The next Bitcoin halving continues to inch closer with each passing day, and the world is starting to prepare.
Historically, the months before and after Bitcoin halvings are usually marked by massive price explosions as the next bull run gets ushered in.
And as it stands, the next Bitcoin halving is expected to happen sometime around April or May 2024, less than a year from now.
When this happens, the Bitcoin block reward will be cut in half again, to around 3.125 Bitcoin per block mined.
This is, of course, good news for the miners. It means that the inflationary pressure on the bitcoin they have collected so far will be removed, and the prices will rise as a result.
In layman's terms, the miners, especially, are expected to make a ton of profit from the halving.
But what if another entity was poised to make literal billions of dollars in profit from this event?
Enter MicroStrategy.
MicroStrategy, a business intelligence organization based in the United States, announced the purchase of an additional 1,045 Bitcoin for about $29.3 million at an average price of $28,016 per BTC, on 5 April.
This marked the latest of several purchases made by Microstrategy and its Executive Chairman, Michael Saylor.
MicroStrategy, which has been buying Bitcoin massively despite the harsh bear market since 2021, now holds about 153,333 Bitcoin at the time of writing, with a total stash of $4.17 billion at an average price of $29,803 per Bitcoin.
MicroStrategy chairman, Saylor, has been a die-hard Bitcoin advocate and is at the forefront of Bitcoin's institutional adoption.
Saylor's MicroStrategy also recently paid back its Silvergate debt and purchased 6,500 BTC at the end of March, before buying another thousand in April in a clear dollar-cost-averaging strategy.
Bitcoin bulls, like Michael Saylor's MicroStrategy, are anticipated to profit massively from Bitcoin halving and the price increase that comes after.
The value of MicroStrategy's bitcoin holdings as well as its company's stock price is anticipated to more than double if Bitcoin hits its all-time high again.
Berenberg Capital Markets, a New York-based financial firm, has even provided a bullish outlook for MicroStrategy.
According to the Berenberg report written by equity analyst Mark Palmer, along with associates Matthew Laflash and Hassan Saleem, MicroStrategy shares are expected to hit somewhere around $430 soon.
For perspective, MicroStrategy shares are currently selling at $408, representing a 180% increase from the beginning of 2023.
Explaining the reason for their outlook on Bitcoin, Berenberg stated that MicroStrategy's value is mostly determined by the 152,333 bitcoins it owns.
The analysts anticipate that the price of bitcoin might rise by up to 682% after the second halving, resulting in a huge boost in MicroStrategy's share price.
At the same time, the analysts also observed that for the price of Bitcoin to rise to such a level, widespread demand for bitcoin must also rise.
They cited the recent uptick in spot bitcoin ETF applications from Blackrock and others, as evidence of increasing institutional adoption of bitcoin, which might lead to more demand for the cryptocurrency in the future.
For one, the next halving and bull run is going to be massively bullish.
Why?
Because Bitcoin may have something the previous bull markets didn't: Institutional adoption.
According to a tweet from Will Clemente, the co-founder of the Digital asset research firm, Reflexivity Research, the last Bitcoin ETF decision deadline is sometime around 19 March 2024.
The Next Bitcoin halving, on the other hand, is expected sometime around 16 April 2024 (about a month after).
This means that if BlackRock and the others get the go-ahead on their Bitcoin ETFs from the SEC, Bitcoin may be ushered into a new era, backed by massive institutional investment
As mentioned earlier, Microstrategy's Bitcoin holdings are currently worth about $29,803 per token, and about $4.17 billion.
The majority of the crypto market's participants expect Bitcoin to hit its all-time high of $69,000 at least, and maybe even go higher.
If Bitcoin so much as hits the $60,000 mark, MicroStrategy's holdings would be worth (roughly) about $8.34 billion, leading to more than $4 billion in profits for the firm.
If that isn't impressive enough, the profit margin, if Bitcoin hits the $100,000 mark, would be almost a whopping $10 billion (if the firm holds its coins for long enough).
How are things looking for the miners on the other hand?
Not as good.
As established earlier, the halving decreases the amount of Bitcoin paid to miners for processing transactions every four years. This implies that miners will have to compensate for lost income by boosting efficiency or cutting operational expenses.
According to a report from Bloomberg, roughly half of Bitcoin miners are now operating inefficiently.
This implies that they are using older and outdated mining equipment. As a result, things don't look as good for the Bitcoin miners.
After the halving, the break-even power price for the most common mining equipment is expected to fall from $0.12/kWh to $0.06/kWh. This means that miners with operational costs greater than $0.06/kWh will be at serious losses.
The halving is most likely to affect miners with running expenses greater than $0.08/kWh, and many miners must find new methods to scale, or risk losing their sources of livelihood.
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