The valuation logic of Bitcoin mining companies is changing! They are collectively transforming into AI computing power suppliers

The Zhitong Finance APP noted that as more large computing companies shift to a hybrid model centered on artificial intelligence and high-performance computing, their stocks have once again outperformed the original cryptocurrency (Bitcoin). These companies were previously referred to as "mining companies" due to their similarities with traditional commodities like gold mining, and their fortunes have often been swayed by the dramatic fluctuations in Bitcoin prices. Two years ago, at the onset of the AI boom, the industry benefited, but in the following year, as mining profits declined and competition intensified, their stock prices plummeted. Despite the cryptocurrency market experiencing a crash in the past week, Bitcoin is still up about 14% in 2025 and is not far from the nearly $126,000 historical high set earlier this month. Since the Trump administration's second term supported the cryptocurrency agenda, investors have flocked to Bitcoin. However, the biggest winner in this year's cryptocurrency recovery is not Bitcoin holders, but the mining companies themselves. A fund tracking publicly listed mining companies has surged over 150% so far this year. Unlike the past cycles where mining companies would also rise with Bitcoin, these companies are now seen as technology infrastructure firms as they are transitioning in that direction. Bitcoin mining stocks outperform cryptocurrencies John Todaro, an analyst at Needham & Co., stated, "Currently, investors' valuations of Bitcoin mining companies are almost entirely based on their opportunities in high-performance computing/AI. In our discussions about mining companies, less than 10% are actually talking about Bitcoin and mining." Cipher Mining Inc. (CIFR.US) and IREN Ltd. (IREN.US) are typical representatives of this trend. As these two Nasdaq-listed companies shift from purely mining Bitcoin to AI infrastructure, their stock prices have surged approximately 300% and 500% this year, respectively. At the beginning of 2025, Cipher signed a 10-year, approximately $3 billion hosting agreement with Fluidstack, which is backed by Google, guaranteeing $1.4 billion in lease debt in exchange for warrants equivalent to 5.4% of the shares. This agreement is one of the clearest signals that the boundaries between crypto mining and AI computing are becoming blurred. Meanwhile, IREN completed a $1 billion convertible bond issuance on Wednesday. U.S. mining company TeraWulf Inc. also announced plans this week to issue $3.2 billion in senior secured notes to fund the expansion of its Lake Mariner data center in Buckeye, New York. Singapore-based Bitdeer Technologies Group saw its stock price soar nearly 30% on Wednesday after detailing its plans to transform its main mining sites into AI data centers, including its 570-megawatt facility in Clarendon, Ohio The company stated that, in the best-case scenario, the comprehensive transformation could generate over $2 billion in annualized revenue by the end of 2026. Jeff Rabich, Vice President of Capital Markets and Strategy at Bitdeer, said: "For Bitdeer, artificial intelligence/high-performance computing is a complement to the mining business, not a replacement. We will continue to lead with the efficiency of self-mining and selectively transform qualified sites into artificial intelligence/high-performance computing sites to achieve sustainable long-term returns." The earnings metrics for Bitcoin miners are nearing historical lows. The transition of mining companies to artificial intelligence occurred after last year's Bitcoin halving, which reduced the rewards for miners from 6.25 Bitcoins to 3.125 Bitcoins. Since then, rising network difficulty and slowing transaction volumes have squeezed the profit margins of mining companies. Even the recent historical highs of Bitcoin have done little to help the individual profits of mining companies. Wolf Zhao, an analyst at TheMinerMag, stated that a company's shift to artificial intelligence-high-performance computing means they will slow down or pause the expansion of Bitcoin hash rate—the metric that measures the mining capacity of the entire industry—because a portion of their power capacity is being reallocated. He noted that Riot Platforms Inc., IREN, and Bitfarms have all signaled that they will not expand hash rates in the short term. Zhao said: "The focus is shifting from 'how much hash rate can we increase' to 'how effectively can we utilize our energy.'" He indicated that this shift is inevitable as Bitcoin's hash price is at historical lows, marking a new phase where mining and computing now share the "same energy economy." Toddaro from Needham stated: "The revenue per megawatt and EBITDA margins for high-performance computing and artificial intelligence hosting businesses are far higher than those of the mining business." He added that, considering the volatility of Bitcoin and the risks of halving, "the capital markets are valuing data centers focused on artificial intelligence much higher than traditional mining companies."