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Bitcoin Mining Sector Is Attracting Growing Investor Interest Following Core Scientific Deal: JPMorgan
Iris Energy is best positioned to take advantage of the high-performance computing/AI opportunity, the report said.
Updated Jun 24, 2024, 10:45 a.m. Published Jun 24, 2024, 10:42 a.m.
- Bitcoin miners are seeing an influx of investor interest following Core Scientific's AI deal with CoreWeave, the report said.
- Iris Energy is best positioned to take advantage of the growing HPC/AI opportunity.
- Investors are waking up to the alternative use cases for mining facilities and the value of power access.
The bitcoin mining sector is attracting a wave of investor interest following Core Scientific's (CORZ) deal with artificial intelligence (AI) company CoreWeave, JPMorgan (JPM) said in a research report on Monday.
The bank notes that the total market cap of the 14 miners it tracks has grown by 22%, or $4 billion, since the announcement, versus a 7% drop for bitcoin and a 3% increase for the S&P 500 stock index. Core Scientific said it had signed a 200 megawatts (MW) artificial intelligence deal with the cloud computing firm earlier this month. News of the deal triggered a re-rating of the bitcoin mining sector as investors reacted positively to the announcement.
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This is a reflection of the "alternative (and potentially more accretive) use cases for mining facilities and the scarcity and value of power access," analysts Reginald Smith and Charles Pearce wrote, adding that the Core Scientific deal "validates and will accelerate miners diversifying into high performance computing (HPC) programs."
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Overweight-rated Iris Energy (IREN) is best positioned to take advantage of the opportunity, the report said, noting that the company has excess power capacity and is not wedded to bitcoin mining. Iris Energy was early to embrace the HPC trend and is already running graphics processing units (GPUs) at its facilities, the bank noted. The firm has a track record of building and delivering high-quality data centers on time and has access to a decent amount of power.
Neutral-rated Cipher Mining (IFR) has attractive power costs and a strong operational history, but has a smaller power pipeline than Iris Energy, the bank said.
Riot Platforms (RIO), also overweight rated at JPMorgan, "remains fully committed to bitcoin mining," and has not shown much interest in HPC despite its abundance of power capacity.
Underweight-rated Marathon Digital (MARA) and neutral-rated CleanSpark (CLSK) "screen the most expensive on an enterprise to energized power basis," the report said.
Read more: Bitcoin Miners With Attractive Power Contracts Are Potential M&A Targets, JPMorgan Says
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Solana CME Futures Fell Short of BTC and ETH Debuts, but There's a Catch
When adjusted for asset market capitalization SOL's relative futures volume looks better, K33 Research noted.
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- Solana's SOL futures began trading on the Chicago Mercantile Exchange (CME) on Monday, with a notional daily volume of $12.3 million and $7.8 million in open interest, significantly lower than the debuts of bitcoin (BTC) and ether (ETH) futures.
- Despite the seemingly lackluster debut, when adjusted to market value, SOL's first-day figures are more in line with BTC's and ETH's, according to K33 Research.
- Despite the bearish market conditions, the launch of CME SOL futures offers new ways for institutions to manage their exposure to the token, said Joshua Lim of FalconX.
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