JPMorgan Chase & Co (NYSE:JPM, ETR:CMC) CEO Jamie Dimon, known for his cautious stance on cryptocurrency, may hold a bearish view, but some analysts within the Wall Street giant are seeing positive signals in the bitcoin mining market.
As the highly anticipated Halving event approaches this week, Bitcoin’s price has seen a recent decline. However, despite this, the cryptocurrency remains up by 50% year-to-date, although this growth hasn’t translated to the prices of bitcoin mining stocks.
Stocks like Iris Energy, Riot Blockchain, and Marathon Digital Holdings, listed on the Nasdaq, have all experienced declines of more than a third since the beginning of the year. In London, Argo Blockchain has lost two-thirds of its value, and Toronto-listed HIVE Digital Technologies (TSX-V:HIVE, NASDAQ:HIVE) has also seen a one-third drop. 
The common trend among these companies’ stock charts is a sharp decline following the approval of spot-bitcoin exchange-traded funds by the US Securities and Exchange Commission in early January. This raises questions about whether the emergence of bitcoin ETFs from major players like BlackRock, Fidelity, Grayscale, and VanEck has replaced bitcoin miners as the go-to investment for exposure to bitcoin.
Fintech analyst Reginald L. Smith at JPMorgan noted that despite this, bitcoin mining stocks still maintain “attractive relative valuations,” particularly Riot and Iris.
Smith’s analysis suggests that US-listed miners, which contribute approximately 21% of the network hashrate, are trading at around 1.6 times their proportional share of the four-year block reward opportunity. While this is lower than the average of 1.5x since January 2022, it indicates that bitcoin miners’ valuations are relatively inexpensive compared to their expected earnings from future mining rewards.
The term ‘hashrate’ refers to the computing power dedicated to the bitcoin network. Miners compete to increase their share of this hashrate to earn more daily bitcoin rewards. Smith’s analysis shows that Iris and CleanSpark have increased their hashing power since February’s end, while Hut 8 and Marathon have seen a decrease.
While CleanSpark has shown strong year-to-date performance, up by 35%, it doesn’t currently fit the criteria for a value play.
Despite uncertainties about the future returns of bitcoin mining stocks, one advantage they have is their adaptability and diversification. HIVE Digital Technologies, for instance, has leveraged its significant processing power to expand into the growing artificial intelligence sector. This move positions them to capitalize on the increasing demand for data centers driven by AI advancements.
