The Bitcoin (BTC) mining industry is in a crucial phase, as the approval of a BTC exchange-traded-fund (ETF) could spark a rally. This comes amid record hashrates and the upcoming block reward halving, which pose challenges to industry revenues and profitability, according to JPMorgan.
JPMorgan Research Highlights Crucial Moment for Bitcoin Mining Industry and Top Picks
The bank’s research report highlights the importance of factors like hashrate, efficiency, power contracts, growth plans, and liquidity in assessing mining operators. JPMorgan has initiated coverage of CleanSpark (CLSK), Marathon Digital (MARA), Riot Platforms (RIOT), and Cipher Mining (CIFR), with different ratings and price targets.
The decision on approving a spot bitcoin ETF by the U.S. SEC has been delayed. CleanSpark is JPMorgan’s top pick due to its scale, growth potential, power costs, and relative value. Marathon is the largest mining operator but has higher energy costs and lower margins. Riot has lower power costs but is the most expensive stock in their coverage universe.
Cipher Mining has the lowest power costs but faces growth constraints. The bank estimates the block reward opportunity at around $20 billion, but the upcoming halving could affect profitability. Around 20% of the network hashrate may be at risk from decommissioned less efficient mining computers.