With the right infrastructure and management talent, Bitcoin miners can gain substantial value by pivoting into the booming AI and HPC data center market, analysts say.
As demand for AI infrastructure increases, crypto miners with access to power and cooling can benefit from supporting high-performance computing workloads, according to the Galaxy Digital Research Report.
Analysts believe miners with experienced management teams capable of performing AI and HPC build-outs have “a huge opportunity” to “delivery incredible incremental value to the company.” This appeal lies in its long-term contracts and strong, stable cash flow models for AI and HPC colocation, described by Galaxy Digital as “predictable and high margin cash flow streams.”
“Revenues are not only more predictable than Bitcoin mining, but are also not correlated to the crypto market, smoothing out the revenue profile of companies with high exposure to the volatile crypto market. In the Bitcoin Bear market, it can increase financial stability and continue to increase capital or debt without causing excessive dilution or profits for miners.”
Galaxy Digital
Funding options are also expanding. “Galaxy writes that data center operators who have leases at credit-worthy counterparties can raise significant project funding to build data centers, citing $18 billion in development funding in the first quarter of 2024 alone.”
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The valuation gap is another important factor, with the report noting that Bitcoin (BTC) miners trade at 6-12 times their usual revenue, while some of the world’s largest data center operators are valued at 20-25 times their revenue.
Differences between Key AI Data Center vs Mining Data Center | Source: Galaxy Digital
However, not all crypto mining sites are suitable for shifting, writes Mike Novogratz’s Galaxy Digital, pointing out that even though they are suitable for bitcoin mining, there may be no suitable conditions for AI and high-performance computing.
If US data center capacity is expected to more than double by 2030, Galaxy says adapted miners could become “some of the largest operators in the industry.”
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