January rally bolsters near-term outlook for bitcoin mining stocks, JPMorgan says

Group 1: Market Performance - Bitcoin mining stocks started 2026 positively, with a combined market capitalization of $60 billion, reflecting a 23% month-over-month increase, significantly outperforming the S&P 500's 1% gain [1] - Stock performance was generally favorable, with 12 out of 14 miners tracked outperforming Bitcoin's 4% decline in January, including IREN rising 42% and CANG falling 18 [7] Group 2: Industry Dynamics - The rally was supported by Riot Platforms signing a high-performance computing (HPC) agreement with AMD, indicating a shift for miners to diversify beyond Bitcoin and repurpose mining sites into AI-ready data centers [2] - Bitcoin miners are facing record-low margins post-2024 halving and are transitioning to digital infrastructure providers to seek more stable, long-term revenue [2] Group 3: Operational Metrics - January saw a 6% month-over-month decline in the average network hashrate to 981 exahashes per second (EH/s), with a brief dip to 700 EH/s, while mining difficulty decreased by 5% from December [4][5] - Miners earned approximately $42,350 per EH/s in daily block reward revenue in January, a slight increase from December, with gross profit rising 24% to around $21,200 per EH/s due to improved network efficiency [6] Group 4: Valuation Insights - Mining stocks are currently trading at about 150% of the four-year block reward opportunity at year-end, which is approximately three times the post-2022 average, indicating a disconnect between miner valuations and Bitcoin's price [3]