J.P. Morgan Adjusts Bitcoin Miner Ratings Amid HPC Sector Shift

J.P. Morgan Revises Bitcoin Miner Ratings, Highlights HPC Opportunities

J.P. Morgan has refreshed its analytical framework for major U.S.-listed bitcoin miners, adjusting ratings and price targets based on the increasing potential for High-Performance Computing (HPC) colocation and cloud services. This recalibration reflects a growing industry trend where traditional cryptocurrency mining operations are diversifying into AI infrastructure.

Detailed Rating Adjustments and Price Targets

The investment bank upgraded Riot Platforms (RIOT) from Neutral to Overweight, simultaneously increasing its price target to $19 from $15. This upgrade stems from Riot's strong market position, characterized by installed scale, a clear path to hashrate expansion, favorable power contracts, and substantial HPC optionality. J.P. Morgan highlighted Riot's 700 MW Rockdale facility and the ongoing energization of its new 1 GW Corsicana site as key assets. The firm noted that Riot shares "offer the best value relative to other operators with HPC upside" in its coverage universe.

Conversely, Iris Energy (IREN) saw its rating cut to Underweight from Neutral, although its price target was raised to $24 from $16. Analysts Reginald Smith and Charles Pearce indicated that IREN shares are currently pricing in a massive colocation agreement at its Sweetwater site exceeding 1 GW, a deal that would entail over $10 billion in capital expenditure and represents "record scale." While acknowledging the long-term possibility of such a deal, J.P. Morgan expressed concerns that it creates "more downside risk than upside potential at current valuation levels." IREN shares experienced a decline of 9.81% in immediate trading.

CleanSpark (CLSK) was downgraded to Neutral from Overweight, with its price target trimmed to $14 from $15. J.P. Morgan cited valuation concerns, noting that CleanSpark shares appeared to be "fully pricing in the company's recent expansion to 50 EH/s." Despite recognizing CleanSpark as a "well capitalized, best-in-class operator with M&A expertise," the downgrade was primarily valuation-driven rather than due to operational issues. CLSK shares were down 8.99% post-announcement.

Cipher Mining (CIFR) maintained a Neutral rating, but its price target was significantly raised to $12 from $6, reflecting its considerable HPC exposure. Marathon Digital Holdings (MARA) also saw its price target adjusted, trimmed to $20 from $22, and was graded Overweight.

Market Reaction and Strategic Reorientation

The market reacted with notable shifts in the valuations of the affected bitcoin mining companies. Riot Platforms saw a modest gain of 0.45%, while IREN and CleanSpark experienced declines. This immediate impact underscores investor sensitivity to analyst ratings, particularly when they signal fundamental shifts in sector valuation methodologies. The core of J.P. Morgan's revised outlook is the integration of a 50% probability that leading miners will secure new HPC colocation deals, leveraging their existing power infrastructure for AI workloads. This framework estimates equity per MW for HPC colocation contracts ranging from $3.7 million to $8.6 million and approximately $5.3 million for GPU cloud services.

This analytical shift reflects a broader industry trend where energy-intensive cryptocurrency mining facilities are increasingly being repurposed or expanded to accommodate the surging demand for AI computation. The substantial power capacity and infrastructure developed for bitcoin mining present a cost-effective and rapidly scalable solution for AI GPU hosting centers.

Broader Context and Implications: The AI-Crypto Convergence

The strategic pivot of bitcoin miners towards AI and HPC infrastructure is exemplified by recent landmark agreements. A notable instance is the Cipher Mining (CIFR), Google (GOOGL), and Fluidstack deal, announced on September 25, 2025. This "AI-crypto hybrid bet" involves Cipher Mining providing 168 megawatts (MW) of critical IT load at its Barber Lake site for a 10-year colocation agreement with Fluidstack, valued at an initial $3 billion, with potential extensions to $7 billion.

Google's involvement includes a $1.4 billion backstop for Fluidstack's lease obligations and warrants to acquire approximately 24 million shares of Cipher common stock, representing about a 5.4% pro forma equity ownership. This partnership enables Google to rapidly scale its AI computing power, potentially reducing HPC costs by an estimated 40%, while diversifying Cipher Mining's revenue streams beyond the volatile cryptocurrency market.

This convergence creates a compelling blueprint for other crypto miners, potentially driving them to specialize in AI-ready infrastructure. Semiconductor companies, particularly GPU manufacturers like NVIDIA (NVDA), are indirect beneficiaries, as the rising demand for AI infrastructure translates into increased orders for high-performance chips. The aggregate market capitalization for the 13 U.S.-listed miners tracked by J.P. Morgan reached a record $39.1 billion in August, a 23% month-over-month jump, significantly outpacing the S&P 500's 3.5% gain, primarily due to the market aggressively valuing diversification into HPC.

Expert Commentary on Market Dynamics

J.P. Morgan analysts emphasized the relative value proposition among miners. They stated:

"We apply a 50% probability that Cipher (CIFR), IREN (NASDAQ:IREN) and Riot sign HPC colocation deals at remaining near-term capacity they are shopping, using Core Scientific's ~800 MWs of committed capacity to CoreWeave as an upper limit on near-term demand from a single tenant."

Regarding Riot, they noted:

"Under this framework, we see the most relative upside at Riot (+14%)."

For IREN, the concern lay in its current valuation:

"We estimate IREN shares are pricing in a >1 GW colocation agreement at Sweetwater, which would be a deal of record scale and capex (>$10bn), which could be possible over time, but creates more downside risk than upside potential at current levels, in our view."

And for CleanSpark:

"CLSK shares seem to fully price in the company's recent expansion to 50 EH/s, and investors will likely need more clarity around the company's latest thinking on HPC to drive further upside from current levels."

These comments underscore the bank's focus on the tangible progression of HPC deals and their impact on valuations.

Looking Ahead: The Narrowing Window for HPC Deals

J.P. Morgan analysts highlight a critical, time-sensitive opportunity for bitcoin miners. They estimate a window of approximately nine months for miners to secure favorable HPC colocation deals with hyperscalers and AI startups, as data center applications and grid connections for new facilities face significant backlogs, potentially taking up to six years for approval and construction. U.S.-listed bitcoin miners collectively possess over 5 GWs of power, with an additional 6 GWs in development, presenting a substantial existing infrastructure for AI workloads.

This dynamic positions miners with existing large-scale power infrastructure as attractive partners for companies seeking to rapidly expand their AI computing capabilities. The market will closely monitor the realization of these potential HPC deals, as their successful execution will be a key determinant of future valuations and strategic positioning within the evolving digital infrastructure landscape. The emphasis on high-quality colocation contracts and GPU cloud services suggests a continued shift in how these companies are valued, moving beyond traditional bitcoin mining metrics to embrace diversified revenue streams from AI infrastructure.