In a recent report, JP Morgan affirmed that the Bitcoin mining sector is at a crucible stage by highlighting the buzz about a spot BTC exchange-traded-fund (ETF). It could trigger a rally in BTC price.
However, the industry faces challenges because of the upcoming reduction in mining rewards despite having record levels of network security.
JPMorgan kicked off coverage Wednesday by naming CleanSpark its top mining pick, hailing the company’s “A-team” management and fund growth plans.
But it slapped underweight ratings on mining giants Marathon Digital and Riot Platforms, warning of high costs and uncertainty ahead.
“The hotly anticipated approval of a bitcoin spot ETF could light a fire under crypto prices, raining revenue on efficient miners,” JPMorgan said.
But gathering storms of record hash rates and next year’s halving have analysts on edge.
“It’s do or die time for bitcoin miners on the knife edge of a crypto winter,” said lead analyst Reginald Smith. “Those who cut costs and lock in funding will be poised to strike if the ETF sparks a bitcoin breakout.”
CleanSpark snagged pole position with JPMorgan thanks to its “lean and mean” operations.
But Marathon Digital’s sprawling energy costs could become an “albatross” during the halving, analysts said. Riot Platforms faces integration risks after its blockbuster Whinstone U.S. acquisition.
All eyes are on the SEC’s looming ETF decision that could take Bitcoin mainstream. But JPMorgan sees existential threats if miners can’t survive the approaching halving hurricane. The bank’s initiation of coverage puts an institutional spotlight on crypto miners sailing into the storm of 2023.