Bernstein Elevates Bitcoin Miner Targets as Strategic Pivot to AI Infrastructure Gains Traction

Executive Summary

Wall Street brokerage Bernstein has significantly upgraded price targets for U.S.-listed Bitcoin miners, including Core Scientific, Riot Platforms, and CleanSpark, reflecting their strategic pivot towards monetizing high-density power infrastructure for artificial intelligence applications. The revaluation acknowledges the growing role of these companies as essential AI infrastructure providers, driven by their unique access to power capacity.

The Strategic Revaluation of Bitcoin Miners

Bernstein analysts, led by Gautam Chhugani, have revised their outlook on Bitcoin mining companies, stating that these entities are increasingly becoming integral to the AI value chain. The firm has replaced its traditional discounted cash flow valuation model with a sum-of-parts approach. This new methodology accounts for the distinct valuations of Bitcoin mining and AI co-location businesses, incorporating metrics such as Bitcoin holdings, mining EBITDA, AI co-location revenues, cloud revenues, and the value of power sites designated for AI data centers, estimated at $3 million per megawatt.

Under this revised framework, Core Scientific (CORZ) saw its price target raised to $24 from $17, Riot Platforms (RIOT) to $25 from $19, and CleanSpark (CLSK) to $24 from $20. This reflects a broader industry trend where every U.S.-listed Bitcoin miner under Bernstein's coverage is strategically shifting to maximize the value of its power assets rather than solely focusing on Bitcoin price appreciation.

Deconstructing the AI Infrastructure Pivot

Bitcoin miners possess a unique advantage in the burgeoning AI infrastructure sector: access to pre-secured, high-density power capacity. This power is often located in regions with surplus renewable energy, positioning miners as critical partners for AI cloud providers facing interconnection delays and grid congestion. This leverage can potentially reduce AI data center deployment timelines by up to 75%.

Illustrating this pivot, IREN (IREN) announced a multi-year GPU cloud services contract with Microsoft, valued at $9.7 billion over five years, which includes a 20% prepayment. IREN also secured a $5.8 billion deal with Dell Technologies for GPUs and related equipment. By 2027, Bernstein expects IREN's AI and power assets to constitute approximately 87% of its enterprise value, with only 13% attributed to its Bitcoin mining operations. Similarly, TeraWulf announced a $9.5 billion project with Google-backed Fluidstack to develop 168 megawatts of next-generation AI compute capacity, securing a 51% ownership stake and a $1.3 billion lease-backing commitment from Google. Cipher Mining also entered a 10-year HPC hosting deal with AI cloud platform Fluidstack, expected to generate $3 billion in revenue, with Google taking a 5.4% pro-forma equity stake.

Analysts note that AI compute can yield revenues 25 times higher than Bitcoin mining on a per kilowatt-hour basis, further incentivizing this strategic shift.

Market Implications and Broader Context

The strategic pivot of Bitcoin miners towards AI infrastructure has profound implications for market dynamics and corporate strategy. JPMorgan analysts have observed an unusual trend where the combined market capitalization of publicly traded Bitcoin mining companies has climbed substantially, even as Bitcoin itself remains in a sideways trading pattern. This indicates that equity markets are increasingly valuing these firms based on their AI potential rather than solely their cryptocurrency exposure.

Profitability pressures intensified for Bitcoin miners following the April 2024 halving event, which reduced block rewards from 6.25 Bitcoin to 3.125 Bitcoin. JPMorgan estimates current production costs average around $92,000 per Bitcoin, with projections reaching approximately $180,000 following the next halving in April 2028. Bitcoin currently trades near $109,700, creating a challenging cost structure for miners focused purely on cryptocurrency production.

This trend signals a significant evolution in the business models of Web3-native companies, demonstrating a pragmatic adaptation to market conditions and technological demands. The convergence of digital asset infrastructure with high-performance computing for AI positions these miners as critical enablers for the broader technology ecosystem, diversifying their revenue streams and bolstering their long-term viability beyond the volatility of cryptocurrency prices.