Wall Street is bullish on bitcoin miners who've pivoted to AI
As bitcoin (BTC) suffers its worst monthly performance since the crash of 2022, the crypto market is ending 2025 in a much different place than it was exactly a year ago.
Following Donald Trump's victory in the 2024 US presidential election last November, the crypto market went on a tear.
The industry was buoyed by the prospect of a much friendlier regulatory environment under the new administration, as well as a president whose family is actively building its own digital asset business.
Bitcoin began to immediately rally after Trump won, gaining 40% after election night and pushing its price past the $100K threshold for the first time ever by December.
But while most market experts don't expect a crash as big as what happened in 2022 to repeat itself, there's no question that the crypto market is in a much worse slump than anyone saw coming even several months ago.
In fact, investors have pulled $3.5 billion out of bitcoin ETFs so far this month, sending the funds toward their worst month of outflows since they were launched two years ago, as Bloomberg reported.
And as BTC's price now hovers below $90K, this is especially bad news for bitcoin miners.
Considering that it now costs smaller US-based operations roughly $137K to mine a single bitcoin, according to recent industry estimates, it means that many miners are now operating at a loss.
But as the margins have gotten increasingly worse even before the recent downturn, several bitcoin miners have pivoted over the past year and redirected their HPC infrastructure toward powering AI data centers, a sector with stronger margins and more consistent demand.
Wall Street appears to be bullish on the pivot.
JPMorgan analysts this week upgraded Cipher Mining (CIFR) and CleanSpark (CLSK) from Neutral to Overweight, while also raising the price target on Cipher from $12 to $18.
The bank also raised its price target for IREN Ltd. (IREN) to $39 from $28.
All three firms have been aggressively moving into the HPC business this year.
A big bet on AI that could drive future growth
Cipher has signed long-term agreements this year with AI cloud platform Fluidstack that could bring it up to $9 billion in contracted revenue over the course of its contract.
Citizens analyst Greg Miller initiated coverage of Cipher earlier this month with an Outperform rating and a $30 price target.
Miller said he was bullish on Cipher because he sees them as having an "early-mover advantage in large-scale HPC capacity with long-term monetization upside."
IREN secured new multi-year AI cloud contracts for Nvidia Blackwell GPU deployments in October. The mining company has doubled its AI cloud capacity to 23K Nvidia GPUs after purchasing an additional 12.4K GPU in September.
It is now targeting $500 million in AI cloud annualized run-rate revenue (ARR) by the first quarter of 2026.
And its spending spree on Nvidia chips paid off when Microsoft (MSFT) signed a $9.7 billion cloud deal with IREN earlier this month that includes access to the Blackwell GPUs.
This deal was enough for Canaccord Genuity analyst Joseph Vafi to raise his price target for IREN's shares to $70 from $42, a 66.7% increase.
Meanwhile, after announcing in October that it was expanding from a pure-play bitcoin miner to AI infrastructure services, CleanSpark said this month that it acquired the rights to roughly 271 acres of land in Austin County, Texas and secured 285 megawatts of long-term power supply agreements.
Although the company's stock fell this week after missing on the Street's revenue expectations for its fourth quarter earnings, the company sounded confident during its call with investors about its move into the AI sector.
“While we are in the early innings of our AI data center journey, the market is moving quickly, and so is CleanSpark,” said CFO Gary Vecchiarelli. “Our conversations with offtakers are ongoing, and it is not a matter of if but when we will have our first customer.”
B. Riley analyst Nick Giles cut his price target for the stock to $22 from $25 following the earnings miss, but still remains bullish on CleanSpark's prospects, projecting that the "strategic AI pivot" will be "unlocking long-term upside despite near-term estimate cuts."
CleanSpark's stock is up 46% for the year. Cipher has surged 312.7% YTD, while IREN has soared 393.4%.