- Bitcoin miners can piggyback off the AI boom, Bernstein analysts said.
- According to one measure, they trade at a steep discount to comparable businesses.
Investors are waking up to the fact that Bitcoin miners are well positioned to ride the boom in artificial intelligence, according to a new report from Bernstein.
By one measure, Bitcoin miners trade at a 90% discount relative to legacy data centres, Bernstein analysts note in their new Blackbook, an annual deep dive into the cryptocurrency.
That’s despite the fact that a growing number of miners are making their money the same way as those data centres: by appealing to AI providers’ insatiable appetite for energy.
That discount might not last, however. Core Scientific, a miner that has embraced a pivot to AI, has seen its shares rise almost 300% in 2024.
“Bitcoin miners find themselves in a unique position, led by their disproportionate ‘power access’ in a power-constrained world,” the analysts wrote.
“This access to ‘ready,’ cheap power, combined with data centre capabilities, positions Bitcoin miners as attractive partners for AI cloud providers looking to accelerate time-to-market.”
Brand-new data centres can take up to four years to connect to the energy grid, according to the analysts, in part because new, power-hungry Bitcoin mines and AI data centres have clogged the queue.
What’s more, tapping energy from existing Bitcoin mines can cut that time by 75%, they say.
Calculating their value on a per-megawatt basis, legacy data centres are valued at $30 million to $50 million per megawatt, according to the analysts.
Bitcoin miners, meanwhile, are valued at $2 million to $4 million per megawatt.
“We believe the market is underestimating this value of ‘power access’ and penalising miners for Bitcoin cyclical volatility. Thus, AI DC diversification would enable miners to trade closer to their potential as ‘energy’ assets.”
Core Scientific has been one of the miners to embrace AI.
Core Scientific has secured a 12-year, $6.7 billion contract with Nvidia partner CoreWeave in which it will build and run an AI data centre while CoreWeave pays for the hardware, power, and more, according to the analysts.
By 2027, one-fifth of Bitcoin miners’ energy will be dedicated to artificial intelligence, the analysts predict.
For Bitcoin miners, that trend promises a safety net when energy prices spike or the value of the cryptocurrency plummets, making the production of new Bitcoin unprofitable.
But it would still allow the miners to tap any upswing in Bitcoin prices.
Bernstein is notably bullish on this front: Earlier this year, it predicted Bitcoin would hit $200,000 by the end of 2025 and $1 million by 2033, driven by institutional adoption.
In fact, the analysts expect Wall Street to surpass Bitcoin’s pseudonymous creator, Satoshi Nakamoto, as the largest holder of Bitcoin by year’s end.
Nakamoto holds an estimated 1.1 billion Bitcoins, though it is unknown whether they have access to those tokens or whether they are still alive.
Aleks Gilbert is a DeFi correspondent based in New York. You can reach him at aleks@dlnews.com.
