Bitcoin miners are increasingly expanding beyond traditional hashrate operations and into AI-focused high-performance computing, attracting new attention from Wall Street. But despite the optimism surrounding the sector’s pivot, JPMorgan warns that several mining firms may be overvalued, primarily due to rising shareholder dilution.
In a research note published on Nov. 24, JPMorgan upgraded Cipher Mining and CleanSpark, while cutting price targets for Marathon Digital (MARA) and Riot Platforms (RIOT).
Cipher and CleanSpark Get Upgrades
JPMorgan raised its rating on both Cipher Mining and CleanSpark from “Neutral” to “Overweight,” citing disciplined equity management and stronger positioning in the AI compute race.
- Cipher’s price target: Raised from $12 → $18
- CleanSpark’s price target: Maintained at $14
Cipher has announced plans to scale its infrastructure to 1.7 gigawatts by 2026, largely to support high-performance AI computing. Meanwhile, CleanSpark recently expanded its Texas datacenter with an additional 200 MW dedicated largely to AI workloads.
The shift reflects a broader trend: miners are increasingly using their access to cheap power and large-scale facilities to enter the booming AI compute market.
Dilution Risks Threaten MARA and RIOT
While JPMorgan sees potential in the mining sector’s AI expansion, it also warns that some companies are masking significant risks.
Many miners rely on at-the-market (ATM) offerings to raise capital which increases outstanding shares and dilutes existing shareholders. JPMorgan argues that the market is underestimating just how much dilution is occurring.
According to the report:
“Our diluted share count figures that underpin our price targets are 20%–33% higher than the share count reflected in Bloomberg.”
This suggests that several mining stocks may appear more valuable than they really are when adjusted for actual dilution.
Because of this, JPMorgan cut its price targets for two of the sector’s biggest names:
- Marathon Digital (MARA):
$20 → $13 - Riot Platforms (RIOT):
$19 → $17
The bank cautions that ongoing dilution combined with capital-intensive expansion could limit upside for these firms despite the AI trend.
AI Demand Is Rising, but Challenges Remain
Bitcoin miners have strong incentives to diversify. With Bitcoin block rewards falling over time and energy costs rising, pivoting into AI compute, data hosting, and HPC services offers miners a new revenue avenue.
But JPMorgan warns that while the AI boom is real, the financial risks attached to expansion including funding needs, dilution, and infrastructure costs must not be overlooked.
