Should You Buy Bitcoin Mining Stocks Post-Halving?
As a general rule of thumb, Bitcoin (CRYPTO: BTC) mining stocks tend to go up when the price of Bitcoin is going up, and down when the price of Bitcoin is going down. That makes sense, given that their revenue and profitability are directly tied to the price of Bitcoin. Thus, when Bitcoin soared by 150% last year, Bitcoin mining stocks also skyrocketed in price.
But the Bitcoin halving, which took place on April 19, changes everything. We've now entered a new halving cycle, and changes brought about by the Bitcoin algorithm could have profound implications for mining stocks over the next 12 months. Let's take a closer look.
In a halving event, the reward paid out for mining a new block of Bitcoin drops by one-half. That directly affects Bitcoin miners, because their primary revenue source has just been reduced by one-half. Think of the effect on your own life if someone cut your primary source of income by 50%. You'd be reeling.
Source Fool.com
