- A report published by JPMorgan predicts a 20% potential decrease in Bitcoin’s hash rate after the block reward halving event scheduled for April 2024.
- This upcoming event in April 2024 will see a halving of miners’ rewards. This mechanism is designed to limit crypto inflation.
- JPMorgan’s top pick among mining companies is CleanSpark, offering a combination of scale, growth potential, energy costs, and relative value.
In its latest report, JPMorgan explained its expectations for the hash rate after the Bitcoin halving period and how companies will proceed.
JPMorgan Reveals Post-Halving Expectations
A report published by JPMorgan predicts a 20% potential decrease in Bitcoin’s hash rate after the block reward halving event scheduled for April 2024. According to the report, the elimination of a portion of the current network hash rate, equivalent to 80 EH/s, may occur as a result of the gradual phase-out of old mining hardware for the upcoming halving event in April 2024.
The report emphasizes that the Bitcoin (BTC) mining industry is at a critical juncture with the next halving event. This upcoming event in April 2024 will halve miners’ rewards, and it is designed to limit crypto inflation. This will be the fourth halving in Bitcoin’s history.
The report notes that, based on the current price of Bitcoin, miners’ potential four-year block reward is approximately $20 billion. This represents a significant 72% decrease from the high point of nearly $73 billion about two years ago.
JPMorgan analysts Reginald Smith and Charles Pearce prefer mining operators with the best value in terms of current hash rates, operational efficiency, energy contracts, funded growth plans, and liquidity.
The bank initiates coverage of CleanSpark with an overweight rating and a $5.50 price target, while it rates Marathon Digital as underweight with a $5 target, Riot Blockchain as underweight with a $6.50 target, and evaluates Cipher Mining as neutral. Iris Energy is upgraded from neutral to overweight.
In a related development, the U.S. Securities and Exchange Commission (SEC) has postponed the approval of a spot Bitcoin ETF until the end of this month. The crypto community hopes a positive decision could attract more mainstream investments.
JPMorgan’s top choice is CleanSpark!
JPMorgan’s top pick among mining companies is CleanSpark, which offers a combination of scale, growth potential, energy costs, and relative value. On the other hand, Marathon is the largest mining operator but has high energy costs and low margins.
Riot has low energy costs and liquidity but is among the more expensive covered shares. According to the report, Cipher Mining has the lowest energy costs but faces growth limitations.
Interestingly, investment management firm BlackRock is also buying shares in Bitcoin mining companies, aligning with JPMorgan’s evaluations. BlackRock holds 5.89 million shares of CleanSpark, representing 3.8% of the total, making it JPMorgan’s top mining pick.
