Bitcoin Miners Ditch Crypto for AI as Stocks Soar Over 500%

TLDR

• Bitcoin mining companies including IREN, Riot, TeraWulf, and Cipher Mining are redirecting their infrastructure to AI and high-performance computing workloads through long-term contracts.
• Mining profitability has declined over 7% in September due to bitcoin price volatility and the halving schedule that cuts mining rewards every four years.
• Bitcoin miners can reduce AI data center deployment timelines by up to 75% because they already have power and infrastructure in place.
• Jane Street Group took passive stakes of around 5% in Bitfarms, Cipher Mining, and Hut 8, sending mining stocks up by double digits.
• IREN stock has climbed over 500% year to date after pivoting to AI services, while TeraWulf is up 150% and Riot has gained 104% this year.

Bitcoin mining companies are converting their facilities to serve artificial intelligence workloads. The shift comes as traditional crypto mining becomes less profitable and demand for AI computing power surges.

Several major mining firms have announced deals to lease their infrastructure for AI purposes. TeraWulf and Cipher Mining signed decade-long agreements with Fluidstack, a Google-backed AI cloud company. Galaxy Digital plans to transform its 1,500-acre Texas facility into an AI hub through a partnership with CoreWeave.

The pivot addresses declining mining revenues. Miner profits fell more than 7% in September as bitcoin prices dropped. Every four years, bitcoin’s halving event cuts mining rewards in half, further reducing income.

Bitcoin miners possess assets that AI companies need. They control land, energy infrastructure, and data centers already connected to power grids. These resources are in short supply as tech giants race to build AI capacity.

Infrastructure Advantages Drive Interest

Cloud providers like Google, Microsoft, and Amazon face multiyear delays in permitting and grid access for new data centers. Bitcoin miners can help fill this gap immediately.

Bernstein analysts estimate miners can cut data center deployment timelines by up to 75%. Their facilities are already grid-connected and often use renewable power sources. The existing infrastructure can be converted to AI use at lower cost than building from scratch.

CleanSpark announced its entry into AI data centers this week. The company will use its land and computing infrastructure to serve the growing AI market.

Riot converted additional acreage at its Texas facility for mixed bitcoin and AI use. The company expects the site to be operational in 2026. Riot shares have climbed 104% since January.

IREN, formerly Iris Energy, paused bitcoin mining expansion in April to focus on AI cloud services. The company purchased 4,200 Nvidia Blackwell chips in August. IREN stock has gained over 500% this year.

Institutional Investment Signals Confidence

Jane Street Group disclosed passive stakes in multiple bitcoin miners in late October. The trading firm holds approximately 5.4% of Bitfarms, 5.0% of Cipher Mining, and 5.0% of Hut 8.

Cipher Mining Inc., CIFR

Cipher Mining stock jumped 13% on the day the filings became public. Other mining companies also saw gains as traders interpreted the moves as validation of the business model.

Jane Street filed Schedule 13G forms, which indicate passive investment rather than activist positions. The firm has been active in digital assets trading and worked with spot bitcoin ETF issuers.

TeraWulf shares have risen 150% since the start of the year. The company’s multi-billion dollar lease agreement with Fluidstack runs for a decade.

Analysts view these contracts as evidence of a permanent shift rather than a temporary strategy. Compass Point analysts Michael Donovan and Ed Engel noted the multi-year terms and investment-grade backing suggest this is not a stopgap solution.

Jane Street reported around $110 billion in crypto trading activity in 2023. The firm’s involvement in bitcoin miner stocks brings institutional attention to companies that have struggled with thin margins in traditional mining operations.

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