JPMorgan recently underwent a comprehensive update of its models and price targets for bitcoin miners, incorporating various factors such as first-quarter 2024 results, revised 2024 hashrate targets, and adjustments in spot bitcoin prices. This reassessment prompted the bank to adopt a more cautious stance regarding the potential for a post-halving bitcoin rally, leading to downward revisions in December 2024 price targets and estimates across the sector. Despite this tempered outlook, JPMorgan maintains differing ratings for key players in the bitcoin mining space, including an overweight rating for Iris Energy (NASDAQ: IREN) and Riot Blockchain (NASDAQ: RIOT), an underweight rating for Marathon Digital Holdings (NASDAQ: MARA), and a neutral rating for Cipher Mining (NASDAQ: CIFR) and CleanSpark (NASDAQ: CLSK).
The report from JPMorgan indicates a notable departure from its earlier projections regarding the trajectory of bitcoin prices following the halving event. Previously, the bank anticipated a robust 30% stair-step increase in bitcoin’s price post-halving. However, it now forecasts a more modest 15% increase in the third quarter of 2024, suggesting that a portion of the anticipated rally may have been accelerated in the current market cycle. Despite this adjustment, the report notes that bitcoin has already surged by an impressive 56% year-to-date, underscoring the ongoing momentum in the cryptocurrency market.
In terms of valuation, JPMorgan assesses the notional value of the remaining 1.3 million bitcoins at approximately $91 billion, reflecting a slight 4% decline from April 10 but a remarkable 109% increase year-over-year. Similarly, the four-year block reward revenue opportunity is estimated at $47 billion, representing a 4% decrease from April 10 but a substantial 108% surge year-over-year. The aggregate market capitalization of the 14 U.S.-listed miners closed on June 3 at levels exceeding historical averages, indicating robust investor interest in the sector despite the recent market fluctuations.
IREN, a prominent player in the bitcoin mining industry, recently announced ambitious plans to achieve a hashrate of 30 EH/s by the end of 2024, surpassing its previous guidance of 20 EH/s. Additionally, the company aims to enhance its fleet efficiency to 16 J/TH, down from the current 25 J/TH. In response to these developments, JPMorgan has revised its December 2024 price target for IREN to $11 from $10, considering the company’s intention to fund 50% of its expansion through their ATM.
Despite relatively stable bitcoin prices and network hashrates, JPMorgan has adjusted its target gross profit per EH/s estimates downwards, primarily due to less optimistic near-term bitcoin price assumptions. However, IREN stands out with the least decline in target gross profit per EH/s, attributed to its improving fleet efficiency. The report highlights potential upside of 38% and 24% for IREN and RIOT, respectively.
Looking ahead, JPMorgan outlines each miner’s hashrate trajectory over the next 18 months, emphasizing the importance of executing large purchase orders and acquisitions for sustained growth. Notably, IREN has outperformed its peers and bitcoin over the last three months, while RIOT shares have experienced some lag during the same period.