AI Deals Become the New Growth Driver for Bitcoin Miners as Analysts Spot Value in Cipher and TeraWulf

Analysts say AI data center contracts are undervalued, creating opportunities in former bitcoin miners

Compass Point analysts Michael Donovan and Ed Engel believe several companies converting former bitcoin mining facilities into AI data centers could be trading below their true value because investors are not fully recognizing the worth of their signed customer agreements.

The analysts created a valuation model that separates the value of existing AI infrastructure contracts from speculative projects that have not yet secured customers. They argue these firms should increasingly be viewed as real estate-style infrastructure businesses generating rental income rather than traditional bitcoin miners whose revenue is tied to cryptocurrency prices.

Under their framework, Compass Point calculates the potential value of future rental revenue from confirmed AI data center agreements after subtracting the remaining construction expenses. The firm then compares this estimated contract value with each company’s enterprise value to determine whether investors are assigning any worth to future expansion plans.

Using this methodology, Compass Point identified Applied Digital (APLD), TeraWulf (WULF), and Cipher Mining (CIFR) as companies showing the largest gap between the value of their existing AI contracts and their current market valuations. The analysts said investors appear to be placing little value on additional AI capacity that has not yet been leased, despite the possibility of generating significant recurring income once completed.

Core Scientific (CORZ) and Riot Platforms (RIOT) represent different cases. Compass Point noted that Core Scientific’s existing customer agreements are already mostly reflected in its stock valuation, meaning future growth will likely depend on securing additional deals. Riot, on the other hand, is valued more heavily on future opportunities, with investors placing importance on its Corsicana site and broader AI infrastructure plans despite having fewer contracted projects currently.

The report suggests the next couple of years will be crucial for the sector as companies move beyond announcing AI partnerships and begin completing facilities, onboarding customers, and generating rental revenue. Firms that successfully execute their plans could see valuations move closer to those of traditional infrastructure companies with stable income streams.

Former bitcoin miners have already become a major part of the AI infrastructure investment theme. Several companies have seen their shares rise significantly after announcing partnerships with hyperscalers and AI firms seeking large-scale power and computing resources. However, performance has varied as investors continue evaluating construction timelines, funding needs, and the speed of new customer agreements.

The transition reflects a broader industry shift, with mining companies using existing power access and electrical infrastructure to support AI and high-performance computing workloads. Unlike bitcoin mining, where profitability fluctuates with crypto prices, long-term AI hosting contracts can provide more predictable and recurring revenue.

After recent declines across the sector, Compass Point believes the market may be moving into a phase where operational execution becomes more important than future promises. As AI facilities are completed and contracts begin generating income, investors may increasingly focus on actual cash flows rather than long-term projections.

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