock.com
Set against the magnificent landscapes of Canada, Hut 8 Mining Corp (NASDAQ:HUT) operates in a climate that keeps cooling costs low. With hydroelectric and nuclear power sources, the company’s mining operations are cost-effective and environmentally friendly. Despite dabbling in data center services and supporting other miners, Hut 8’s primary focus remains Bitcoin mining, making it highly vulnerable to market fluctuations.
Since its inception, Hut 8 has weathered adverse conditions, notably the 2020 halving event that impacted its profitability. While the company’s shares have climbed 13% in the past year, they still lag behind 52-week highs. Although recent acquisitions of power plants have piqued investor interest, the looming bitcoin halving remains a significant threat.
Despite its current façade of stability, with a market capitalization of $1.20 billion and plans for a new mining site in Texas, Hut 8 has not diversified its revenue sufficiently to withstand the upcoming halving event. It operates in a cutthroat environment and risks suffering significant losses if a bitcoin price correction aligns with its selling period.
Riot Platforms: A Risky Bet
Source: rafapress / Shutterstock.com
Riot Platforms (NASDAQ:RIOT) revolves around blockchain technology and Bitcoin mining, with a recent shift towards a goal of 100 exahash operations per second (EH/s). As the cost of mining Bitcoin rises, coupled with the forthcoming reward halving, Riot Platforms faces mounting financial challenges, with equipment depreciation costs set to double post-halving.
In less than two years, Riot’s cost per bitcoin mined has surged from $44,400 in Q4 2021 to $110,000 in Q3 2023. If this trend persists, RIOT could find itself in dire straits, hence its inclusion in the list of crypto stocks to sell before the bitcoin halving.
Canaan Creative Inc.’s Precarious Position
Source: shutterstock.com/Jarretera
Canaan Inc. (NASDAQ:CAN) straddles the worlds of mining and artificial intelligence, catering to clients in need of high-performance microchips. Despite a brief surge in share price in 2021, it has since plummeted to around $1.5, prompting concerns about its stability.
Warning bells rang four years ago about CAN’s vulnerability before the 2020 halving event, which indeed wrought logistical disruptions and financial woes. With a location in China amidst geopolitical tensions, unpredictable supply chains, bans from Western countries, and an upcoming halving, Canaan finds itself in a precarious position.
On the brink of the bitcoin halving in 2024, Canaan faces uncertainties that could significantly impact its future, making it another in the line of crypto stocks investors should tread cautiously with.
Remember, when it comes to investments, a cautious approach is always prudent, especially when navigating the unpredictable waters of the cryptocurrency market.
More From InvestorPlace
The post 3 Crypto Stocks to Sell ASAP Before the Bitcoin Halving appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
