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J.P. Morgan analyst Reginald Smith on Wednesday expanded his coverage of the bitcoin (BTC-USD) mining industry, handing out Underweight ratings to Riot Platforms (NASDAQ:RIOT) and Marathon Digital Holdings (NASDAQ:MARA).
The downbeat coverage of the two miners comes as the wider industry “is at a crucible moment as management teams (and investors) weigh the prospects of a bitcoin ETF, which may catalyze a rally, against record hashrate increases and the looming block reward halving that threaten industry revenues and profitability,” Smith wrote in a note.
Marathon (MARA) is the largest operator in Smith’s coverage, though it has the highest energy costs and lowest margins, he said. And, while Riot (RIOT) has relatively low energy costs and is nearing completion of a large data center, it’s “by far the most expensive name in our coverage universe.”
With bitcoin (BTC-USD) slipping 1.1% to $27.1K at 9:39 a.m. ET, RIOT and MARA drifted down 3.7% and 5.1%, respectively.
On the other hand, the sell-side analyst started coverage of CleanSpark (NASDAQ:CLSK) with an Overweight rating, calling the stock his top pick among miners.
The Overweight rating aligns with the SA Quant system rating and the average Wall Street analyst rating, both at Strong Buy.
CLSK, which saw its stock tick up 0.7% at the time of writing, “offers the best balance of scale, growth potential, power costs, and relative value,” Smith noted.
Cipher Mining (NASDAQ:CIFR) was also included in the new coverage, snagging a Neutral rating, as it has the “lowest power costs but its growth is constrained.
