The “valuation logic” of “Bitcoin miners”: “Generating electricity for AI” is several times greater than “mining Bitcoin”.

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The valuation logic of Bitcoin mining companies is undergoing a fundamental restructuring. With ready access to the power grid, these companies are rapidly transforming into technology infrastructure providers. The ability to immediately supply power to AI data centers has become a core advantage, helping Bitcoin mining companies gradually break free from the constraints of the cryptocurrency cycle.

On October 19, according to media reports, funds tracking listed mining companies have surged more than 150% this year, far surpassing Bitcoin's 14% increase. The share prices of Cipher Mining and IREN Ltd. have soared about 300% and 500% respectively. Behind this performance is investors' repricing of these companies—not relying on mining revenue anymore, but focusing on their AI infrastructure value.

John Todaro, analyst at investment bank Needham & Co., said:

“Investors are almost entirely valuing Bitcoin mining companies based on the HPC/AI opportunity. In our conversations with miners, less than 10% actually involves Bitcoin and Bitcoin mining.”

This valuation difference stems from a key fact: US Bitcoin mining companies have about 6.3 GW of operating sites and 2.5 GW of capacity under construction, making them the “fastest way for AI companies to get power and the lowest execution risk” choice. Against the backdrop of a 45 GW data center power shortage in the US between 2025 and 2028, the value of these ready-made power resources stands out.

Reconstructing Transaction Logic

In reality, deals are already being made on the “powering AI” logic. Earlier this year, Cipher Mining signed a one-month verification for a 10-year, approximately $3 billion hosting agreement with Fluidstack, partially backed by Google, including $1.4 billion in ownership obligations, in exchange for warrants representing 5.4% equity. This is one of the clearest signals yet of the blurring line between crypto mining and AI.

On Wednesday, IREN completed a $1 billion convertible bond issuance, while TeraWulf this week announced plans to issue $3.2 billion in priority proposals, aimed at the Lake Mariner data center in Barker, New York. Singapore-headquartered Bitdeer Technologies on Wednesday detailed its plans to convert major mining sites into AI data centers, including its 570 MW facility in Clarington, Ohio. The company said that in the best scenario, a full transformation could generate over $2 billion in annualized revenue by the end of 2026.

Todaro from Needham pointed out:

“Per MW revenue and EBITDA margins of HPC and AI hosting are far higher than mining, and capital markets are rewarding data centers focused on AI with multiples much higher than traditional mining companies.”

Instant Power Supply: The Core Competitiveness of Mining Companies

The biggest advantage Bitcoin mining farms have over newly built data centers is time. A Morgan Stanley report pointed out that these mining farms have approved grid connections and large-scale power supply capabilities, allowing them to bypass the “heavy load interconnection” process that often takes years for new data centers.

Data shows that in addition to 6.3 GW of current operational capacity and 2.5 GW under construction, US Bitcoin miners have 8.6 GW of permitted grid access projects. The conversion period to transform these sites into AI data centers is about 18 to 24 months, perfectly matching the time it takes for Bitcoin sites to complete their power infrastructure foundation from development.

Against the backdrop of acute power shortages, this ability to “immediately supply power” is critical. According to a Morgan Stanley model, even if all innovative solutions such as gas turbines, fuel cells, and nuclear power are considered, US data center developers will still face a power shortage of about 5 to 15 GW by 2028. Schneider Electric’s survey report also confirmed that “obtaining power” has become an urgent reason for data center project delays.

Deteriorating Mining Economics Accelerate Transformation

The urgency of Bitcoin mining companies’ transformation stems from the ongoing deterioration in mining economics. Last year's Bitcoin halving cut miners’ rewards from 6.25 BTC to 3.125 BTC. Since then, network growth and trading volume have further squeezed profit margins. According to the hashprice index, Bitcoin miners’ revenue indicators are close to historical lows. Even with Bitcoin recently hitting all-time highs, it has hardly improved mining companies’ unit returns.

Zhao from TheMinerMag pointed out that Riot Platforms, IREN and Bitfarms have already stated that they will not expand capacity in the near term. Jeff LaBerge, Bitdeer’s VP of Market Capital and Strategy, said:

“For Bitdeer, AI/HPC is a supplementary alternative to mining.”

With soaring demand for AI electricity and mining companies’ ability to supply power immediately, the market is rediscovering these companies’ true value as technology infrastructure startups.

Risk Warning and DisclaimerThe market involves risks and investments require caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investing accordingly is at your own risk. ```