Macquarie's Positive Outlook on Cryptocurrency Mining Companies

Strategic Diversification in Cryptocurrency Mining

Macquarie has recently initiated coverage on several prominent cryptocurrency mining companies, assigning Outperform ratings to Marathon Digital Holdings, Core Scientific, CleanSpark, Riot Platforms, and Cipher Mining. This move highlights the potential of these companies to capitalize on the evolving digital asset landscape, particularly through diversification into AI and high-performance computing (HPC).

Two Distinct Strategies in the Sector

Within the crypto-mining sector, Macquarie identifies two main strategies. Some companies are leveraging their power infrastructure to host non-crypto services, such as AI clients. Others remain focused on accumulating Bitcoin, betting on favorable price forecasts. Notably, growth in mining capacity and land or GPU acquisition for HPC and AI is often achieved through equity issuance.

Leaders in AI Hosting and Power Efficiency

Core Scientific and Iris Energy are recognized for their early adoption of AI-related hosting. Core Scientific, in particular, has secured a hosting deal with CoreWeave, positioning it advantageously in the AI compute infrastructure market. This partnership is seen as a catalyst for significant growth. Cipher Mining has completed its Odessa site, supporting both Bitcoin mining and HPC. Its focus on power efficiency and scaling is expected to boost profitability, with a target price set at $6.

Advancements in Cooling Technology

Riot Platforms continues to excel in Bitcoin cooling technology, thanks to its vertically integrated operations that encompass power and infrastructure management. Macquarie acknowledges its potential for operational efficiency, setting a target price of $15.

Broad Exposure and Acquisition Strategies

Finally, Marathon Digital and CleanSpark are noted for their extensive exposure to Bitcoin infrastructure and strategic acquisition approaches, with target prices of $22 and $20, respectively. These companies are well-positioned to benefit from their comprehensive involvement in the cryptocurrency mining industry.