Hyperscalers with generative AI needs are particularly interested in converting to bitcoin mining data centers due to the substantial power requirements and the urgency of deployment timelines. Generative AI applications demand immense computational power and energy, often ten times more than standard operations. Bitcoin mining data centers are equipped with advanced cooling systems and have access to cheap, substantial energy sources. This presents an ideal solution for these needs. For hyperscalers, building new high-performance computing (HPC) data centers from scratch can take years, with current wait times for electrical-grid connections extending more than four years (Exhibit 1 below shows the median duration to get grid connections in the US). By repurposing existing bitcoin mining facilities, hyperscalers can significantly reduce these timelines and meet the growing demand for AI services more efficiently.
Exhibit 1: Median Duration to Get Grid Connections (months)
Source: Bernstein Research
Given these trends, bitcoin miners are increasingly transitioning to AI data centers as a strategic move to diversify their revenue streams and leverage their existing infrastructure. This shift is driven by the volatile nature of the cryptocurrency market, prompting miners to seek more stable and profitable ventures. AI data centers require significant computational power and cooling systems that make them a natural fit for bitcoin miners who already possess these resources. Exhibit 2 shows US based Bitcoin miners have 6GW of power interconnect with pipeline in place to double by 2027.
Exhibit 2: U.S. BTC Miners Have Ready ‘Power Interconnect’ of ~6GW with an Active Pipeline of 12GW by 2027E
Source: Bernstein Research
The transition of a bitcoin mining company into an AI data center can be very transformative to the market valuation of the company. Volatile crypto revenue streams are replaced with recurring AI data center services revenues, which have high growth and high incremental profit margins. We have made investments in companies that are leading this transition from bitcoin miner to AI datacenter company.
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