On Tuesday, B. Riley Financial updated its stock price targets and estimates for several digital mining companies, citing the recent surge in Bitcoin (BTC) prices and a modest increase in the global network hash rate. The firm adjusted its expectations following a 30% rise in BTC value since the U.S. election on November 5, with the cryptocurrency hitting a record high above $93,000 on November 13.
The updated price targets for Bitfarms Ltd. (NASDAQ:BITF), HIVE Digital Technologies Ltd. (NASDAQ:HIVE), and Stronghold Digital Mining, Inc. (NASDAQ:SDIG) are now set at $4, $6, and $6, respectively. B. Riley maintains a 'Buy' rating for these stocks. The firm also noted that transaction fees as of November 12 constituted about 4.9% of the total block reward, with an average of 2.3% since the start of November.
The global hash rate, a measure of the computational power per second used when mining and processing transactions on a blockchain, saw a 3% increase based on a 7-day average. However, it briefly peaked at around 830 EH/s. B. Riley pointed out that historically, hash rate increases tend to follow BTC price surges and anticipates the hash rate will rise later in the quarter.
Several other digital mining companies are scheduled to report their third-quarter results soon. Bitdeer Technologies Group (NASDAQ:BTDR), Bit Digital Inc. (NASDAQ:BTBT), and Canaan Inc . (NASDAQ:CAN) will release their earnings next week, with IREN (NASDAQ:IREN) following on November 26.
B. Riley has previously discussed the third-quarter results of other companies in the sector, including Core Scientific (NASDAQ:CORZ), Northern Data Group (XETRA:NB2-DE), Riot Platforms, Inc. (NASDAQ:RIOT), Marathon Digital (NASDAQ:MARA) Holdings, Inc. (NASDAQ:MARA), and TeraWulf Inc. (NASDAQ:WULF).
The financial firm's revised assumptions on BTC price and hash rate, along with adjusted EBITDA and price target estimates, are detailed in a table in their report. B. Riley is also set to host several of these companies at the Energy Convergence Conference in New York on December 4, where discussions will include updates on high-performance computing (HPC) opportunities and the growth outlook for digital mining.
In other recent news, Stronghold Digital Mining reported its Q3 2024 results, showing a decline in Bitcoin production and a subsequent decrease in revenue. The company generated 188 Bitcoin and an additional $0.5 million in energy revenue, totaling the equivalent of 196 Bitcoin, a 35% decrease from Q2 2024. The company's revenue for Q3 totaled $11.2 million, down 42% sequentially and 37% year-over-year.
In addition to these developments, Stronghold announced a pending merger with Bitfarms, which is expected to increase operational efficiency and diversify beyond Bitcoin mining. Two new hosting agreements with Bitfarms aim to improve mining operations at Stronghold's facilities. However, the company reported a GAAP net loss of $22.7 million, with a non-GAAP adjusted EBITDA loss of $5.5 million.
These recent developments have been influenced by the Bitcoin halving event, which has resulted in a lower block reward affecting mining output. Despite these challenges, the merger with Bitfarms and the new hosting agreements are anticipated to enhance Stronghold's growth and shareholder value.
InvestingPro Insights
To complement B. Riley Financial's analysis of digital mining companies, let's take a closer look at Stronghold Digital Mining, Inc. (NASDAQ:SDIG), one of the companies mentioned in the report. According to InvestingPro data, SDIG has a market capitalization of $88.84 million, reflecting its position as a smaller player in the digital mining space.
InvestingPro Tips highlight that SDIG's stock has shown strong performance over the last three and six months, with price total returns of 87.86% and 94.1% respectively. This aligns with the overall positive sentiment in the crypto mining sector due to the recent Bitcoin price surge mentioned in the article.
However, it's important to note that SDIG operates with a significant debt burden and its short-term obligations exceed liquid assets. This financial structure could be a point of concern for investors, especially in the volatile cryptocurrency mining industry.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for SDIG, providing a more comprehensive view of the company's financial health and market position.
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