Jefferies Highlights Political Influence on Crypto, Adjusts Miners’ Price Target

The annual Bitcoin conference held in Nashville last week generated significant buzz with an array of notable announcements. Promoted as the largest gathering for crypto enthusiasts, the event drew over 20,000 participants, according to a report from investment bank Jefferies.

High-profile political figures were present, including Donald Trump and several Republican politicians, along with a few Democrats. Jefferies indicated that Trump’s commitment to appoint crypto-friendly regulators might link Bitcoin’s short-term price movements to the results of the upcoming US Presidential election. Trump promised to establish a presidential advisory council for the crypto industry and declared his intention to position the US as the “crypto capital of the planet.”

In terms of financial projections, Jefferies analysts adjusted Marathon Digital’s share target down to $21.57 from $22, while raising Argo Blockchain’s target to $1.63 from $1.20. These valuations are based on a discounted cash flow analysis, highlighting significant risks such as price declines, rapid increases in network hash rate, construction delays at hosting facilities, rising costs for ASIC miners, and regulatory challenges.

Despite the ongoing industry adjustments following the recent halving event, many Bitcoin miners were caught off guard by a reduction in network hashrate. Although Bitcoin prices have risen by 5% since the halving, the hashrate fell by 3% in May and by 5% in June. This trend surprisingly improved mining profitability, with Jefferies reporting that mining revenue per EH decreased by approximately 40-45% rather than experiencing a complete halving. Major miners, including Marathon Digital Holdings, still expect growth, aiming for 50 EH of output by the end of 2025, while Riot Platforms aims for 56.6 EH and CleanSpark targets 50 EH by the same deadline.

In a shift towards diversification, some miners are exploring AI and GPU computing capabilities to reduce their reliance on Bitcoin mining. For instance, Core Scientific, having emerged from bankruptcy, has redirected about half of its megawatt capacity towards AI data centers. Jefferies noted that this pivot to AI highlights a strategic move to capture growing demand and diversify revenue streams.

Additionally, Jefferies suggested that increased mergers and acquisitions could be on the horizon, as access to power resources becomes more valuable than mining fleets. Recently, Riot acquired Block Mining, a private platform boasting nearly 300 MW of power capacity across three locations in Kentucky.