Bitcoin Miners Essential Partners for AI Industry's Energy Needs, Bernstein Reports
According to Bernstein's analysis, Bitcoin mining companies continue to show strong potential as their partnerships with external providers become crucial for solving AI data center power capacity challenges.
According to Bernstein, the investment firm continues to maintain an overweight position on Bitcoin mining companies, pointing to the expanding collaborations between cryptocurrency mining operations that have become essential for solving artificial intelligence (AI) data center energy limitations.
Bernstein's tracking system for Bitcoin mining industry transactions recorded a fresh AI-focused agreement each week throughout July, with total agreements now exceeding 7.5 gigawatts or representing approximately $150 billion worth of multi-year contractual commitments, based on a Thursday research report provided to Cointelegraph.
According to the firm's analysts, external computing infrastructure provided by cryptocurrency mining operations will continue to hold significant value since power availability represents the primary constraint for the AI sector, especially given increasing political resistance toward establishing new data center facilities across the United States.
Shares of Bitcoin mining firms experienced substantial double-digit increases on Monday following major AI infrastructure partnership announcements from mining companies Hut 8 and IREN. Hut 8 revealed a 15-year lease agreement valued at $9.8 billion for its artificial intelligence data center facility, while IREN made public $2.8 billion worth of cloud service contracts with AI development companies.
IREN is beginning to convert that infrastructure advantage into contracted and more predictable revenue. The biggest risk to my thesis is execution.
Seeking Alpha contributor The Curious Analyst
July sees slew of AI-miner tie-ups
Additional Bitcoin mining operations with public stock listings have similarly diversified into the artificial intelligence sector. In early July, MARA Holdings revealed intentions to purchase a facility located in Texas featuring capacity reaching 2 gigawatts, aimed at growing its artificial intelligence and digital infrastructure operations.
Shortly before that announcement, TeraWulf entered into a 20-year lease agreement for data center space with Anthropic, an AI startup company, in a transaction that TeraWulf indicated has the potential to produce approximately $19 billion in contractual income.
Bitdeer, a Bitcoin mining infrastructure provider, has similarly moved into offering AI cloud computing solutions and high-performance computational services.
The majority of cryptocurrency mining company stocks showed upward momentum on Thursday according to premarket trading data. HUT 8's stock price increased 5.23%, IREN climbed 1.89% and TeraWulf advanced 1.49%. The sector-focused exchange-traded fund CoinShares Bitcoin Mining ETF (WGMI) rose 1.47% prior to the Nasdaq market opening. Bernstein maintains an outperform recommendation on all mentioned stocks with the exception of MARA, which carries a market perform designation.
AI data centers face political pushback
The research analysis from Bernstein indicated that cryptocurrency mining operations and external computing capacity suppliers will continue playing a vital role for artificial intelligence companies, given that new data center construction projects are encountering mounting political opposition from both major political parties.
On Wednesday, reports indicated that James Talarico, a Democratic candidate for the Texas Senate, presented a legislative proposal aimed at establishing more rigorous local authorization procedures and eliminating tax incentives currently available to AI data center operations.
Back in April, Senator Ron Wyden from the United States raised alarm about AI data centers operating in Oregon, his home state, potentially exacerbating water shortage issues during ongoing drought conditions. He noted that major data center facilities have the capacity to use as much as 5 million gallons of water daily and requested that large-scale data center operators provide explanations regarding their strategies to decrease groundwater usage for the purpose of safeguarding local water resources.
During March, the administration of President Donald Trump released a Ratepayer Protection Pledge designed to facilitate AI infrastructure expansion while preventing increases to electricity costs for residential consumers and small business establishments.
In January, multiple state governors unveiled strategies to enhance electrical grid capacity to accommodate the accelerating growth in demand from AI data center facilities, while emphasizing that newly constructed data centers must shoulder the expenses they generate instead of transferring these financial burdens to current residential ratepayers and small business consumers.