Bernstein "Bitcoin Miners Emerge as Top Beneficiaries of AI Power War"

▲ Bitcoin (BTC) mining/AI generated image

Bitcoin (BTC) mining companies have emerged as key beneficiaries in the race to expand artificial intelligence infrastructure. Wall Street research firm Bernstein evaluated that mining companies could absorb the demand for AI data centers by leveraging their large-scale power sites and access to transmission networks. The AI transaction volume is said to exceed $90 billion, with related power capacity reaching 3.7 gigawatts.

Benzinga reported on May 19 (local time) that Bernstein gave an "outperform" rating to four Bitcoin mining companies. Bernstein analyzed that AI transactions encompassing hyperscalers, Neocloud, and semiconductor suppliers are acting as a growth engine for mining companies. The explanation is that the power infrastructure held by mining companies, coupled with large-scale computing demand, has become the basis for a re-evaluation of their corporate value.

Bernstein set a target price of $100 for IREN, which represents a 98.1% upside potential from Monday's closing price of $50.46. CleanSpark received a target price of $24, with an upside potential of 78.5% based on Monday's closing price of $13.44. MARA Holdings maintained an "market perform" rating but set a target price of $23, reflecting an 88.8% upside possibility from Monday's closing price of $12.18.

Riot Platforms received a target price of $25. The upside potential from Monday's closing price of $23.18 was calculated at 7.8%. Core Scientific was given a target price of $24, which is 1.8% higher than Monday's closing price of $23.57. Bernstein saw that the differences in target prices among stocks varied depending on each company's AI transition speed, power acquisition structure, funding burden, and regional regulatory risks.

Bernstein analysts, led by Gautam Chhugani, analyzed that Bitcoin mining companies are already deeply involved in the AI infrastructure development process. These companies control over 27 gigawatts of planned power capacity alone. The fact that it can take approximately 50 months to secure 1 gigawatt of power in the US market, including regions with transmission network constraints like Texas, was also cited as a competitive advantage for mining companies with existing power connection sites.

IREN is pursuing the construction of 5 gigawatts of AI computing using Nvidia's AI Factory architecture. It also holds a $3.4 billion AI cloud contract linked to GPU deployment obligations. Riot's co-location deal is 50 megawatts related to AMD and can expand to 200 megawatts if expansion options are exercised. Bernstein also mentioned extensive collaborations between Google, Amazon, and other mining companies through intermediary cloud structures.

However, the expansion of AI data centers still faces regulatory and permitting burdens. Bernstein believes that grid connection delays, zoning restrictions, environmental reviews, and power grid capacity limitations will continue to be burdens in several US states. Nevertheless, Bitcoin mining companies with large sites already in operation or under development and access to power grids are considered to be in a more advantageous position than new entrants.

Company-specific risk factors were also presented. Core Scientific may miss out on some of the benefits of a Bitcoin bull market during the process of reallocating power from mining to AI infrastructure. IREN's AI cloud expansion is capital-intensive and depends on access to flexible funding. Riot Platforms' high concentration in Texas exposes it to changes in state-level tax policies or operational restrictions. MARA Holdings' reliance on external power partners carries production risks where power capacity could be converted to other commercial uses.

Bernstein's analysis shows that the investment thesis for Bitcoin mining companies has entered a stage where it cannot be explained solely by mining profitability. Large-scale power sites and transmission network connectivity have emerged as scarce assets in the AI data center expansion race, and mining companies are now facing the challenge of also dealing with environmental group scrutiny over energy consumption.

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