Bitcoin (BTC-USD) rose 9.3% in November, further boosting the Bitcoin miner’s stock price and its earnings outlook.
These miners are in the business of receiving Bitcoin (BTC-USD) as a reward for completing “blocks” of verified transactions. By solving complex mathematical problems on the blockchain. Therefore, all else being equal, mining companies want BTC prices to rise. Because that will boost profits. However, to ensure profitability, miners must manage equipment and power costs.
Bitcoin (BTC-USD)’s rise last month was enough to offset a rise in network hashrate, which tracks a group of 14 U.S. companies that hit an all-time high for 11 consecutive months as a measure of industry competition. Reginald Smith, a JPMorgan analyst who is a publicly traded BTC miner – wrote in a recent note to clients.
One of the main drivers of Bitcoin (BTC-USD)’s rally this month includes continued confidence that the U.S. Securities and Exchange Commission will soon approve exchange-traded funds that invest directly in Bitcoin. Many have suggested that if the Spot Bitcoin ETF is approved, it could open up the crypto market to traditional financial players.
In another development, expectations are rising that the Federal Reserve will begin cutting interest rates next year from a 22-year high. But both stories, especially the ETF story, have contributed to the hottest cryptocurrency’s up to 130% surge over the past 11 months since last year’s market slump.
JPMorgan’s Smith said CleanSpark (CLSK), whose stock price has soared nearly 275% since the beginning of the year, is one of the top BTC miners given its “combination of scale, proven vehicle efficiency, and power costs.” He said he was the best candidate. He rates the stock as “overweight.” Iris Energy (IREN) is another miner he rates as Overweight. In the near term, the company is looking at significant hash rate growth, as well as “low-cost power contracts and additional expansion opportunities at the Childress site, as well as great value compared to its peers.”
The sell-side analyst is not bullish on all the miners he covers. Marathon Digital Holdings (MARA) is rated Underweight due to its high variable cost basis. And while Riot Platforms (RIOT) has a “clear path to meaningful hashrate expansion,” the stock has already seen “significant increases in Bitcoin price (or decline in network hashrate).” “It appears to be interwoven,” the memo said.
It will be interesting to see how miners’ Bitcoin (BTC-USD) production and hashrate growth has trended over the last month. Many companies, including CleanSpark (CLSK), posted strong statistics in October, when BTC soared 28.8% despite increased mining difficulty.
other bitcoin miners: HIVE Digital Technologies (HIVE), BIT Mining (BTCM), Hut 8 Mining (HUT), Bitfarms (BITF), Bit Digital (BTBT), Greenidge Generation (GREE), and Core Scientific (OTCPK:CORZQ).