Bernstein Lowers Bitcoin Mining Stock Targets by 20%-40% Amid Regulatory Concerns

Bernstein, a prominent asset management firm, has recently adjusted its price targets for several Bitcoin mining companies, lowering them significantly. This move comes amidst a broader analysis of the cryptocurrency market and the potential impact of regulatory changes and political stances on the industry. The firm's decision to lower the price targets for these mining firms suggests a cautious outlook on the near-term prospects of the Bitcoin mining sector.

The firm's analysts have noted that Bitcoin mining company stocks have experienced a significant correction, with declines ranging from 20% to 40%, while Bitcoin itself has only decreased by 10%. This discrepancy highlights the underperformance of mining companies relative to the broader cryptocurrency market. The analyst Gautam Chhugani pointed out that mining company stocks have not shown significant gains in the fourth quarter of last year, and the pullback since the beginning of this year has been more severe compared to Bitcoin's performance.

According to the analyst, institutional interest in mining companies is more focused on the high-performance computing narrative rather than the Bitcoin commodity cycle. This shift in focus has led to a divergence in performance between companies that advocate for AI data center hosting diversification, such as IREN and Core Scientific, and those that are historically Bitcoin-focused, like Riot and MARA. Despite performing well in 2024, companies like IREN and Core Scientific have underperformed this year compared to their Bitcoin-focused counterparts.

Bernstein's analysis also highlights the potential risks and challenges facing the cryptocurrency market. The firm notes that while regulatory clarity could drive industry growth, there are also macroeconomic factors that could affect market sentiment. These factors include changes in interest rates, inflation, and global economic conditions, which could impact the demand for cryptocurrencies and the profitability of mining operations.

The firm's revised price targets for Bitcoin mining companies reflect its cautious outlook on the near-term prospects of the sector. However, Bernstein's analysis also suggests that there are long-term opportunities for growth in the cryptocurrency market, particularly for companies that are well-positioned to benefit from regulatory clarity and industry growth. The firm's price target for Coinbase, for example, is based on the expectation that the company will continue to benefit from favorable regulatory developments and maintain its leading market share in the U.S. market.