Bitcoin (BTC) mining stocks are struggling as declining cryptocurrency prices add further pressure to business models strained by the Bitcoin network’s April halving, according to a JPMorgan research note shared with Cointelegraph.
Mining stocks tracked by JPMorgan collectively shed 22% in market capitalization in February as Bitcoin’s falling price eroded mining economics, the March 3 report said.
Mining stocks such as Riot Platforms (RIOT), Bitdeer (BTDR), Marathon Digital (MARA) and Core Scientific (CORZ) reported their fourth-quarter 2024 earnings in February.
Virtually all of them saw post-earnings stock price declines, including Core Scientific, which reported better-than-expected Q4 revenues.
Bitcoin’s price versus the network’s hashrate. Source: JPMorgan
Related: Analysts eye Bitcoin miners’ AI, chip sales ahead of Q4 earnings
Halving woes
Every four years, the number of BTC mined per “block” — a bundle of transaction data stored on the blockchain — is reduced by half. The April halving event reduced mining rewards from 6.25 BTC to 3.125 BTC per block.
Since the halving, mining revenues and gross profits have dropped by an average of 46% and 57%, respectively, JPMorgan said.
Meanwhile, lower Bitcoin prices contributed to a 9% drop in gross profits in February, the analysts said.
Macroeconomic uncertainty — including fears of a looming trade war — has rattled markets since US President Donald Trump took office in January and announced 25% tariffs on Canada and Mexico.
Pressure on AI businesses
Miners are optimistic that adjacent business lines — including leasing out high-performance hardware to AI models and selling specialized ASIC microchips — will more than offset any revenue losses.
But even miners cashing in on demand for high-performance computing (HPC) from artificial intelligence models are under strain, JPMorgan noted.
“Operators with HPC exposure also felt pressure following the DeepSeek announcement and questions around near-term demand for data center capacity,” the analysts said.
In January, AI-related stocks took a hit when the Chinese AI company Deepseek claimed its AI models were able to produce results comparable to US market leaders such as OpenAI’s ChatGPT for a fraction of the cost.
Despite the setback, mining stocks with extensive AI exposure, such as Hut 8, are still more richly valued than peers, JPMorgan said.
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