JPMorgan anticipates a possible 20% reduction in Bitcoin’s (BTC) Network Hashrate after the upcoming halving event in April 2024.
“Our projections suggest that around 80 EH/s, which is 20% of the total network hashrate, might be eliminated during the April ’24 halving as outdated equipment is phased out,” the study mentioned.
Every four years, Bitcoin undergoes a halving event, which reduces the rewards for Bitcoin miners by half.
The study also highlighted that, based on Bitcoin’s present value, the quadrennial block reward opportunity is about $20 billion.
Yet, it underscored a substantial decline of roughly 72% from just over two years prior, remarking:
“To give perspective, this amount reached its zenith at nearly $73 billion in April ’21 and has oscillated between $14 billion and $25 billion in the previous twelve months.”
JPMorgan Names Out Top Bitcoin Miners
JPMorgan’s report also suggested mining operators that provide superior value, considering factors like current hashrate, operational prowess, energy agreements, funded expansion strategies, and financial liquidity.
The bank conveyed that it will commence its coverage with these ratings and projected prices: CleanSpark (CLSK) is rated as overweight with a target of $5.50, Marathon Digital (MARA) is underweight aiming for $5, Riot Platforms (RIOT) is underweight with a $6.50 target, and Cipher Mining (CIFR) stands neutral.
Furthermore, Iris Energy (IREN) received an upgrade, moving from a neutral to an overweight stance.
JPMorgan has singled out CleanSpark as their prime choice, valuing its harmonious blend of size, growth prospects, energy expenditures, and comparative worth.
The study further emphasized that Marathon, despite being the leading mining operator, grapples with the steepest energy expenses and slimmest profit margins.
Contrarily, Riot benefits from modest energy charges and good liquidity, yet it stands as the priciest equity within JPMorgan’s analyzed group.
Cipher Mining, while flaunting the smallest energy costs among its competitors, is perceived to have limited growth potential.
Miners Turn to Hedging Options Amid Price Volatility
Reports suggest that Bitcoin miners are exploring hedging strategies to safeguard their income consistency given the cryptocurrency market’s fluctuations.
GSR, a prominent player in the trading and market-making domain, is introducing hedging instruments designed to grant miners a steadier revenue stream.
Through these offerings, GSR is striving to fortify the robustness of the $500 billion Bitcoin network, ensuring that major operators remain secure and aren’t threatened by market declines.
It’s pertinent to mention that miners typically retain the Bitcoin they extract, rather than instantly liquidating it. This retention serves as an inherent hedging mechanism, as miners speculate on the cryptocurrency’s value appreciating over the long run. Nonetheless, by choosing to hold onto their mined Bitcoins, these miners potentially miss out on immediate gains.