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Bitcoin BTC/USD mining stocks are a mixed bag right now. With soaring hashrates and dwindling returns, the industry is feeling the squeeze.

But according to JPMorgan's Reginald L. Smith, not all miners are created equal. In fact, Smith says MARA Holdings Inc MARA is far too expensive for what it offers, while Riot Platforms Inc RIOT may be a hidden gem.

So, why is one stock overpriced and the other underappreciated? The devil's in the details.

Why MARA Is Expensive

Smith's analysis revolves around the economics of grid connections and mining operations. Marathon's mining setup is valued at $2.8 billion, but with only three bitcoins mined daily (net of power costs), it would take over 40 years for the company to generate its implied value.

That's an eye-watering number, especially when you consider that the lifespan of its mining equipment is less than four years. No wonder Smith finds MARA "inexplicably expensive."

Why RIOT Is A Clear Bargain

On the other hand, Riot's valuation tells a different story. RIOT's land and power assets are worth $1.4 billion—more than its current enterprise value of $1.2 billion. In other words, the market is giving negative value to its mining operations despite Riot producing eight bitcoins daily.

For Smith, this discrepancy makes RIOT a clear bargain, or in his words, "cheap."

As the bitcoin mining landscape shifts, Smith suggests that direct bitcoin investments may yield better returns than pouring more capital into mining infrastructure.

With payback periods lengthening and industry economics tightening, Riot's undervalued assets could be the ace up its sleeve, while Marathon's inflated price tag raises serious questions about its future prospects.

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