VanEck Says Bitcoin Mining Stocks Are Oversold After October’s 35% Sell-Off

Bitcoin mining stocks that expanded into AI data center infrastructure may now be trading in oversold territory, according to investment manager VanEck. The firm described the recent sell-off as a market dislocation rather than a fundamental rejection of the companies’ business strategies.

Shares of these companies fell an average of 35% in October as investors broadly grouped businesses from different sectors into a single investment trade, VanEck said in a research note published Wednesday.

The investment manager believes Bitcoin miners transitioning into AI data infrastructure, including Hut 8 and Core Scientific, were caught in a wave of negative sentiment spreading from GPU rental providers such as CoreWeave. VanEck classifies these infrastructure operators as powered shell providers (PSPs).

Concerns about credit conditions spread across the PSP sector, while broader market pressures added to the selling. These included September’s higher-than-expected U.S. Consumer Price Index (CPI) reading and uncertainty surrounding the November midterm elections.

Powered shell providers supply electricity and infrastructure capacity to GPU rental companies, which have faced rising borrowing costs as they finance expensive AI computing hardware.

VanEck argued that access to electricity remains the primary limitation on expanding AI computing capacity.

The investment manager stated that current share prices appear significantly disconnected from underlying business fundamentals, particularly given the long-term contracted cash flows generated by these companies.

VanEck also highlighted that the main constraint on AI infrastructure expansion is available power capacity rather than a lack of demand.

Although GPU rental providers, commonly known as neocloud companies, have faced increasing debt-servicing expenses, the firm noted that none of the signed lease agreements had been canceled.

Meanwhile, lengthy grid connection waiting periods are increasing the value of existing electricity capacity. Bitcoin miners that already control substantial power resources could benefit from this supply shortage as demand for AI computing infrastructure grows.

Against this backdrop, VanEck views October’s 35% decline as a potential buying opportunity rather than evidence that the AI infrastructure transition is losing momentum.