JPMorgan revised its price targets for several prominent Bitcoin mining companies on August 23, reflecting recent market shifts and company-specific developments.
Despite the downgrades, the investment bank sees potential buying opportunities in select miners.
Factors Behind JP Morgan Price Downgrades on Bitcoin Miners’ Stock
The investment bank lowered its price targets due to two primary factors. The bank reduced its Bitcoin price prediction from $68,000 to $60,000, accounting for the decline in Bitcoin prices since its last update.
Additionally, the bank considered a higher baseline network hashrate assumption (increased from 600 to 615 exahash per second) and share count dilution in some mining companies.
These factors have led to a reduction in the target gross profit per EH/s estimates for the miners.
Particularly, JPMorgan analysts Reginald L. Smith and Charles Pearce provided updated price targets for several publicly traded Bitcoin miners.
My LATEST #Bitcoin Miner Model – Industry's MOST complete view of the key metrics needed to evaluate all public miners to see who's best prepared to survive the halving
Key Observations
1) Top 5 miners: $MARA $CLSK $RIOT $CIFR $IREN
2) Only profitable miners: $MARA $CLSK… pic.twitter.com/GJ7IM6GgT3— Danny Marques | Investing Informant
(@Invst_Informant) March 6, 2024
CleanSpark’s target was reduced to $10.50 from $12.50, while Iris Energy’s was lowered to $9.50 from $11.
Marathon Digital’s target was decreased to $12 from $14, and Riot Platforms’ was cut to $9.50 from $12.
Despite the downgrades, JPMorgan maintains a positive outlook on certain miners.
The analysts stated, “We remain overweight IREN, our top pick, and RIOT, underweight MARA, and are neutral CIFR and CLSK.”
They suggest that the recent stock price dip for Iris Energy and Riot Platforms might present good buying opportunities. JPMorgan’s report follows a similar rating note from investment firm Bernstein, who upgraded four miners to ‘outperform.’
Future Outlook for Bitcoin Mining
Despite the lower price targets for miners, JPMorgan’s report offers an optimistic long-term view of the Bitcoin mining industry.
The bank predicts that Bitcoin’s block rewards could generate around $37 billion over the next four years.
While this figure is 19% lower than earlier estimates this year, it represents an 85% increase compared to last year.
With only 1.28 million Bitcoins left to be mined out of the total 21 million, JPMorgan highlights a massive opportunity of $74 billion worth of Bitcoin still available for mining.
While JPMorgan sees opportunities, market data for Bitcoin reveals potential risks.
A CryptoQuant report indicates that Bitcoin reserves held by miners have reached their highest level in over two years, totaling 368,000 BTC (approximately $22.36 billion). Historically, such high reserve levels have often preceded market drops.
Bitcoin reserves on over-the-counter (OTC) desks have also risen greatly, with a 70% increase in miner OTC balances over the past three months.
Bitcoin OTC desk balances for miners have increased by more than 70% over the past three months, rising from 215,000 BTC in June to 368,000 BTC in August—an increase of 153,000 BTC.
Historically, the growth of the metric was accompanied by a fall in the price of the first… pic.twitter.com/Hkizb5cfvo— Constantin Kogan (@constkogan) August 23, 2024
Miners’ growing Bitcoin reserves may indicate plans for large sales, increasing the selling pressure and driving down Bitcoin’s price.
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