AI Data Centers, Rather Than Bitcoin Mining, Drive the Bull Case for Galaxy Digital, Says Analyst

Rittenhouse Research Sees Galaxy Digital’s Future in AI Data Centers, Not Bitcoin Mining

Rittenhouse Research, a new player in fintech and crypto analysis, has given Galaxy Digital (GLXY) a strong buy rating, highlighting the company’s strategic shift from bitcoin mining to AI data centers as a major growth driver.

When Galaxy Digital’s CEO Mike Novogratz acquired Argos’ Helios data center in late 2022 during the crypto market downturn, few anticipated the move would become a cornerstone of the company’s future. Back then, it seemed like a rescue of a struggling bitcoin miner. However, the rapid rise of AI technologies, such as ChatGPT, transformed the data center into a highly sought-after asset in the booming AI sector.

According to Rittenhouse analysts, Galaxy’s move away from the cyclical and capital-intensive bitcoin mining business to focus on AI infrastructure offers a more predictable and profitable revenue stream. AI data centers generate stable, long-term cash flows through leases with major cloud providers, unlike bitcoin mining revenues which fluctuate due to halving events and bitcoin price volatility.

The analysts point out that Galaxy’s Helios facility is now a prime example of this lucrative pivot. Instead of constantly investing in mining hardware upgrades, Galaxy benefits from reliable lease income. This contrasts with other miners who only recently began considering diversification after AI’s explosive growth.

Galaxy’s transition reflects a broader industry trend, but its strong balance sheet—with $1.8 billion in net cash and investments—and strategic CoreWeave lease set it apart. While concerns around CoreWeave’s credit have pressured Galaxy’s stock, Rittenhouse sees the risk as overstated, noting the company’s steady revenue base and secured financing tied to customer contracts.

Notably, Galaxy has fully exited bitcoin mining, signaling its commitment to AI infrastructure and making it an attractive partner for hyperscale cloud clients.

Cipher Mining’s CEO Tyler Page acknowledged the challenge of attracting AI clients due to high capital demands. Galaxy, with no mining distractions and a ready data center, avoids this hurdle.

If Rittenhouse’s thesis holds, Galaxy Digital’s shift from bitcoin mining to AI data centers could represent one of the most significant strategic moves in the crypto space this year.