Up-to-date news, tips and insider takes on the world of Bitcoin and cryptocurrency at large.
The price of Bitcoin posted a solid gain in the first half of 2024, largely thanks to the introduction of spot Bitcoin exchange-traded funds (ETFs) in January. Meanwhile, Bitcoin mining rewards were halved on April 19, setting the stage for another four-year cycle of boom and bust. By the end of June, Bitcoin had cruised to a solid 44.2% gain according to data from S&P Global Market Intelligence.
Bitcoin’s performance in the first half of 2024
Then there’s MicroStrategy (NASDAQ: MSTR), the enterprise software company that decided to ride Bitcoin’s coattails in the most amplified fashion four years ago. MicroStrategy’s balance sheet held $7.5 billion worth of Bitcoin but only $81 million of cash by the end of March. Mirroring Bitcoin’s rise with an extra shot of adrenaline, MicroStrategy shot up a whopping 118.1% in six months.
MicroStrategy’s exposure to Bitcoin
Meanwhile, most crypto miners didn’t share the same bullish fate. The reward halving had an immediate effect on their financial results, and the leading miners headed in different directions.
Crypto miners’ varying fortunes
Marathon Digital Holdings (NASDAQ: MARA) saw a 15.5% price drop, while Riot Platforms (NASDAQ: RIOT) lost 40.9% of its market value. Highlighting the complex nature of today’s crypto market, CleanSpark (NASDAQ: CLSK) managed to keep pace with Bitcoin’s gains, pocketing a 44.6% return.
CleanSpark’s impressive showing
Why did these crypto-related investments head in different directions? Their operations are quite different and market makers are paying attention to these unique qualities.
CleanSpark’s expansion into new mining facilities
CleanSpark acquired a total of 13 new mining facilities from other companies in the first half, criss-crossing the American map from Georgia to Wyoming. In addition, the all-American Bitcoin miner also crushed Wall Street’s consensus estimates in February’s first-quarter report and May’s second-quarter update. This company turned a profit in these two earnings reports, both in terms of free cash flows and adjusted earnings per share.
With proven profitability, a debt-free balance sheet, $323 million in cash reserves, and a similar amount of Bitcoin holdings, CleanSpark looks ready to ride out the lower production rates of this rewards-halving cycle.
Meanwhile, Marathon experienced the same rewards halving as CleanSpark and went on its own production facility buying spree. The company currently has 31.5 exahashes per second (EH/s) of installed mining gear, targeting the Bitcoin mining business. A much smaller machine park with a capacity of 0.6 EH/s is mining the smaller Kaspacryptocurrency instead, diversifying Marathon’s crypto operations a bit.
Riot Platforms runs a smaller Bitcoin mining operation than Marathon or CleanSpark. Its average production capacity stops at 11.4 EH/s, targeting 31 EH/s by the end of 2024. Both Marathon and CleanSpark aim for a 50 EH/s capacity at the same calendar milestone.
The takeover is up in the air and investors generally hate uncertainty, so Riot Platforms’ stock performance isn’t impressing anyone in 2024.
Riot Platforms’ smaller mining capacity
MicroStrategy is a different story. The company doesn’t run any Bitcoin mining machines, so it doesn’t care much about the lower mining rewards. Founder and chairman Michael Saylor’s company does care deeply about Bitcoin’s price, now and in the long run, since almost all of its cash reserves have been converted into Bitcoin holdings. Moreover, the company keeps buying more Bitcoin at every opportunity.
MicroStrategy’s commitment to Bitcoin
The purchases have been financed by MicroStrategy’s software business profits, sales of additional stock, new debt, and in one short-lived test, even a loan secured by some of the company’s Bitcoin holdings. This coin-buying strategy amplifies Bitcoin’s gains when times are good, but also exposes investors to more risk when Bitcoin prices are down.
Bitcoin’s cyclical pattern
The halving of Bitcoin’s mining rewards makes it harder to run a profitable mining business – at least for a while. This hard-coded four-year cycle is designed to limit the supply of new coins while the cryptocurrency builds its real-world demand. The basic laws of supply and demand dictate rising prices in this scenario, and Bitcoin’s price chart has shown this pattern in each of the first three halvings. History doesn’t repeat, but it often echoes familiar patterns, and the fourth rewards halving cycle looks ready to send Bitcoin prices sharply higher over the next year or so.
There is a clear investor takeaway from the Bitcoin trends of early 2024: Understanding the cyclical nature of Bitcoin and the strategic moves of key players in the surrounding industry can provide a significant edge. Keep an eye on the players who thrive under pressure, because they’re the ones likely to shine when the market rebounds. The presence of spot Bitcoin ETFs should boost and support the current cycle, thanks to a heavy inflow of money from institutional investors.
However, the crypto industry has also been plagued by bad actors, which has tarnished its image. From Sam Bankman-Fried to Bitcoin Jesus, these are the people giving cryptocurrency a bad name.
Sam Bankman-Fried’s fall from grace
Sam Bankman-Fried, once a crypto poster boy, became a disgraced cryptocurrency executive after being convicted on seven fraud and conspiracy charges for stealing at least $10 billion from customers and investors in the dramatic collapse of the crypto exchange FTX.
Changpeng Zhao’s troubles with regulators
Binance founder Changpeng Zhao, or “CZ,” was sentenced earlier this year to four months in prison for allowing rampant money laundering on the world’s largest cryptocurrency exchange.
Do Kwon’s troubles with regulators
Crypto company Terraform Labs’ co-founder Do Kwon was once a king of the crypto world, but now he is awaiting extradition to the U.S. or South Korea, where he could face charges.
Roger Ver’s tax troubles
Early crypto investor Roger Ver, a.k.a. “Bitcoin Jesus,” was once known for promoting Bitcoin and preaching to people about other cryptocurrencies. He is also known to be one of the biggest owners of Bitcoin. But earlier this year he was charged with a tax fraud, with the Department of Justice saying he evaded nearly $50 million in taxes.
Ben Armstrong’s fall from grace
Ben Armstrong, formerly known as Bitboy, used to be the most popular cryptocurrency YouTuber globally, but now his empire has crumbled.
Understanding these crypto villains can help us anticipate what may come next. While it’s impossible to eliminate bad actors from the crypto industry, identifying patterns can help us navigate the complex world of cryptocurrency.
There you have it - a look at the winners and losers of the first half of 2024, and a brief exploration of the crypto villains who have tainted the industry’s image.
