On August 23, JPMorgan Chase & Co. announced a reevaluation of its price targets for several major Bitcoin mining firms, responding to recent fluctuations in the market and specific developments related to these companies. Despite the adjusted targets, the investment bank perceives potential opportunities for investors in certain mining entities.

The primary reasons for JPMorgan’s downgrades revolve around two significant factors. Firstly, the investment bank adjusted its Bitcoin price forecast from $68,000 to $60,000, reflecting the actual decline in Bitcoin prices since its prior assessment. Secondly, the expectation of a higher baseline network hashrate was raised from 600 to 615 exahash per second, coupled with the potential dilution in shares among certain mining corporations. These adjustments have resulted in reduced projections for gross profit per exahash per second (EH/s) for these miners.

JPMorgan analysts, Reginald L. Smith and Charles Pearce, have provided revised price targets for various publicly traded Bitcoin miners: CleanSpark’s target was decreased to $10.50 (down from $12.50), Iris Energy’s target was lowered to $9.50 (down from $11), Marathon Digital’s target was reduced to $12 (from $14), and Riot Platforms’ target was cut to $9.50 (down from $12).

Despite these downward adjustments, JPMorgan retains a favorable outlook towards certain mining enterprises. In their analysis, the bank maintains an ‘overweight’ rating on Iris Energy and Riot Platforms while being ‘underweight’ on Marathon Digital and neutral on Cipher Mining and CleanSpark. The analysts opine that the recent decline in stock prices for both Iris Energy and Riot Platforms could present lucrative buying opportunities.

This report by JPMorgan echoes a similar sentiment expressed by investment firm Bernstein, which recently upgraded the ratings of four mining entities to ‘outperform.’

Looking ahead, while the price targets for Bitcoin miners have been revised downwards, JPMorgan’s report paints an optimistic long-term picture for the Bitcoin mining sector. The bank forecasts that Bitcoin’s block rewards could potentially amass approximately $37 billion over the next four years. Although this estimation reflects a 19% decrease from earlier projections made this year, it signifies an 85% increase in comparison to the previous year.

With a mere 1.28 million Bitcoins remaining to be extracted from the total supply of 21 million, JPMorgan emphasizes a substantial opportunity amounting to $74 billion associated with the remaining Bitcoin available for mining.

Nevertheless, despite these opportunities identified by JPMorgan, market data for Bitcoin raises certain cautions. A report from CryptoQuant has indicated that Bitcoin reserves held by miners have surged to elevated levels not seen in over two years, totaling 368,000 BTC (aproximately $22.36 billion). Historically, such elevated reserve levels have frequently preceded downturns in the market. Additionally, Bitcoin reserves on over-the-counter (OTC) desks have also seen significant increases, with miner OTC balances rising by 70% over the past three months. This accumulation may foreshadow impending large-scale sell-offs, thereby exacerbating selling pressures and driving down the price of Bitcoin.

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