Lucrative Data Centers: Why Wall Street Still Sees Opportunity When AI Fears Mount

Even as concerns about artificial intelligence valuations swept through financial markets in early 2025, one fundamental reality persisted beneath the skepticism: the insatiable demand for electrical power. According to Joe Nardini, head of investment banking at B. Riley Securities, the dealmaking machinery continues humming precisely because the economics remain sound. “M&A work is still ongoing as people still need power,” Nardini told CoinDesk, explaining that bitcoin miners and data center operators are actively bidding for power capacity well into late December 2025.

The picture emerging from Wall Street’s back rooms tells a surprisingly bullish story. GPU-heavy data center assets are commanding strong rates from multiple creditworthy tenants. The demand split is particularly revealing: while bitcoin mining still requires significant power allocations, the pull from AI and high-performance computing (HPC) operations has grown “even bigger,” with clients specifically seeking GPU-ready infrastructure.

The Catalyst: From Miners to Infrastructure Operators

The shift accelerated after the 2024 bitcoin halving event, which cut mining rewards and squeezed margins. Rather than exit the business, many mining operators pivoted toward a more profitable model: repurposing their data center capacity to host GPU-intensive AI and HPC hardware. This strategic repositioning proved attractive to investors. Bitcoin mining stocks that made this transition gained sharply throughout 2025 as AI enthusiasm swept markets, and notably, “miners that repositioned toward HPC are seeing higher valuations and accessing cheaper capital,” Nardini observed.

A tangible example: Hut 8, a major mining operation, saw its shares rally approximately 20% after announcing a 15-year lease valued at $7 billion with Fluidstack for 245 megawatts of IT capacity at its River Bend facility. The contract size alone signals the scale at which these operations now function.

The Dealmaking Playbook: Pricing Power and Strategic Forks

Behind the scenes, the mechanics of these lucrative transactions reveal a sophisticated market structure. In premium locations with high-quality power supply and operational viability, valuations have climbed dramatically. Nardini highlighted one negotiation process valued at over $400,000 per megawatt, with potential negotiations reaching $450,000 per megawatt. Prior deals have even fetched $500,000 to $550,000 per megawatt in competitive situations.

The buyer pool has expanded well beyond crypto-native operators. Bitcoin miners compete directly with hyperscalers (the massive tech infrastructure companies), AI firms, and other computational enterprises. On the seller side, the opportunity set now includes traditional industrial companies with older, idle, or underutilized facilities—their primary asset being abundant electrical capacity.

Nardini described one transaction where roughly 25 prospective buyers sought non-disclosure agreements to evaluate a single property, representing the competitive intensity across mining operations, hyperscalers, and AI specialists.

Pricing, however, reflects location and facility quality. Distressed or less desirable sites still attract “lowball” offers, typically ranging from $100,000 to $250,000 per megawatt, from buyers willing to accept compromised market position or infrastructure limitations in exchange for power access.

For asset owners, this creates a strategic choice: sell to an established player (hyperscaler or developer), or attempt the higher-risk path of becoming a developer. Nardini noted examples of older industrial companies and even private owners retrofitting vintage office complexes into modular power capacity, with one client “building 30 megawatt units at a clip” and actively seeking expansion capital. In at least one negotiation, tenant interest was so strong that a customer offered to prepay rent before construction completion—a stark indicator of capacity scarcity.

The Fundamental Test: Are the Tenants Real?

Beneath the optimism lies a simple diagnostic framework that Nardini applies to gauge whether enthusiasm matches reality:

Do clients have demand for their built-out data center capacity? Yes. Do they have tenants? Yes. Are they high-quality tenants? Yes. Are rates remaining strong? Yes.

“Across multiple conversations, the message has been consistent,” Nardini said. “So the demand is still there.”

Despite the broader market sell-off in AI-adjacent equities—CoreWeave (CRWV) tumbled more than 50% from its June 2025 peak, and Nvidia (NVDA) faced profit-taking—the operational reality for infrastructure operators remains resilient. “Despite the recent selloff, these companies have been well rewarded with higher valuation multiples and the ability to raise capital at attractive valuations and terms,” he noted.

The 2026 Outlook: Risk-On Economics

Looking toward 2026, Nardini expects the setup to favor risk assets if interest rates decline, creating a “risk-on environment” beneficial for dealmaking activity. His conviction rests on a straightforward observation: tenants are booking capacity, pricing remains firm, and if one customer declines a site, another steps in within hours.

His caveat is equally straightforward: worry only arrives when developers can’t lease what they build or can’t secure their required pricing. For now, that moment hasn’t arrived. “The demand for power and AI HPC data center capacity continues unabated,” he stated as of December 2025. “Developers with data center capacity have demand from multiple creditworthy tenants at good rates, so the core economics of business remain intact.”

The verdict: When stripped of sentiment and speculation, the fundamentals supporting these lucrative data center investments remain undisturbed. The AI trade, at least in its infrastructure dimension, proves far more resilient than near-term market volatility might suggest.