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Needham began coverage of Hut 8 Corp. (NASDAQ: HUT) with a buy rating in a recent note leading up to the highly anticipated bitcoin halving event (BTC-USD) that is expected to weigh on the broader bitcoin mining sector.
The company’s diversification strategy “bodes well in the Halving when self-extraction revenues decline across the industry,” Needham wrote in a note.
Another factor fueling its bullish investment thesis includes “increased fleet efficiency in the near term, which is expected to reduce HUT’s production costs.” Additionally, its large holdings in Bitcoin (BTC-USD) “buffer short-term Halving-related concerns impacting the sector.”
In early March, JP Morgan warned in a note that the price of bitcoin (BTC-USD) could drop significantly after the April halving, which will negatively impact the profitability of bitcoin miners due to the reduction of premiums and increased production costs.
In contrast, Bernstein recommended buying miners before the event, arguing that the price of bitcoin typically increases after a halving. A CoinLedger study confirms Bernstein’s point of view.