Bitcoin Miners Fall Even as CEOs Say They’re Ready for Halving

David Pan and Sonali Basak, Bloomberg News

Mining units at a Bitcoin mining facility in Fort Stockton, Texas.

, Bloomberg

(Bloomberg) -- Bitcoin miners are seeing a sharp decline in their stock prices as a code update for the largest cryptocurrency that will drastically reduce revenue is set to happen later this week.

Shares of Marathon Digital Holdings Inc., Riot Platforms Inc. and CleanSpark Inc. all fell for at least a third consecutive day on Tuesday. The Valkyrie Bitcoin Miners exchange-traded fund has tumbled by around 28% this month.

The downward trend continues with short interest in crypto-mining stocks piling up and Iran’s attacks against Israel over the last weekend prompting the shift to a risk-off environment for investors. But chief executives of the companies remain bullish, touting low-cost operations, more efficient equipment and growing demand for the asset class can make up for $10 billion in annual revenue losses due to the software update.

“Riot is here for the long term,” Jason Les, CEO at Riot Platforms, said in a Bloomberg Television interview on Tuesday. “Our long-term investment thesis on Bitcoin is strong and I think we have the setup for a very positive movement in Bitcoin over the next several months here.”

Bitcoin mining is an energy-intensive process, in which miners use specialized computers to validate transactions on the blockchain and earn a reward in the form of the token. That reward, which comprises the vast majority of mining revenue, is cut in half every four years due to the preprogrammed event called the halving. The upcoming halving, the fourth since 2012 will reduce the amount of Bitcoin reward to 450 tokens in daily production from 900.

Miners are also betting on more demand from the new spot ETFs pushing Bitcoin prices higher to mitigate the negative impact from the halving. The digital asset has been on a tear since traditional asset management firms launched the ETFs in January. Those funds have attracted billions of dollars from a wider range of investors beyond the crypto-native communities.

“I think it is very hard to predict Bitcoin prices on any kind of short-term time frame. But over the course of years, I think you have seen a steady course of adoption,” said Tyler Page, CEO at Cipher Mining. “I think in large, sort of longer time frames, we can remain very very bullish on the adoption of the network.”

--With assistance from Tim Stenovec.