Bernstein Analysts Bullish on Bitcoin Mining Companies Leveraging AI Data Centers for Growth
Bernstein analysts have identified two under-the-radar Bitcoin mining companies, Iris Energy (IREN) and Core Scientific (CORZ), as potential winners in the evolving market landscape. In a recent note, the firm initiated coverage on these companies with Outperform ratings, citing their strategic shift towards housing artificial intelligence (AI) data centers.
The analysts point to the miners' hybrid business model, which leverages their existing Bitcoin mining infrastructure to support AI data centers. Recent deals, such as CORZ's $4.7 billion co-hosting agreement with Coreweave, demonstrate the companies' commitment to this trend.
According to Bernstein, Bitcoin miners have a competitive advantage in the 'large load' power interconnect queue, giving them a head start in the development of AI data centers. This, combined with their low power costs, makes them attractive partners for companies looking to expand in the AI space.
The analysts predict that by 2027, 20% of Bitcoin mining power capacity will be allocated to AI, with IREN, CORZ, and other similar players leading the way. They remain optimistic about Bitcoin's future price, forecasting a value of $200,000 by 2025 and surpassing $1 million by 2033.
However, Bernstein sees the AI data center angle as a hedge against Bitcoin's price volatility, potentially appealing to institutional investors. They compare IREN and CORZ, highlighting CORZ's strong lead in co-hosting agreements and IREN's expertise in power pipeline and data center operations.
Bernstein values IREN and CORZ at target Enterprise Value (EV) to EBITDA multiples of 9.7x and 6.4x for fiscal year 2025, respectively. They believe that the market is currently undervaluing these companies' potential in the growing AI data center sector.
In conclusion, Bernstein's analysis suggests that Bitcoin mining companies like IREN and CORZ are well-positioned to capitalize on the shift towards AI data centers. This trend could not only drive their growth but also provide a buffer against Bitcoin's price fluctuations, making them attractive investments for both individual and institutional investors looking to diversify their portfolios.