Bitcoin Miners Face New Test as Investors Reward AI Revenue over Plans

Bitdeer shares rose more than 8% after the company announced its largest AI infrastructure deal to date, while Cipher Digital fell more than 13% after weaker-than-expected quarterly results upstaged progress on its own data centre projects. Hut 8 added to the mixed picture after also reporting earnings on 4 Aug missing analysts' estimates, with its shares falling nearly 9% during the trading day on Nasdaq. 

Together, the moves highlighted the tension facing miners shifting into AI: long-term data centre plans are becoming more central to their investment cases, but current earnings still largely reflect volatile and capital-intensive Bitcoin mining operations.

Bitdeer looks beyond mining

Bitdeer shares traded at roughly $12 as of 15:00UTC, jumping more than 8% after the company disclosed a 16-year agreement worth about $4.7bn to lease space at its AI data centre in Norway. The push into AI is part of a broader shift across the Bitcoin mining industry as companies look for new sources of revenue beyond simply mining. 

The agreement comes less than a week before Singapore-based Bitdeer reports second-quarter results on 10 Aug. Analysts expect the company to post a loss of about $0.33–$0.37 per share on revenue of about $239mn, although investors may focus more closely on the cost of its expansion and the pace at which its AI business can begin generating material revenue. 

Bitdeer reported a $39mn gross loss in the first quarter as electricity and depreciation costs outpaced a 170% increase in revenue, while AI cloud services contributed just $3.7mn. The Norway contract is expected to strengthen the company's longer-term AI case.

Miners shift to AI picked up after the 2024 Bitcoin halving cut mining rewards in half, making it harder for them to make money in exchange for securing the Bitcoin network. The price of Bitcoin (BTC) has also fallen more than 25% this year, putting more pressure on the industry. 

In response, crypto miners such as Bitdeer, Core Scientific, CleanSpark and several others have been transitioning services to supply demand for high-performance computing (HPC) data centres. Many are using the same power and infrastructure that once supported Bitcoin mining to provide computing power for AI companies.

Cipher's transition continues

Also following the AI trend, New York-based Cipher Digital announced on 4 Aug that it had begun delivering capacity at its Black Pearl data centre project two months ahead of schedule. The company also secured an option on a new 900-megawatt site near San Antonio, Texas, for further data centre expansion and completed financing for its Stingray data centre project. 

The AI developments, however, were not enough to offset investor disappointment after Cipher missed analysts' estimates. The company reported second-quarter revenue of $25mn, down 43% from a year earlier and below the $31.7mn consensus estimate. Losses per share stood at $0.65, missing Wall Street estimates for a loss of about $0.24 per share.

Sandmark analysts said the Cipher's results show the company's move from Bitcoin mining to AI data centres is making progress, but the transition is on its early days as all but $200k of its $25mn revenue came from Bitcoin mining.

The developments, however, addressed one of investors main concerns amid the AI boom, that companies can deliver on the infrastructure needed to support the demand. The Bank of England has already shared concerns on the AI transition and its potential implications through "two interdependent channels: the financing of the required infrastructure, and the pace and extent of adoption of the technology." 

Cipher CEO Tyler Page said Black Pearl's accelerated delivery proves the company can "execute at scale, with speed, and without compromise in a challenging environment." 

Despite the progress, Cipher's shares fell nearly 14% on the news to trade at $20.78 at 19:36UTC.

Hut 8 misses estimates

Also reporting earnings on 4 Aug, Hut 8 shares fell nearly 9% to $102.55 as of 19:38UTC after the Miami-based company posted a $177.1mn second-quarter net loss, largely driven by a $138.6mn unrealized loss on its Bitcoin holdings. Revenue rose 81% to $75mn, gross margin widened to 64% and adjusted EBITDA more than doubled to $10mn, but investors remain focused on the gap between Hut 8's current earnings and an AI data centre strategy that is not expected to begin generating revenue until 2027.