Bitcoin Miners' AI Arbitrage Play to Boost Revenue
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This month, we update the fundamental thesis for publicly traded bitcoin miners, highlighting their increasingly important roles in AI/HPC (high-performance computing) and energy markets. Publicly traded miners now control a record percentage of Bitcoin's global hash rate, and their collective market cap reached an all-time high in July. The MarketVector Digital Asset Equity Index, tracking these stocks, has risen 2.8% as of August 12th, underperforming the bitcoin price by 3,000 bps. At these levels, we believe investors are missing a major arbitrage between bitcoin miners and AI/HPC data centers.
We speak to many investors who are still unaware that bitcoin miners now have significant exposure to AI. The synergy is simple: AI companies need energy, and bitcoin miners have it. As the market values the growing AI/HPC data center market, access to power—especially in the near term—is commanding a premium. Due to heightened energy demands from bitcoin miners and data centers, North American grid interconnection queues now exceed four years. However, by drawing large loads and collaborating with power grids by participating in grid balancing programs, existing bitcoin miners are uniquely equipped to support AI/HPC immediately. Suitable bitcoin mining sites can energize GPUs for AI in less than a year, compared to the 4+ years required for greenfield AI data center developments to go online. Highlighting the potential value of this time arbitrage, we found that bitcoin miners trade at an average of ~$4.5M per megawatt (MW) of installed capacity, compared to above $30M / MW for some data center stocks. If properly equipped with power, bandwidth, and cooling systems, bitcoin mining sites are ideal for capturing this value for AI/HPC cloud services.
