JPMorgan Sees $8B Valuation Gap in Bitcoin Mining Sector
Wall Street is mispricing miners by 28% by underestimating the value of their high-performance computing capacity, analysts say.
JPMorgan has identified a significant valuation gap in the Bitcoin mining sector, suggesting that Wall Street is underpricing publicly traded miners by as much as 28%. The bank’s analysts argue that flawed valuation models are failing to account for the growing value of the miners' high-performance computing (HPC) capabilities, creating a potential $8 billion market inefficiency.
The bullish assessment triggered a rally across the sector in morning trading. Shares of Riot Platforms (RIOT) jumped over 6% to $13.51, while CleanSpark (CLSK) surged more than 7% to $10.45. Marathon Digital (MARA), another industry leader, also saw its shares climb over 2%.
According to a JPMorgan report highlighted by Benzinga, the mispricing stems from an underappreciation of miners' capacity for HPC and integrated cloud services. As the demand for data-intensive computing power grows, these firms are uniquely positioned to monetize their infrastructure beyond just mining digital assets.
This view marks a significant shift in how some on Wall Street are beginning to analyze the sector, moving beyond a pure-play correlation with the price of Bitcoin. The note suggests that while the industry's fortunes are still tied to the volatile cryptocurrency market, its underlying infrastructure holds a durable, and currently underestimated, value.
The analysis comes on the heels of several targeted upgrades from the bank. JPMorgan recently raised its rating for CleanSpark to 'Overweight', citing a favorable valuation reset and its operational efficiency. The average 12-month analyst price target for CleanSpark now sits at $23.98, implying substantial upside from its current trading level. Similarly, Riot Platforms holds an average price target of $27.33.
Despite the optimistic outlook, the sector is not without its headwinds. In an October report, JPMorgan noted that the combined market value of 14 U.S.-listed mining companies had reached $56 billion, but also pointed to the risk of shrinking profit margins. The ever-increasing global hash rate—a measure of the total computational power on the network—means miners must continuously become more efficient to remain profitable, a particular challenge following the most recent Bitcoin 'halving' event which slashed mining rewards.
However, the latest analysis suggests that the most efficient operators are poised to capture value that the market is currently overlooking. By re-evaluating these companies as broader infrastructure players with significant HPC assets, JPMorgan's report frames the sector not just as a bet on Bitcoin's price, but as a stake in the future of decentralized computing.