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Bernstein analysts are still very focused on publicly traded Bitcoin mining companies in the months after the most recent halving event.
In a research note on Wednesday, the firm benchmarked 12 Bitcoin mining companies, highlighting significant upside for those with improved power strategies and efficiency. The analysis suggests that Bitcoin miners could narrow their current 90% valuation discount, or disadvantage, compared to traditional data centers by optimizing their power portfolios and embracing cutting-edge efficiency measures.
"We believe Bitcoin miners by focusing on an active 'power' strategy and pushing the frontiers of power efficiency, can make a stronger case for valuation re-rating," the analysts state.
The report highlights aggressive hash rate expansion plans, varying power efficiencies across miners, and the potential for miners to leverage their assets for both Bitcoin mining and AI data center operations.
Key players like Riot Platforms (RIOT), CleanSpark (CLSK), and Iris Energy (IREN) are still favorites among the Bernstein analysts. The report also touches on Bitcoin holding strategies and the impact of next-generation mining chips.
The analysts believe there is "significant upside from extracting more Bitcoin hash rate from their existing portfolio, by simply upgrading their fleets to the latest generation ASICs."
In terms of power efficiency and uptime, the analysts write that Iris Energy and CleanSpark “do well on power efficiency/uptime.” Meanwhile, Core Scientific (CORZ) “does well on data center uptime."
The analysts expect improvements for some companies, noting: "We believe RIOT efficiency should get better as it energizes its large power sites, and [Marathon Digital] efficiency should get better as it grows its self-mining portfolio."
The report also discusses the opportunity presented by the latest generation of mining chips, writing that it presents an opportunity for CORZ to improve its mining capacity to power consumption ratio.
Bernstein's analysis also extends to the miners' Bitcoin holdings and selling strategies.
Large consolidators like Marathon Digital Holdings, Riot Platforms, and CleanSpark are holding substantial Bitcoin on their balance sheets while selling a smaller percentage of their production compared to 2023.
In contrast, smaller or mid-scale miners like Core Scientific (CORZ), Iris Energy (IREN), and TeraWulf (WULF) typically sell 100% of their production to fund operations.
The report also touches on the potential for Bitcoin miners to pivot towards AI data centers, which it also covered in a report at the start of the month.
Bernstein analysts wrote that they’re maintaining an Outperform rating on Core Scientific with a $17 price target, Iris Energy with a $26 target $26, Riot Platforms with a $22 target, and CleanSpark with a $30 target. But Marathon Digital has been given a Market-Perform rating, with a $23 target.
Edited by Stacy Elliott.