The recent Bitcoin Nashville conference was a significant event, not just for the crypto industry but also due to the presence of multiple politicians and former president Donald Trump. This attendance has sparked discussions about the potential impact of politics on the price of bitcoin.
Jefferies’ Research Report
Investment bank Jefferies released a research report on Monday, providing insights into the current state of the crypto industry. Analysts Jonathan Petersen and Joe Dickstein highlighted that the near-term price of bitcoin may be influenced by the outcome of the US presidential election.
Trump’s Promises to the Crypto Industry
During his Nashville speech, Trump made several promises to the crypto industry. He pledged to maintain a strategic bitcoin reserve and never sell the government’s seized bitcoin. Additionally, he committed to picking crypto-friendly regulators, creating a crypto industry presidential advisory council, and making the country the ‘crypto capital of the planet.’
Impact on Bitcoin Price
The recent shift in Trump’s policy towards crypto is a significant development. Jefferies notes that this positive change could impact the price of bitcoin in the near term, depending on who wins the election in November.
Bitcoin Mining Profitability
The report also touched on the profitability of mining following the halving in April. According to Jefferies, the network hashrate dropped a total of 8% in May and June, but the ‘profitability of mining is modestly better than feared at the beginning of the year.’ Mining revenue per exahash was down 40%-45%, which is lower than the initially feared 50%.
Larger Bitcoin Miners Still in Growth Mode
Despite the challenges faced by the industry, larger bitcoin miners are still in growth mode. Jefferies notes that these companies have orders in place to expand their installed hashrate materially. This growth is a testament to the resilience of the industry and its ability to adapt to changing circumstances.
Consolidation Phase for Bitcoin Mining
The report suggests that the industry is entering a consolidation phase, with multiple mining firms seeking to acquire or merge with others. CleanSpark’s recent agreement to acquire GRIID and Riot Platforms’ public offer for Bitfarm are examples of this trend. Comments from management teams suggest that more mergers and acquisitions (M&A) are likely in the sector.
Value of Access to Power
The report highlights the importance of access to power for mining firms. With the increasing value placed on this resource, companies are willing to invest in acquiring or partnering with those who have access to reliable and affordable power sources.
Conclusion
The intersection of politics and crypto is a complex and evolving topic. Trump’s promises to the industry may mean that the near-term price of bitcoin is tied to the outcome of the election. The recent shift in his policy towards crypto is a positive development, but its impact on the market remains uncertain.
As the industry continues to grow and mature, it is essential to monitor these developments closely. The consolidation phase for bitcoin mining, combined with Trump’s promises, could have significant implications for the price of bitcoin and the overall direction of the industry.
Recommendations
Based on the report, investors may want to consider the following:
- Monitor the outcome of the US presidential election: The near-term price of bitcoin may be influenced by the winner of the election.
- Watch for further consolidation in the mining sector: Multiple M&A deals are likely to occur, and access to power will become increasingly valuable.
- Keep an eye on Trump’s policy towards crypto: His recent shift in favor of the industry could lead to significant developments.
By staying informed about these trends and developments, investors can make more informed decisions about their investments in the crypto market.
