Crypto miners face uncertain times, as the recent halving events have changed the economics of Bitcoin. However, Cantor Fitzgerald analysts believe that optimism is still high in the Bitcoin mining industry.
Bitcoin prices have remained high, and with the worldwide network having a rate of around 600 EH/s, each publicly traded Bitcoin mining company can mine Bitcoin profitably. Therefore, Bitcoin miners are an enticing and leveraged method of investing in Bitcoin that allows users to mine Bitcoin at a lower cost than the cost of the spot.
Based on Cantor Fitzgerald, the growth of Bitcoin is the primary concern in the world of Bitcoin miners, resulting in the growth capex equal to maintenance cost. When new mining equipment is deployed, it does not just boost capacity for hash rates but also boost efficiency, which reduces the costs of mining Bitcoin.
Cantor has begun research coverage for seven new stocks. Each has a rate of “Overweight.”
Certain companies such as Cleanspark (NASDAQ: CLSK), Marathon Digital (NASDAQ: MARA), and Riot Platforms (NASDAQ: RIOT) have been able to position themselves as large-scale miners. These companies have gained an edge through a rise in trading activity, plenty of liquid financial assets, and a solid financial position to take advantage of opportunities for acquisition.
“We believe CLSK offers the excellent growth story, RIOT offers the perfect combination of growth/valuation, CIFR the accurate way to play power expertise, and WULF the excellent way to play the AI/HPC theme,” analysts stated in an article.
Investors who are dissatisfied with the decline in the performance of mining stocks in comparison to Bitcoin’s value may not realize that this relationship is enduring, but it is often viewed as the coiled spring.
Bitfarms Ltd. (NASDAQ:BITF)
Cantor Fitzgerald has taken over the coverage of Bitfarms Ltd. with an Overweight rating and a revised share price target of $5.00. The company has identified a major shift in Bitfarms operations and anticipates an enormous rise in its mining capacity by the close of this year. Bitfarms will acquire approximately 88,000 mining rigs called T21, which will increase its hash rate from currently seven exahashes per minute (EH/S) to a staggering 21 EH/S by the time of 2024. This is believed to be the key element to improving Bitfarm’s mining efficiency as well as decreasing its overall cost to mine.
Bitdeer Technologies (NASDAQ:BTDR)
Cantor Fitzgerald has begun coverage of Bitdeer Technologies with an Overweight rating. Analyst Brett Knoblauch sees strong growth potential for the company, pointing out its broad business portfolio, huge potential in the commercial rig industry sec, ured power of more than 2GW of energy and an increase in its self-mining rate. The company is currently expanding its data centres with 1,079 megawatts of power, which will raise the mining capacity of 59.5 exahashes every second.
TeraWulf Inc. (NASDAQ:WULF)
Cantor Fitzgerald, too, has been supportive of TeraWulf and analyst Josh Siegler, who raised the price goal from $4.00 to $7.00 instead of $4.00 and retained its Overweight grade. TeraWulf is involved in sustainable energy development with a focus on environmentally-friendly mining operations. The company has demonstrated impressive growth in revenue as well as a solid financial performance, resulting in an impressive net margin and a high return on equity.
Riot Platforms (NASDAQ: RIOT)
Riot Platforms has received several positive reviews from Cantor Fitzgerald. Analyst Josh Siegler has maintained an Overweight rating and an estimate of $20.00. Riot Platforms is a vertically integrated Bitcoin mining firm with substantial growth in revenue and solid financial indicators, such as a large net margin and high return on equity.
Cipher Mining (NASDAQ: CIFR)
Cantor Fitzgerald has begun coverage of Cipher Mining with an Overweight rating and an estimated price of $9.00. This is a reflection of the firm’s optimism about Cipher Mining’s future potential within the Bitcoin mining industry.
Cantor Fitzgerald predicts that the capacity of hash rates for the seven miners that they serve is expected to rise from 59.7 EH/s at the beginning of 2024 to 230.5 EH/s at the end of 2025.
The stability of power prices will lower the cost of mining Bitcoin in the event that the hash of the network remains steady. The report, however, is optimistic about the price of Bitcoin and predicts the rate of hashing on the network will improve to at least 900 EH/s by the time of 2025.
Cantor Fitzgerald is of the opinion that the proportion of the total hash possessed by publicly traded Bitcoin mining companies will boost as time passes. Today, public-traded miners control between 20 and 25 per cent of the total hash of the network. Since Bitcoin was halved, the price of mining has doubled. While new equipment is more efficient, the less efficient operator is likely to face difficulties, especially when another halving is expected in 2028.
Cantor Fitzgerald prefers miners that are cost-effective with scale and have liquidity. Flexible balance sheets allow miners to pursue aggressive expansion, either organically or through inorganic methods. However, miners who lack these benefits will be unable to keep pace with their peers, resulting in decreasing market share.
In the wake of the AI explosion, the demand for high-power computing (HPC) has risen and is now providing Bitcoin miners with the feature to make use of the extra power to meet the needs of AI/HPC. Certain miners are looking into this possibility, such as Core Scientific Inc’s (NASDAQ: CORZ) recent agreement with CoreWeave.
Cantor Fitzgerald believes that the Net Present Value (NPV) for this transaction, calculated on $1.5 million capex built per MW, would be $12 million per megawatt. Of their portfolios, WULF and Iris Energy Ltd (NASDAQ: IREN) are perfectly placed to profit from this trend because of their secured power capacity and their early participation in AI/HPC.
Furthermore, Riot Platforms has one of the lowest costs to mine and has an accurate balance of its balance sheet. In addition, the report states that Cipher Mining boasts the lowest energy costs among its peers. Cleanspark is expected to have the highest hash rate at 2024’s close.
