Bitcoin miners have the potential to maximize their profits by focusing on their power portfolios, according to a recent report by broker Bernstein. The report highlights that miners who adopt an active power strategy and prioritize efficiency are more likely to experience a rerating in their valuation.
By emphasizing efficient power management and exploring the boundaries of power efficiency, bitcoin miners can present themselves as more than just mining operations. Bernstein suggests that investors should view these companies as “efficient power shells with data center capabilities,” rather than solely focusing on their bitcoin mining activities. It is noted that miners currently trade at a significant discount compared to general data center valuations.
In recent months, the bitcoin mining sector has seen a rerating, particularly after Core Scientific signed a long-term artificial intelligence (AI) deal with CoreWeave, a cloud computing company. The market is now factoring in the potential for AI and high-performance computing (HPC) applications, as well as exploring alternative and more profitable uses for bitcoin mining sites.
The report identifies Riot Platforms, CleanSpark, and Iris Energy as the large miners best positioned to increase their market share. These companies are concentrating on boosting bitcoin production and enhancing their respective hashrates. Additionally, there is room for improvement in power efficiency and uptime, with opportunities for miners to extract more hashrate from their existing portfolios by upgrading their hardware to the latest ASICs.
CleanSpark, Iris Energy, and Core Scientific are praised for their power efficiency and uptime, while Riot Platforms is expected to enhance its efficiency as it activates its larger power sites. Marathon Digital’s efficiency is also set to improve as it expands its self-mining portfolio. The report suggests that customization and innovation in mining systems and software can further enhance efficiency and profitability for miners.
Bernstein has given an outperform rating to CleanSpark, Core Scientific, Iris Energy, and Riot Platforms, while assigning a market perform rating to Marathon Digital. The report emphasizes the importance of miners focusing on their power portfolios and efficiency to unlock their full profit potential in the competitive bitcoin mining industry. By prioritizing power management, upgrading hardware, and exploring innovative solutions, miners can position themselves for long-term success and growth in the market.