Bitcoin mining stocks rally in June amid AI frenzy – JPMorgan


 ​ — Bitcoin mining stocks outperformed the underlying cryptocurrency in June, driven by excitement around AI data centers, the value of power access, and a decline in network hashrate. 

According to a note from JPMorgan, dated Monday, these factors contributed to a 19% sequential increase in the aggregate market cap of 14 U.S.-listed bitcoin miners, which reached $22 billion.

The investment bank highlighted several key factors behind this rally. First, the AI data centers emerged as a more lucrative use case for mining facilities. Second, the scarcity and value of power access have become more apparent. Lastly, a decline in network hashrate modestly improved mining economics for U.S.-listed operators, although profitability remains nearly 50% below pre-halving levels.

Despite an overall decline, the average Bitcoin price in June hovered around $66,000, up merely 1% from May. However, it exited the month lower at a $61,200 seven-day rolling average, an 11% decrease from the previous month’s figure. 

The network hashrate, a proxy for industry competition, declined for the second consecutive month, averaging 583 EH/s in June. This marks a 3% decrease from the previous month and a massive drop from pre-halving levels. Mining difficulty also declined by 1% from the end of May.

Mining profitability showed a modest improvement, with miners earning an average of $52,000 per EH/s in daily block reward revenue in June, a 6% increase month-over-month. However, this is still well below the peak of $342,000 in November 2021 when Bitcoin prices were $60,000, and the network hashrate was 161 EH/s.

JPMorgan notes that the group of 14 U.S.-listed miners had an aggregate market cap of $21.9 billion as of June 30th, with Terawulf Inc (NASDAQ:WULF) being the best performer, up 117%, and Argo Blockchain (NASDAQ:ARBK) being the worst, down 17%. 

“Nearly every miner tracked outperformed Bitcoin in June, reflecting the market’s enthusiasm for AI data centers and the scarcity and value of power access,” JPMorgan stated.

JPMorgan’s analysis reveals that the aggregate market cap of the 14 largest U.S.-listed bitcoin miners has been, on average, 17% of the nominal value of all remaining bitcoin since January 2022. This ratio peaked at 29% in December 2023 and was 28% as of June 30th. The aggregate market cap of these miners, which account for 24% of the total network hashrate, is about 28% as large as the nominal value of all remaining bitcoin.

Finally, the report compares the market cap of these bitcoin mining operators with the four-year rolling block reward revenue opportunity, which coincides with the useful life of mining hardware. This ratio peaked at 57% in December 2023 and was 55% as of May 31st, up 13 points sequentially, versus an average of 33% since January 2022.


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