JPMorgan lowers bitcoin mining stock targets amid price drop and rising hashrate

JPMorgan has downgraded price targets for bitcoin miners to reflect second-quarter results and other company-specific announcements, such as fleet efficiency improvements and hashrate targets. 

The decline in price targets is primarily due to a drop in bitcoin prices since the last model update, reducing the spot bitcoin price assumption from $68,000 to $60,000, according to an analyst report from the investment bank released Friday.

Additionally, the baseline network hashrate assumption has increased from 600 exahash per second to 615 EH/s. These factors have led to a reduction in the target gross profit per EH/s estimates for the miners, the report added.

"Our price targets generally declined due to share count dilution, lower bitcoin prices and a rising network hashrate. We remain overweight IREN, our top pick, and RIOT, underweight MARA, and are neutral CIFR and CLSK," JP Morgan analysts Reginald L. Smith and Charles Pearce said, referring to publicly-traded bitcoin miners Iris Energy, Riot Platforms, Marathon Digital, Cipher Mining and CleanSpark, respectively.

Potential bitcoin miner opportunities

However, the investment bank’s analysis suggests the potential for improved sentiment and share gains for both RIOT and IREN in the coming months. Friday's report highlighted better uptime and production metrics for RIOT, following the installation of immersion-cooled miners at its Corsicana facility.

The report also notes that the recent decline in IREN shares over the past three weeks, attributed to a sharp rise in power costs in July related to power hedging losses, presents a potential opportunity.

"We think these missteps are correctable, and view recent weakness as a nice buying opportunity. Headlines like these also make us appreciate the consistently solid operations at CleanSpark and Cipher, which have delivered industry leading uptime and expense management for several quarters," the report said.