According to analysts at research and brokerage firm Bernstein, investing in Bitcoin miners is the best indicator of Bitcoin’s value as the largest cryptocurrency by market cap heads toward $150,000.
“Investors simply look at the daily correlation of Bitcoin BTC
-2.41%
miners, only on days when they see bitcoin rallying,” Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in a note to clients on Monday. “This selective periodic vision is incomplete.”
Analysts have noted that miners almost always outperform Bitcoin during bull markets and underperform during bear markets. “Investors need to take a view through the cycle and for us, we are still halfway through the 2024-25 cycle and view every window of miner weakness as a buying opportunity,” they said.
Chhugani and Sapra argued that Bitcoin miners’ actions are dominated by retail trading, with institutions largely avoiding Bitcoin proxies. “Traditional stock investors remain skeptical and still approach crypto with a hindsight bias,” they said. “Bitcoin miners’ underperformance during Bitcoin strong days is a window of opportunity, as Bitcoin sucks retail liquidity out of miners.”
With bitcoin hitting all-time highs above $72,000 today, Bernstein analysts expect renewed institutional interest in bitcoin-related stocks, with miners expected to be the biggest beneficiaries .
Bitcoin vs Bitcoin miners since the launch of spot ETFs in the United States. Picture: Bernstein.
Riot Platforms and CleanSpark will benefit the most
Bernstein analysts said they were particularly focused on Riot Platforms and CleanSpark stocks, suggesting that at current bitcoin price levels and above – even if their production costs were to double after the halving – Riot and CleanSpark would generate approximately 70% and 60% gross profit. margins, respectively. “Any reduction in miner capacity after the halving (we estimate 10-15% of them would be shut down) would lead to both RIOT and CLSK gaining relative market share,” they added.
Bitcoin halvings are scheduled to occur automatically every 210,000 blocks, or approximately every four years. The next halving event, expected in April, will see the reward subsidy for network miners increase from 6.25 BTC to 3.125 BTC per block. However, they continue to charge additional transaction fees for each block mined.
Additionally, as activity in the Bitcoin ecosystem grows through the development of additional layer 2/sidechain solutions, DeFi and NFTs, analysts expect the current 5% of miner revenue generated by Bitcoin fees reach a sustainable level of 15%.
‘More convinced’ of bitcoin price target of $150,000
Although bitcoin has already surpassed its previous all-time high of $69,000, moving into price discovery, Chhugani and Sapra expect another breakout after the halving, with analysts now ‘more convinced’ of their target bitcoin price of $150,000.
Analysts said they incorporated institutional flows into their estimates to arrive at the price target – initially expecting $10 billion in inflows this year following the launch of spot bitcoin ETFs in the United States on January 11 and an additional $6 billion in 2025.
However, net inflows have already exceeded $9.5 billion, with an average run rate of around $370 million per day. If this continues, Bitcoin spot ETFs will surpass Bernstein’s 2025 estimates in 166 trading days.
“Even though ETFs fluctuate, we understand that major ETF issuers have not even scratched the surface when it comes to integration with IRAs, private banks, wire companies and other traditional capital pools such as sovereigns, pensions, etc.,” noted the analysts. “We are still in the early stages of integrating Bitcoin into traditional asset portfolios.”
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