In a new report from FinTech and Crypto research firm Rittenhouse Research, Galaxy Digital cited the shift from Bitcoin mining to artificial intelligence (AI) infrastructure as the biggest reason for the company’s “strong purchase” rating.
The AI pivot on Galaxy Digital is not a bitcoin mining, but its biggest case of bull, says Rittenhouse’s research
Galaxy Digital was once a major player in Bitcoin (BTC) mining, but the 2022 acquisition of Helios data centers from the troubled Miner Argo blockchain could have unexpectedly placed the company as the leading infrastructure provider in the fast-growing AI economy.
At the time of the acquisition, the move was seen as a lifeline for struggling crypto miners. However, the rapid rise of productive AI platforms like ChatGPT has transformed demand for high-performance data centers into a gold rush, with Galaxy appearing to be sitting on one of the most valuable assets in this space.
“The Galaxy accidentally stumbled over Helios,” Rittenhouse wrote in his recent investment bond. The company believes that data centers currently dedicated to serving AI customers can generate $1.7 billion in EBITDA and $32 billion in stock value in the short term.
The Crypto industry remains unstable as BTC mining is subject to regular outages and constant equipment upgrades, but AI data centers typically provide stable margin returns through triple-net leases with large-scale cloud computing customers.
Rittenhouse argues that this contrast in this business model makes Galaxy a strategic advantage to end mining completely.
“Galaxy has completely ended all of its Bitcoin mining activities, focusing solely on AI data center targets and sending positive signals to potential hyperscalar tenants,” the analyst wrote.
The Rittenhouse report compares the Galaxy approach to the approach of other crypto miners, such as Riot Platforms and Cipher Mining.
However, the report argues that in reality these companies didn’t have any concrete AI goals until the AI boom began.
*This is not investment advice.