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Analysis agency Bernstein has argued that Bitcoin mining companies are well-placed to pivot into constructing out AI knowledge facilities, in a brand new report shared with Decrypt.
The report projected that mining companies might derive as a lot as a 3rd of their future enterprise worth from the AI vertical. “We count on 30%-35% of their 2025E EV to be derived from the AI vertical,” the authors acknowledged, including that miners are anticipated to pivot round a fifth of their energy capability in the direction of AI by 2027.
The analysis agency initiated protection on two Bitcoin miners, Iris Power (IREN) and Core Scientific (CORZ), highlighting their hybrid Bitcoin/AI knowledge middle methods. Each are rated “Outperform” with important upside potential.
The report detailed the strategic benefits Bitcoin miners maintain within the AI knowledge middle house, arguing that their early entry into the ability interconnection queue provides them a aggressive edge.
“Bitcoin miners are rising as enticing companions to construct out AI Information Facilities (DC) with ‘prepared energy interconnect’ and knowledge middle working capabilities,” Bernstein defined.
For example, in Texas, the place 60% of U.S. Bitcoin mining capability is concentrated, the interconnect queue has greater than doubled in two years, with AI knowledge facilities and Bitcoin miners forming a major a part of this queue.
“Bitcoin miners at this time management ~6GW of energy entry, with a pipeline as much as 12 GW by 2027E,” Bernstein famous, including that these miners function at a aggressive energy price of ~$0.04/KWh in comparison with the U.S. industrial common of $0.08/KWh.
The report highlighted important offers which have catalyzed this pivot, such because the $4.7 billion co-hosting deal between CoreWeave and CORZ, and IREN’s GPU buildout for Poolside.AI.
“We count on 20% of Bitcoin miners’ energy capability to pivot to AI by 2027E (~2.5GW), largely led by hybrid AI/Bitcoin DC gamers (IREN, CORZ, HUT) and smaller miners,” Bernstein tasks.
Funding implications are important. In ranking IREN and CORZ as “Outperform,” Bernstein researchers argued that the market undervalues Bitcoin miners for his or her strategic energy portfolios and potential monetization by way of AI knowledge facilities. They added that
“The market is penalizing Bitcoin miners for Bitcoin volatility, regardless of our expectation of long-term Bitcoin structural uptrend led by rising institutional adoption,” the report states.
Bitcoin ETFs have “headroom to develop”
Bernstein’s confidence in Bitcoin’s future has strengthened following the success of Bitcoin ETFs, arguing that it signifies a rising acceptance and integration of Bitcoin into mainstream funding portfolios.
At the moment, Bitcoin ETFs handle about $55 billion in belongings, a mere 0.16% of addressable asset swimming pools, in comparison with gold ETFs at $210 billion.
“Bitcoin being the youthful asset has extra headroom to develop whereas being adopted inside asset allocation portfolios,” the report acknowledged.
Although roughly 80% of ETF flows presently come from self-directed retail traders by way of dealer platforms, the report famous optimism about imminent institutional inflows from personal wealth platforms, RIAs, and wirehouses.
“We consider Bitcoin ETF issuers are more and more optimistic of imminent inflows from personal wealth platforms/RIAs/wirehouses within the close to time period,” the report acknowledged.
Bernstein reiterates bullish Bitcoin worth prediction
The report noticed Bernstein double down on its bullish Bitcoin worth stance, reiterating its forecast that the digital asset would attain $200,000 by 2025, $500,000 by 2029, and exceed $1 million by 2033.
In its report, Bernstein emphasised Bitcoin’s distinctive demand-supply dynamics and its four-year worth cycle, pushed by its halving occasions.
The final halving occurred on April 20, 2024, marking the start of a brand new cycle.
The report highlighted that the discount in miner promote strain post-halving and the HODL tradition, the place holders retain Bitcoin throughout risky intervals, contribute to cost breakouts.
Within the final cycle from 2020-2023, institutional demand from entities like Grayscale, MicroStrategy, and Tesla triggered important worth will increase following the Might 2020 halving.
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