Mining company's AI big gamble: Valuations enter a divergence phase, turning the tide is tough

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Author: Nancy, PANews

Cryptocurrency assets continue to weaken and decline, and crypto mining companies are facing increasingly severe survival pressures. In search of new growth trajectories, more and more mining firms are accelerating their entry into the AI sector. This transformation narrative has quickly gained favor in the capital markets, with many mining stocks soaring significantly and even reaching new all-time highs.

However, while AI business injects new growth imagination into mining companies, the massive capital expenditures, ongoing funding requirements, and long return cycles behind it are pushing these companies into another round of capital consumption battles. Amidst the ongoing pressure on mining profitability, this high-stakes gamble on AI transformation is testing the financial strength and execution capabilities of these firms.

Stock prices significantly outperform Bitcoin, and valuations of mining companies are entering a divergence phase

Mining companies are transforming into the dominant computing power providers of the AI era.

As Bitcoin mining profitability continues to narrow, some mining firms are even incurring losses, while the explosive growth of AI is driving a sharp increase in global demand for data centers, electricity resources, and GPU computing power. An increasing number of miners are accelerating their shift into AI infrastructure, seeking new growth curves.

For mining companies, this transformation has natural advantages. Over the years, to meet large-scale mining demands, these companies have accumulated abundant electricity resources, land reserves, substation access capabilities, and mature cooling and heat dissipation systems—key assets. Compared to building data centers from scratch, mining firms only need to upgrade and retrofit existing facilities to quickly enter the AI infrastructure market, offering lower costs and shorter deployment cycles to meet AI computing demands.

Since last year, the pace of mining companies’ AI transformation has noticeably accelerated. Some miners have decisively downplayed or even exited traditional mining operations, fully shifting toward AI computing power and data center operations; others have retained part of their mining hardware but are gradually reallocating resources and capital expenditures toward AI. Today, several mining firms have become important players in AI infrastructure development.

In terms of timing, CoreWeave, Applied Digital, and Bitdeer began deploying AI computing and data center businesses as early as 2022-2023, making them early movers in the industry; while Iris Energy, Terawulf, Hut 8, Riot Platforms, and Bitfarms started ramping up AI infrastructure investments in 2025, coinciding with a period of rapid AI industry expansion.

Market response to the AI transformation narrative has been strong. The 11 mining companies have seen an average increase of 75.97% since the beginning of the year, significantly outperforming Bitcoin’s performance during the same period, with most reaching new highs post-transformation. Notably, Bitfarms (129.62%), Hut 8 (131.87%), Terawulf (118.68%), and Riot Platforms (93.71%) have performed especially well, benefiting from this AI infrastructure revaluation rally.

In terms of market capitalization, there is a clear divergence among mining firms. As a successful example, CoreWeave’s valuation has reached $62.85B, far surpassing other miners and becoming a new valuation benchmark in the industry; Iris Energy, Terawulf, Hut 8, Applied Digital, and Riot Platforms form a valuation tier between $10 billion and $20 billion; while companies like MARA Holdings, Core Scientific, Bitdeer, CleanSpark, and Bitfarms remain below $5 billion. This differentiation is partly due to first-mover advantages, but also reflects market pricing of each company’s AI strategic execution, customer resources, and data center deployment progress.

However, from a fundamental perspective, most miners are still in the heavy-investment phase of their AI transformation. Although many have reported revenue growth in recent quarterly earnings, overall profitability remains under pressure. On one hand, fluctuations in the value of crypto asset portfolios weigh on profits; on the other, building AI data centers requires huge capital expenditures, with increasing investments in power capacity expansion, infrastructure, and GPU procurement, driving operational costs higher. As a result, most miners have yet to shake off losses.

It is noteworthy that despite widespread pressure on performance, the stock prices of related miners have still risen sharply, indicating that the market’s current focus is not on short-term profitability but on the growth potential of miners as new-generation computing infrastructure operators.

The survival battle among miners intensifies, and AI transformation still faces multiple hurdles

The downturn in the Bitcoin market is making the survival environment for miners even more challenging.

Capriole Investments data shows that as of June 18, the average cost of Bitcoin production is about $63,707, with electricity costs around $50,965, and miner profit margins are only 17.45%. Over the past 30 days, miner profit margins have shrunk by 47.8%. Meanwhile, Luxor Hashrate Index data indicates that as of June 18, the daily return per TH/s has fallen to $0.032, a significant drop from $0.053 a year ago.

With mining revenues shrinking, many miners are forced to sell Bitcoin to maintain cash flow, further increasing survival pressure on small and medium-sized miners, and industry resources are rapidly consolidating toward leading players. Currently, Foundry USA, AntPool, and F2Pool together account for 59% of the total network hashrate. In comparison, in 2022, the top three Bitcoin pools only held 44% of the network’s hashrate.

Although traditional mining business is sluggish, the explosive growth in AI data center demand is prompting the market to reassess the value of mining firms. VanEck’s latest research report states that the most valuable assets of miners are not their mining hardware but their electricity resources, substation access, land reserves, and data center infrastructure—precisely the core resources most scarce in the current AI industry. Because AI clients are willing to pay much higher electricity prices and rents than traditional mining, AI infrastructure is expected to become the main growth engine for miners over the next decade.

According to a report by Bernstein, over $90 billion in AI infrastructure collaborations have been announced by large cloud providers, AI cloud service providers, and chip companies, involving about 3.7 GW of power capacity. Currently, competition for electricity resources has become central to AI infrastructure development, with Bitcoin miners controlling over 27 GW of planned power capacity. In some U.S. regions, building a 1 GW power connection can take up to 50 months, making existing mines key locations for AI data center expansion.

However, AI transformation is far from an easy path. VanEck notes that the market is still in the early stages of AI transformation, with company valuations primarily based on total energized power (Gross Energized Power). Miners with signed AI leases generally enjoy higher valuation premiums, while projects still in planning stages struggle to gain market recognition. Going forward, valuation logic will shift from “power capacity” to “project delivery capability,” ultimately focusing on cash flow, return on capital, and tenant quality. Currently, only about 25% of signed capacity has been delivered; whether data centers can be completed on time and within budget will be critical to valuation.

VanEck also emphasizes that the quality of AI tenants will directly impact miner valuations. Large cloud providers like Microsoft, Amazon, and Google can bring more stable cash flows and lower financing costs, while smaller GPU cloud service providers face higher operational risks and capital costs.

The huge capital investments needed for transformation are also testing miners’ financial strength. VanEck estimates that the shift to AI infrastructure will require enormous capital expenditures, with a short-term financing gap of about $50 billion and long-term capital needs reaching $221 billion.

Under this immense financial pressure, many miners are already seeking various ways to raise funds. For example, Iris Energy, TeraWulf, Bitfarms, and CleanSpark have issued convertible bonds to attract investors with lower coupons and future conversion options; while Core Scientific, Terawulf, MARA, Bitdeer, and Riot Platforms are selling or even liquidating some Bitcoin holdings to fund their AI transformation.

Additionally, many miners are signing long-term AI or high-performance computing (HPC) contracts to lock in future revenue, secure project financing, and reduce operational risks. Examples include CoreWeave’s $6 billion AI cloud service deal with Jane Street; IREN’s $9.7 billion AI cloud computing contract with Microsoft; Hut 8’s $9.8 billion data center leasing agreement; and Bitdeer’s partnership with DCI in Norway to build the country’s largest AI data center project.

For miners, AI currently offers a development path with far more potential than traditional mining. However, this transformation is not simply a switch from mining to selling computing power; fundamentally, it is a long-term race around capital, resources, and execution capabilities.