Bitcoin miner stocks are outpacing the price of Bitcoin, which hit its highest level since 2021 as the cryptocurrency goes mainstream with the recent approval of a Bitcoin Exchange-Traded Fund (ETF).

Those gains, however, may not stick for some miners with the four-year halving—when the reward miners get for mining gets cut in half to ensure Bitcoin’s scarcity—happening in April. The halving results in the number of new coins created getting cut by 50%, and the rewards for miners being cut in half.

The fall in revenue could to some extent be compensated by rising Bitcoin prices resulting from the lower supply of new coins. But companies with less efficient machines and operations may have a harder time.

Miners with higher electricity costs or lower-efficiency machines “will have a difficult time mining profitably post-halving,” Luxor Technology Chief Operating Officer Ethan Vera said. Luxor provides services and products for the mining industry. “Many companies are stuck in power contracts, or benefit from top line gross revenue and as such might continue to mine despite not being profitable. Companies’ balance sheets will determine how long they can survive doing that.”

The halving comes amid renewed interest in Bitcoin after the Securities and Exchange Commission approved 11 Bitcoin ETF applications in January, paving the way for investors to access the alternative asset more easily. 

Winners and Losers

Cantor Fitzgerald analyzed 13 Bitcoin miners in January and found that at the then price of Bitcoin at $40,000, only two miners, CleanSpark (CLSK) and Bitdeer (BTDR), would be able to profit from mining. But at above $50,000 now, more miners would be profitable. The ones facing the highest costs were Hut 8 (HUT) and Argo Blockchain (ARBK). It costs them $60,360 and $62,276, respectively, to mine each coin.

Hut 8 and Argo Blockchain did not respond to requests for comment.

Riot Platforms (RIOT) said it has positioned itself as one of the “lowest cost miners” ahead of the halving. It has the third-lowest cost at nearly $44,000 per coin, according to Cantor Fitzgerald.

“Riot also intends to leverage our ability to obtain Bitcoin at a significant discount to its current market price by retaining a greater proportion of our monthly Bitcoin production in the near term,” the company said in a January statement. “This is made possible by our strong liquidity profile, and will further cement our position as one of the largest holders of Bitcoin.”

Marathon Digital (MARA) is preparing for the halving with plenty of cash on hand.

“We need to be resilient,” Chief Executive Officer Fred Thiel said in a video last month. “If the price of Bitcoin let’s just say it drops to $30,000 at the time of the halving, not many miners are going to be able to operate profitably and how many miners have enough cash on the balance sheet to be able to survive six to 12 months, maybe 24 months before it becomes profitable to mine again when Bitcoin has moved back up?”

Marathon’s cost per coin is $50,559, making it profitable by a hair at today’s price. 

Bitcoin miner CleanSpark, which according to Cantor Fitzgerald is profitable with a cost of nearly $37,000 per coin, expects some 30% of machines currently hashing to be forced to unplug, according to Executive Chair Matthew Schultz. That’s an opportunity for growth.

“We’re aggressively seeking opportunities for M&A” to buy facilities and infrastructure, Schultz said.