Key Takeaways
- • Jefferies initiated coverage of five former bitcoin miners pivoting to AI data center development—Cipher Digital (CIFR), TeraWulf (WULF), Hut 8 (HUT), Riot (RIOT), and Core Scientific (CORZ)—with four rated buy and one rated hold, citing their competitive power infrastructure advantage.
- • Year-to-date share performance across the five covered stocks ranges from 45% to 135%, reflecting strong investor appetite for companies combining crypto mining legacy with AI infrastructure positioning.
- • Jefferies analysts argue these companies possess a critical "head start" in addressing projected AI data center capacity shortfalls, as they can repurpose existing power infrastructure originally developed for bitcoin mining operations into interconnected AI data centers.
- • The investment bank estimates 66 gigawatts of AI data center capacity will come online over the next five years, with the five covered companies accounting for approximately 17% of this projected expansion, suggesting additional growth runway.
- • The ability to secure hyperscaler lease agreements and generate revenue from data center operations this year will be a key differentiator among the peer group, according to Jefferies equity analyst Jonathan Petersen and his team.
Summary
Jefferies launched coverage of five cryptocurrency miners that have transitioned into AI data center developers on Thursday, with the report positioning these companies as beneficiaries of both tight AI infrastructure supply and their inherited competitive advantages in power generation and management. The five covered names—Cipher Digital, TeraWulf, Hut 8, Riot, and Core Scientific—have already demonstrated strong market momentum, with share price appreciation between 45% and 135% year-to-date as institutional investors recognize the strategic value of their pivot away from declining bitcoin mining economics toward the higher-margin AI compute market.
The core thesis underpinning Jefferies' mostly bullish coverage centers on power infrastructure as a critical competitive moat. As equity analyst Jonathan Petersen's team notes in their report, "interconnected power" represents "one of the largest bottlenecks" constraining AI data center expansion. Companies with bitcoin mining heritage possess a structural advantage: they have already invested in sourcing, permitting, and operating power infrastructure designed to support intensive computational workloads. By repurposing this existing capacity for AI data centers, former miners can deploy capital more efficiently and accelerate time-to-revenue compared to infrastructure competitors building power systems from scratch.
The magnitude of the opportunity is substantial. Jefferies estimates that approximately 66 gigawatts of AI data center capacity will enter service over the next five years—a period defined by acute supply constraints and elevated pricing for compute access. The five covered companies collectively represent roughly 17% of this projected capacity addition, indicating that even assuming market share concentration among larger players, meaningful growth prospects remain for the group. Moreover, several companies have already begun monetizing their infrastructure through lease agreements with hyperscalers, the cloud platforms and AI service providers driving demand for compute capacity.
Performance differentiation within the group will depend on execution during 2026, specifically on which companies successfully expand data center revenue and secure additional hyperscaler partnerships. The Jefferies report implies that operational success in these areas will drive further valuation re-rating as Wall Street recognizes these firms as pure-play AI infrastructure investments rather than legacy crypto mining assets.
The core thesis underpinning Jefferies' mostly bullish coverage centers on power infrastructure as a critical competitive moat. As equity analyst Jonathan Petersen's team notes in their report, "interconnected power" represents "one of the largest bottlenecks" constraining AI data center expansion. Companies with bitcoin mining heritage possess a structural advantage: they have already invested in sourcing, permitting, and operating power infrastructure designed to support intensive computational workloads. By repurposing this existing capacity for AI data centers, former miners can deploy capital more efficiently and accelerate time-to-revenue compared to infrastructure competitors building power systems from scratch.
The magnitude of the opportunity is substantial. Jefferies estimates that approximately 66 gigawatts of AI data center capacity will enter service over the next five years—a period defined by acute supply constraints and elevated pricing for compute access. The five covered companies collectively represent roughly 17% of this projected capacity addition, indicating that even assuming market share concentration among larger players, meaningful growth prospects remain for the group. Moreover, several companies have already begun monetizing their infrastructure through lease agreements with hyperscalers, the cloud platforms and AI service providers driving demand for compute capacity.
Performance differentiation within the group will depend on execution during 2026, specifically on which companies successfully expand data center revenue and secure additional hyperscaler partnerships. The Jefferies report implies that operational success in these areas will drive further valuation re-rating as Wall Street recognizes these firms as pure-play AI infrastructure investments rather than legacy crypto mining assets.
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