JPMorgan revised its price targets for several leading Bitcoin mining companies on August 23, reflecting recent market trends and company-specific developments.
Despite the downgrades, the investment bank sees potential buying opportunities in select miners.
Reasons Behind JPMorgan’s Price Downgrades for Bitcoin Miners
The investment bank adjusted its price targets primarily due to two factors. Firstly, JPMorgan reduced its Bitcoin price forecast from $68,000 to $60,000, reflecting the decline in Bitcoin’s value since its last update.
Additionally, the bank revised its baseline network hashrate assumption upward, from 600 to 615 exahash per second, and took into account share count dilution in some mining companies.
These adjustments have led to a reduction in the target gross profit per EH/s estimates for the miners.
Specifically, JPMorgan analysts Reginald L. Smith and Charles Pearce provided updated price targets for several publicly traded Bitcoin miners.
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For CleanSpark, the target was reduced from $12.50 to $10.50, while Iris Energy’s target was lowered from $11 to $9.50.
Marathon Digital’s target was adjusted downward from $14 to $12, and Riot Platforms’ target was cut from $12 to $9.50.
Despite these reductions, JPMorgan remains optimistic about certain miners.
The analysts stated, “We continue to favor IREN, our top pick, and RIOT, are underweight on MARA, and hold a neutral view on CIFR and CLSK.”
They suggest that the recent declines in the stock prices of Iris Energy and Riot Platforms may offer good buying opportunities. JPMorgan’s report follows a similar rating from investment firm Bernstein, which recently upgraded four miners to ‘outperform.’
Future Outlook for Bitcoin Mining
Despite the lower price targets for miners, JPMorgan’s report maintains a positive long-term outlook for the Bitcoin mining industry.
The bank projects that Bitcoin’s block rewards could generate around $37 billion over the next four years.
While this figure is 19% lower than earlier estimates from this year, it still 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 underscores the significant opportunity still available for miners, estimating around $74 billion worth of Bitcoin remaining to be mined.
However, while JPMorgan sees opportunities, market data for Bitcoin also reveals potential risks.
A report from CryptoQuant 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 been followed by market declines.
Additionally, Bitcoin reserves on over-the-counter (OTC) desks have seen a substantial increase, with miner OTC balances rising by 70% over the past three months.
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The growing reserves held by miners may signal plans for significant sales, which could increase selling pressure and drive Bitcoin’s price down.
