Crypto Miners Turning to Data Centers

As technology companies strategize the expansion of data centers, Morgan Stanley has highlighted a promising opportunity: the conversion of bitcoin mining sites into high-performance computing (HPC) data centers. Analysts, led by Stephen Byrd, suggest that the market has yet to fully recognize the potential benefits of this transition, which could ultimately lead to a real estate investment trust (REIT) structure for these assets. The bank's analysis indicates that while U.S. bitcoin mining facilities are valued between $2 and $3 per watt, the value to major tech firms for expedited data center deployment exceeds $10 per watt. Recent trends show a growing interest among bitcoin miners in pursuing these conversion opportunities, with management teams engaging more with data center developers and hyperscalers. Morgan Stanley reports that the percentage of miners exploring this avenue has increased from 50% to 80%. Positive feedback regarding demand and pricing has further fueled this shift, especially as a potential shortage of new data centers looms between 2025 and 2027 due to limited grid interconnection. Cipher Mining stands out as a key player in this space, actively seeking data center conversion projects for hyperscaler clients. Despite a decline in its stock value—down 3% for the year and over 35% in August—analysts project a significant rebound, with expectations of a 79% increase in share value over the next year. The company’s expertise in site development and its strategic locations make it a strong candidate for successful conversions. In contrast, Bitdeer recently reported earnings that exceeded expectations but fell short of revenue forecasts, highlighting the mixed performance within the cryptocurrency sector.