Institutional investors attracted to bitcoin mining companies because of their artificial intelligence (AI) potential may ultimately stand to reap unexpected benefits from the cryptocurrency bull market.
“If our prediction of a $200,000 Bitcoin price proves correct, investors may come in for AI and end up enjoying the Bitcoin bull market even if they don't want to,” the Bernstein report, published Monday, said, summarizing a dual opportunity that institutional investors may not have anticipated.
Source: Bernstein
This unexpected synergy between AI infrastructure and cryptocurrency mining is catching the attention of institutional investors who are looking beyond the traditional boundaries of these technologies.
According to Bernstein, bitcoin miners are uniquely positioned in the sector due to their abundant power resources and strategic locations.
“Bitcoin miners currently have access to a combined 4GW of electricity, with operational interconnection set to reach 6GW by the end of 2024,” the report noted, highlighting the critical infrastructure available to these companies.
Source: Bernstein
Bernstein analysts have argued for a revaluation of bitcoin miners, writing that miners have comparable power portfolios but trade at a discount to traditional data centers: around $4 million per MW compared to $30-50 million per MW, but miners also earn slightly less revenue per MW: $600,000 vs. $4.7 million per MW.
“As bitcoin miners operate on AI data center campuses, we believe the gap in both revenue and trading multiples will narrow,” Bernstein said.
According to Bernstein's analysis, bitcoin miners have a significant advantage when it comes to power infrastructure.
These businesses currently have access to 4GW of electricity, and projections suggest this could reach 12GW by 2027.
This huge power capacity, coupled with miners’ experience running high-density operations at 70-80KW per rack, meets the stringent power requirements of AI computing.
Unlike traditional data centers, bitcoin miners have strategically built their operations around “stranded power” sources in non-traditional locations where land and power are abundant.
This approach has resulted in the development of large sites spanning hundreds of acres with power capacities ranging from 100MW to 1GW.
For example, TeraWulf's (WULF) Lake Mariner site in Western New York boasts 500MW of hydroelectric generating capacity with ample water resources for cooling, a key component for both cryptocurrency mining and AI operations.
Bernstein further noted that bitcoin miners’ expertise goes beyond simply accessing electricity, and that their profitability depends on sophisticated electricity cost management, including hedging strategies in wholesale trading markets and collaborative relationships with utility companies and grid operators.
This know-how could be invaluable in managing the energy-intensive demands of AI computing.
Editor: Stacey Elliott.
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