According to CoinDesk, bitcoin miners have significant potential upside from the power portfolios they control, as highlighted in a recent research report by broker Bernstein. The report suggests that miners focusing on an active power strategy and pushing the boundaries of power efficiency are more likely to experience a valuation rerating. Analysts led by Gautam Chhugani believe that investors can profit by valuing these companies as efficient power shells with data center capabilities, rather than just bitcoin mining operations. Currently, miners trade at around a 90% discount to general data center valuations.

The bitcoin mining sector has seen a rerating in recent months, particularly after Core Scientific signed a 12-year artificial intelligence (AI) deal with cloud computing firm CoreWeave. The market is factoring in the potential AI and high-performance computing (HPC) opportunities, as well as the upside from alternative and more accretive use cases for bitcoin mining sites. Large miners remain focused on growing bitcoin production and their respective hashrates, with Riot Platforms, CleanSpark, and Iris Energy best positioned to expand market share.

There is also room for improvement in power efficiency and uptime. Miners can benefit from extracting more hashrate from their existing portfolios by upgrading their hardware to the latest generations of ASICs. The hashrate, a measure of computing power, serves as a proxy for competition in the industry and mining difficulty. Iris Energy and CleanSpark rate well in terms of power efficiency and uptime, while Core Scientific ranks highly regarding data center uptime. Riot’s efficiency is expected to improve as it energizes its large power sites, and Marathon Digital’s efficiency should recover as it builds out its self-mining portfolio.

Customization and innovation in mining systems and software can further boost efficiency, according to the report. Bernstein has an outperform rating on CleanSpark, Core Scientific, Iris Energy, and Riot Platforms, and a market perform rating on Marathon Digital.