JPMorgan Adjusts Price Targets for Bitcoin Mining Stocks Amid Market Challenges
JPMorgan Chase & Co. has recently revised its price targets for bitcoin mining companies in light of a decline in bitcoin market prices and an increase in the network’s hashrate. The investment bank’s report indicates that the adjustment in targets is a response to the disappointing second-quarter results and various company-specific developments, particularly improvements in operational efficiency at Riot Platforms and a marked decrease in share value for Iris Energy.
The report notes that the bank has lowered its forecast for spot bitcoin prices from $68,000 to $60,000, directly impacting the profitability outlook for bitcoin miners. Furthermore, the network’s baseline hashrate assumption has risen from 600 exahash per second to 615 EH/s. These updates collectively contribute to a revision in the target gross profit per exahash per second for the mining companies, as elucidated by JPMorgan analysts Reginald L. Smith and Charles Pearce.
“Our price targets have generally been adjusted downwards due to factors such as share dilution, the ongoing decline in bitcoin prices, and a rising network hashrate,” the analysts outlined. Their current stance places emphasis on maintaining an overweight rating for Iris Energy and Riot Platforms while adopting an underweight position for Marathon Digital, and a neutral stance towards Cipher Mining and CleanSpark.
In what may reflect a shift in sentiment, JPMorgan emphasizes prospective recovery and potential gains for Riot Platforms and Iris Energy in the near term. The report highlights notable improvements in operational metrics for Riot Platforms stemming from the successful implementation of immersion-cooling technology at their Corsicana facility.
Despite recent adversities—including a steep increase in power costs affecting Iris Energy, which has led to a decline in their stock price—JPMorgan suggests that these issues can be rectified, viewing the current weaknesses as an opportune moment for investment. The analysts further underscore the stable performance of CleanSpark and Cipher Mining, attributing their success to superior uptime and efficient expense management over recent quarters.
In conclusion, while the challenges in the bitcoin mining sector are apparent, there remains significant potential for recovery and investment, particularly in well-positioned companies such as Riot Platforms and Iris Energy.
Disclaimer: The Block operates independently to provide insights and updates concerning the cryptocurrency industry. It should be noted that Foresight Ventures holds a majority investment in The Block as of November 2023 and is actively involved in various crypto-related investments. This article does not constitute legal, tax, investment, financial, or other professional advice.
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