The Bitcoin (CRYPTO: BTC) mining sector is running on faulty math — and the gap is big enough to distort every valuation screen on Wall Street.
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That’s according to JPMorgan analyst Reginald L. Smith. In a Nov. 24 research note, he explains that Bloomberg’s diluted share counts for Cipher Mining Inc (NASDAQ:CIFR), CleanSpark Inc (NASDAQ:CLSK), Riot Platforms Inc (NASDAQ:RIOT) and MARA Holdings Inc (NASDAQ:MARA) are 20%–33% too low, understating their combined market cap by roughly $8 billion. In other words, the group appears far cheaper than it truly is.
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Dilution That Screens Haven’t Caught Up To
Miners have been issuing stock at a rapid clip to fund land deals, high-performance computing (HPC) buildouts and long-term data center conversions, but market data hasn’t kept pace.
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JPMorgan estimates Cipher and CleanSpark’s diluted share counts have climbed about 20% since the firm’s last model update, while Riot and Marathon’s have jumped more than 30% thanks to ATM issuance, convertible bonds, options and RSUs.
Yet if Bloomberg’s lighter counts are still the default reference point for market cap and EV calculations, investors are effectively valuing a smaller company than the one that actually exists.
A Sector Being Priced Off Inputs That Are Plain Wrong
This mispricing lands at a moment when the sector is splitting into two clear camps. Cipher and CleanSpark are being upgraded on the back of multi-year HPC contracts and new data-center capacity that’s quickly becoming more valuable than Bitcoin mining itself.
IREN Ltd (NASDAQ:IREN) is getting a richer cloud valuation.
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Meanwhile, Riot and Marathon — the two biggest HODLers — are seeing price targets trimmed as weaker BTC economics collide with rising share counts. With so many moving parts, an $8 billion gap at the foundational data level isn’t just a technicality; it changes the whole picture of who’s gaining ground and who’s simply inflating their equity base.
Why The Input Error Matters To Investors
Smith’s view is straightforward: if your share count is wrong, every ratio built on top of it is wrong — from EV/MW to valuation comps to “cheap vs expensive” calls.
For a sector in the middle of a once-in-a-decade business-model shift toward AI-driven HPC revenue, clean numbers are the difference between spotting real value and chasing a mirage.
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