Bitcoin Miners That Got Into AI Have Soaring Stocks. These Experts See More Gains Ahead

Jefferies initiated coverage on five former bitcoin miners pivoting to AI data centers, rating four Buy and one Hold, with upside of 18% to 48% for the bullish names. The firm says these companies have a head start because they control interconnected power, a key bottleneck as roughly 66 GW of AI data center capacity is expected online over the next five years. Shares of the group are already up 45% to 135% year-to-date, reinforcing the market's optimism around the AI pivot.

Analysis

This is less a clean AI capex call than a capital structure re-rating of stranded power assets. The market is rewarding whichever operators can convert interconnection rights and substation adjacency into contracted revenue fastest, which should widen dispersion inside the group: names with existing leases, energized capacity, or balance-sheet flexibility will compound, while pure option value stories get punished once investors start underwriting execution timelines instead of just megawatt counts.

The second-order beneficiary is the electrical infrastructure stack, not just the miners. If hyperscalers keep outsourcing speed-to-power to these developers, demand should spill into transformers, switchgear, grid services, and construction contractors with constrained lead times; those bottlenecks can create an inflationary feedback loop that delays marginal projects and preserves pricing power for the best-positioned sites. Conversely, traditional colocation and greenfield data-center developers are at risk of multiple compression if they lack comparable power access or cannot match the conversion speed of these repurposed facilities.

The main risk is that the current move is front-running a multi-quarter permit, equipment, and financing cycle. Near term, the stocks can keep acting like momentum names as long as AI demand remains the dominant narrative, but the setup becomes fragile if expected lease announcements slip, financing costs rise, or hyperscalers push back on pricing because they have more negotiating leverage than the equity market assumes. The market is also probably overestimating how much of the five-year capacity shortfall these names can actually capture; a 17% share of expected buildout still leaves most upside dependent on winning scarce projects, not just owning power.

The contrarian view is that RIOT’s neutral stance may be the tell: investors are paying up for conversion optionality, but not every miner has the same real estate quality, interconnect maturity, or capital intensity. As the sector rerates, the winners should separate into those with contracted revenue and those still selling a story; that gap can widen sharply over the next 3-9 months if one or two names show credible monetization while others dilute to fund conversions.

Key Decisions for Investors

• Long CIFR or CORZ vs short RIOT in a 3-6 month pair trade; thesis is that contracted power conversion and leasing visibility will earn a premium while the market penalizes lower-certainty optionality. Target 15-25% relative outperformance on the long side with a hard stop if RIOT lands a material hyperscaler contract.
• Buy dips in WULF on 1-2 week pullbacks rather than chasing strength; this name should trade as a high-beta beneficiary of every incremental AI power headline, but size small because execution slippage can cut the multiple fast.
• Use call spreads rather than outright stock for HUT into the next 1-2 quarters; upside exists if the market keeps paying for AI transformation, but the spread limits damage if financing or development timelines extend.
• Short a basket of conventional data-center developers without explicit power advantage against a long basket of CIFR/WULF/CORZ over 6 months; the edge should accrue to names with the cheapest path to energized capacity, not the broad AI infrastructure cohort.
• If you want cleaner expression, sell cash-secured puts on the strongest balance-sheet name after a post-earnings pullback; premium should remain rich while sentiment stays bullish, and the trade monetizes volatility instead of betting on immediate upside.