Investment firm Bernstein has issued an outperform rating on Bitcoin (BTC) mining stocks Riot Platforms (RIOT), CleanSpark (CLSK), Iris Energy (IREN) and Core Scientific (CORZ), while rating Marathon Digital Holdings (MARA) as market-perform.

For Riot Platforms (RIOT), Bernstein highlighted its significant operational power capacity and expansion plans.

"RIOT has a mega 1GW site at Corsicana, Texas being energised over 2024-25," the report states. Additionally, Riot recently acquired Block mining with 60 operational MW, extendable to 300MW.

The analysts noted that while Rior Platforms currently lags in production efficiency, it saw "improved production efficiency in July” thanks to replacing older S19 XP mining rigs with the latest generation models.

The firm  is expected to exceed 36 EH/s of hash rate by the end of 2024.

CleanSpark (CLSK) received high marks for its energy efficiency and realized hash rate. "CLSK and IREN are in the sweet spot of energy efficiency and realized hash rate/uptime," the analysts wrote.

The report also highlighted CleanSpark as one of the top three Bitcoin producers, along with Marathon and Core.

CleanSpark's focus on operational efficiency has placed it in a strong competitive position, with the company "stand[ing] out on realised hash rate (from higher uptime)."

Bernstein was bullish on Iris Energy’s (IREN) ambitious expansion plans, pointing to its “two mega sites” in the works in Texas.

Iris Energy’s potential in the AI sector also came under the spotlight, with the report noting that the miner has appointed Morgan Stanley “for exploring AI deals for its mega sites." The analysts expect the firm to exceed 30 EH/s by Q4 2024, driven by its 750 MW site at Childress, Texas.

Core Scientific (CORZ) stood out for its cost efficiency and leading AI strategy. The report highlighted its “best in class” hashcost, “driven by low power cost, uptime and controlled SG&A costs."

The firm is “a clear leader on AI strategy,” the report noted, with “382MWs allocated to AI/HPC Data centers with a $6.7Bn co-hosting contract with CoreWeave." The company's diversification into AI services sets it apart from competitors focusing solely on Bitcoin mining.

Room for improvement

While rating Marathon Digital (MARA) as market-perform, Bernstein acknowledged the company's strengths and areas for improvement.

The report noted Marathon as "the largest on self-mining and co-hosting scale" and recognized it as one of the top Bitcoin producers.

However, the analysts see Marathon as "an improving story,” pending its transition to self-owned sites to reduce its reliance on hosting partners.

The analysts expect mining margins to improve in the fourth quarter of 2024, driven by a re-energized Bitcoin bull cycle “led by fresh institutional ETF flows.” Mining costs are also expected to improve, “as some miners deploy the latest generation rigs at scale for their new expansion, leading to operating leverage."