Bitcoin miners could piggyback on the AI boom, Bernstein analysts say. By one measure, they trade at a steep discount to comparable businesses.
According to a new report from Bernstein, investors are waking up to the fact that Bitcoin miners are well positioned for a boom in artificial intelligence.
By one measure, bitcoin miners trade at a 90% discount relative to legacy data centers, Bernstein analysts note in their new Blackbook, an annual deep dive in the cryptocurrency.
Despite the fact that a growing number of miners are making their money in the same way as those data centers: by appealing to AI providers’ insatiable appetite for power.
But that reduction may not last. Core Scientific, a miner that embraced a pivot to AI, saw its shares rise nearly 300% in 2024.
“Bitcoin miners find themselves in a unique position, led by their unparalleled ‘access to power’ in an energy-constrained world,” the analysts wrote.
“This access to ‘ready,’ cheap power, combined with data center capabilities, makes Bitcoin miners attractive partners for AI cloud providers, which accelerate time to market.”
Analysts say it could take up to four years for new data centers to connect to the power grid, as new, power-hungry bitcoin mines and AI data centers clog up the queue.
What’s more, they say tapping power from existing Bitcoin mines can cut that time by 75%.
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Valued on a per megawatt basis, legacy data centers are valued at $30 million to $50 million per megawatt, according to 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 penalizing miners for the cyclical volatility of Bitcoin. Therefore, AI DC diversification enables miners to trade closer to their potential as ‘power’ assets.
Core Scientific is one of the miners that has embraced AI.
Core Scientific has secured a 12-year, $6.7 billion deal with Nvidia partner CoreWeave, in which it will build and run an AI data center while CoreWeave pays for the hardware, power and more, according to analysts.
Analysts predict that by 2027, one-fifth of Bitcoin miners’ energy will be devoted to artificial intelligence.
For bitcoin miners, that trend promises a safety net when energy prices rise or the cryptocurrency’s value declines, making new bitcoin production unprofitable.
But this still allows miners to tap into any rise in bitcoin prices.
Bernstein is particularly bullish on this front: Earlier this year, he predicted that Bitcoin would hit $200,000 by the end of 2025 and $1 million by 2033, driven by institutional adoption.
In fact, analysts expect Wall Street to overtake Bitcoin’s eponymous creator, Satoshi Nakamoto, as the largest holder of Bitcoin by the end of the year.
Nakamoto is estimated to own 1.1 billion bitcoins, but it is unknown if they have access to those tokens or if they are still alive.
