Bernstein Bitcoin mining is about survival, consolidation, and the potential for AI diversification.

Bitcoin (BTC) mining stocks listed in the U.S. have more than doubled this year after being decimated in the crypto carnage of 2022, broker Bernstein said in a research report Friday.

The resurgence has been driven by two main factors, the report said. First, strong bitcoin price action due to improving sentiment resulting from Blackrock , Fidelity and other institutional exchange-traded-fund (ETF) filings. Second, some bitcoin miners are tapping into opportunities in high-performance computing and artificial intelligence (AI) as a “revenue diversification strategy,” the note said.

“This is a unique game of survival where the best-in-class miners with low costs and conservative debt profiles can survive, consolidate capacity and market share, to earn hyper-normal profits when bitcoin prices exceed the cost of production,” analysts led by Gautam Chhugani wrote.

Bernstein notes that weaker miners with high debt are not able to survive and “capitulate during crypto winters,” citing the recent bankruptcy of Core Scientific (CORZQ).

The broker says the first round of consolidation has already played out and surviving miners are now adding capacity in anticipation of bitcoin halving, when mining rewards are cut by 50%, an event that typically drives the BTC price higher . The next bitcoin halving is likely to occur around April 2024.

Wall Street giant JPMorgan also recently said in a report that over time the bitcoin mining industry will consolidate and become more competitive because only miners with lower production costs will be able to survive.

Read more: Only Bitcoin Miners With Low Power Costs and High Sustainable Energy Mix Will Survive: JPMorgan

Edited by Sheldon Reback.

Translation:

Bitcoin (BTC) mining stocks listed in the U.S. have more than doubled in value this year after experiencing significant losses in the cryptocurrency market in 2022, according to a research report by brokerage firm Bernstein on Friday.

The report attributes this resurgence to two main factors. First, the positive price movement of bitcoin, which is driven by improving sentiment due to the involvement of institutional investors such as Blackrock and Fidelity, as well as other exchange-traded-fund (ETF) filings. Second, some bitcoin miners are exploring opportunities in high-performance computing and artificial intelligence (AI) as a way to diversify their sources of revenue.

The analysts, led by Gautam Chhugani, describe this situation as a unique game of survival, where the most efficient miners with low costs and conservative debt profiles can endure, consolidate their capacity and market share, and earn exceptionally high profits when bitcoin prices exceed the cost of production.

Bernstein highlights that weaker miners with high debt are unable to sustain themselves and often succumb to financial difficulties during periods of market downturn, as evidenced by the recent bankruptcy of Core Scientific (CORZQ).

The brokerage firm states that the initial phase of consolidation among miners has already taken place, and surviving miners are now expanding their capacity in anticipation of the next bitcoin halving event, which will involve a 50% reduction in mining rewards. This event typically leads to an increase in the price of BTC. The next bitcoin halving is expected to occur around April 2024.

JPMorgan, a major player in Wall Street, also recently stated in a report that the bitcoin mining industry will eventually consolidate and become more competitive, as only miners with lower production costs will be able to survive.

For more information, read the article: “Only Bitcoin Miners With Low Power Costs and High Sustainable Energy Mix Will Survive: JPMorgan.”

Edited by Sheldon Reback.

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