JPMorgan Chase & Co. has lowered its price targets for several bitcoin mining companies, citing declining bitcoin prices and increased network hashrate as primary factors. The investment bank’s report, released on Friday, also highlighted potential opportunities for certain miners despite the overall bearish outlook.
The analysts at JPMorgan, Reginald L. Smith and Charles Pearce, explained that the reduced price targets were primarily driven by share dilution, lower bitcoin prices, and a rising network hashrate. They maintained an overweight rating for Iris Energy (IREN) and Riot Platforms (RIOT), while underweighting Marathon Digital (MARA) and maintaining neutral stances on Cipher Mining (CIFR) and CleanSpark (CLSK).
One of the key factors contributing to the downgrade was the drop in bitcoin prices since the last model update. JPMorgan lowered its spot bitcoin price assumption from $68,000 to $60,000, which directly impacted the projected profitability of bitcoin miners. Additionally, the baseline network hashrate assumption was increased from 600 exahash per second (EH/s) to 615 EH/s, further reducing the target gross profit per EH/s estimates.
Despite the negative outlook, JPMorgan’s analysis suggested that there might be opportunities for improved sentiment and share gains for both RIOT and IREN in the near future. The report highlighted better uptime and production metrics for RIOT following the installation of immersion-cooled miners at its Corsicana facility.
Also Read: Bitcoin’s (BTC) Unpredictable Path: Market Liquidity and Technical Indicators Raise Concerns
Furthermore, the recent decline in IREN shares, attributed to a sharp rise in power costs in July related to power hedging losses, presented a potential buying opportunity according to the analysts. They believed that these missteps were correctable and that the recent weakness in IREN’s stock price offered a good entry point.
In contrast, JPMorgan praised the consistently solid operations of CleanSpark and Cipher, which had delivered industry-leading uptime and expense management for several quarters. These companies have demonstrated their ability to navigate the challenges of the bitcoin mining industry and maintain profitability even in volatile market conditions.
Overall, JPMorgan’s report provides a mixed outlook for the bitcoin mining sector. While the immediate future may be challenging due to declining bitcoin prices and increased competition, there are opportunities for certain companies to outperform their peers. Investors will need to carefully evaluate the individual factors affecting each miner’s operations to make informed decisions.
