Wall Street investment bank BTIG cut its 12-month average price target for bitcoin (BTC) miners by 65%, citing falling bitcoin prices and concerns over funding.
“While we expect BTC mining stocks to trade with BTC prices (like most commodity stocks do with commodities), we believe another driver of miners’ underperformance of BTC is concerns over funding growth (think lower BTC) price means less money for growth),” BTIG analyst Greg Lewis wrote in a research note on Friday.
BTIG’s Greg Lewis cut his 12-month price target on mining stocks he covers. (BTIG, CoinDesk)
Bitcoin miners have been hit hard this year, with their shares down more than 50% on average as the price of bitcoin tumbled after last year’s bull run. The pain of miners has been magnified as the Bitcoin network hash rate and mining difficulty have approached all-time highs this year, squeezing their profits.
This market condition has led investors to worry that miners will not be able to raise the capital needed to grow, as building a large-scale mining operation is very capital-intensive. However, BTIG’s Lewis believes that even in a bear market, large miners are better positioned to raise capital.
“In a market where BTC prices are flat, the ability to get funding becomes more important (think financing rigs, infrastructure and BTC) and we expect large established miners to continue to get funding at the expense of smaller new miners,” he said. wrote.
Lewis maintains a Buy rating on all four mining stocks he covers — Riot Blockchain (RIOT), CleanSpark (CLSK), Core Scientific (CORZ) and Marathon Digital (MARA) — and maintains a long-term outlook for the sector stay optimistic. “Unsurprisingly, our BTC mining price target is highly sensitive to our BTC price estimate; thus, the near-term BTC price of ~$40,000 is 30%-40% higher than our price target, while the $50,000 BTC The price is 90%-100% above our target price,” he wrote.
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