Upgraded Price Targets Reflect Value from Mining Companies’ Electrical Power Assets and BTC Holdings
Analysts at JPMorgan have raised price targets for four prominent Bitcoin (BTC) mining stocks, incorporating the value of their electrical power assets and BTC holdings into their valuation framework. This move reflects a shift in focus towards the miners’ diversified revenue streams, rather than solely relying on their hash rate and production costs.
The Mining Operations with Upgraded Price Targets
According to the December 10 report shared with Cointelegraph, the following mining operations have had their price targets upgraded:
- MARA Holdings (MARA)
- CleanSpark (CLSK)
- Riot Platforms (RIOT)
- IREN (IREN)
Each of these stocks is already trading near or above its revised price target, highlighting the growing recognition by investors of the mining companies’ diversified revenue streams.
JPMorgan’s Valuation Framework: Expanding Beyond Hash Rate and Production Costs
The analysts explained their reasoning behind the upgraded price targets in a statement. "We previously valued Bitcoin miners based on the four-year gross profit opportunity for each operator," they noted. However, they have expanded upon this framework by incorporating two key components:
- Value of Land and Power Assets: JPMorgan has recognized that mining companies possess significant value in their land and power assets, which can be leveraged to generate revenue.
- HODL Premium: The analysts have introduced a HODL premium, giving miners credit for holding Bitcoin on their balance sheets like MicroStrategy.
The Rise of the HODL Premium
MicroStrategy, a software company turned de facto Bitcoin fund, has been at the forefront of the trend towards corporate treasuries holding significant amounts of BTC. As of December 10, MSTR had gained nearly 450% year-to-date, outpacing BTC’s 125% gains.
This success can be attributed to MicroStrategy’s strategic decision to hold a substantial portion of its treasury in Bitcoin. Its massive $40 billion BTC reserve is the largest corporate treasuries holding, followed closely by major Bitcoin miners such as Marathon, Riot, and CleanSpark.
The Growing Number of Corporate Treasuries Holding BTC
According to data from Bitcointreasuries.net, dozens of companies are now buying BTC in hopes of earning a similar trading premium in the public markets. As of December 10, corporate treasuries held more than $53 billion in BTC.
Here is the top 10 list of corporate BTC treasuries:
| Rank | Company Name | BTC Holdings |
| — | — | — |
| 1 | MicroStrategy (MSTR) | $40B |
| 2 | Marathon Digital (MARA) | $3.9B |
| 3 | Riot Platforms (RIOT) | $1.1B |
| 4 | CleanSpark (CLSK) | $890M |
Power Acquisitions and Diversification
The halving event in April 2024, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block, posed significant challenges for Bitcoin miners. In response, cash-heavy mining companies like Riot Platforms and CleanSpark acquired other miners with turn-key facilities to increase their hashrate and power pipeline.
JPMorgan highlighted the importance of diversification in a statement: "The second quarter of 2024 ‘was a historic quarter, as Bitcoin miners navigated the 4th Bitcoin halving event, which cut the number of daily coins mined (and all else equal, the daily revenue opportunity) in half, resulting in lower margins and profitability across our coverage universe.’"
Riot’s Valuable Power Portfolio
The December report further noted that "Riot has the most valuable power portfolio in our coverage universe, worth ~$1.3bn, by our estimate."
In conclusion, JPMorgan’s upgraded price targets for four prominent Bitcoin mining stocks reflect a growing recognition of the importance of diversified revenue streams and HODL premiums. As the market continues to evolve, it is essential for investors to consider these factors when evaluating the value of mining companies.
