A new report from Bernstein Research suggests that a highly favorable "Goldilocks scenario" is developing for the Bitcoin mining industry, driven by several critical factors, including increased chances of pro-Bitcoin political changes in the United States.
The report, authored by analyst Gautam Chhugani, points to increased chances of pro-Bitcoin political change, the U.S. becoming a dominant hub for mining, and miners being valued for their power infrastructure and partnerships with AI data centers.
"We believe a Goldilocks scenario is emerging for Bitcoin miners," Chhugani wrote in a report released earlier today. "We expect Bitcoin mining stocks to open materially positive today after weeks of sideways price action."
Bitcoin surpassed $63,000 for the first time since the start of the month, driven by renewed buying from U.S. institutional investors after several weeks of sell-offs.
U.S. Bitcoin-related stocks saw significant gains on Monday. Bitcoin miners Marathon Digital, CleanSpark, Riot Platforms all climbed 7% in early trading. Crypto exchange Coinbase saw a whopping 9% surge and Michael Saylor-founded software company MicroStrategy—famous for amassing a giant Bitcoin treasury—has gained 11% since its close on Friday.
Political Landscape Shifting in Bitcoin's Favor
The Bernstein report highlights recent political developments, particularly surrounding former President Donald Trump, are being interpreted positively by the crypto market.
Trump's recent legal issues have coincided with a 5% jump in Bitcoin prices, as the market views a potential Trump presidency as more favorable for cryptocurrencies compared to the Biden administration's regulatory crackdown.
Bernstein notes that Trump is scheduled to speak at Bitcoin Nashville, the largest industry conference, on July 27.
Additionally, betting odds for a Trump victory in the 2024 presidential election have risen by 11% to 71% on online betting platforms.
Analysts believe that Bitcoin prices will remain sensitive to election updates and positively correlate with the probability of a Trump presidency.
U.S. Bitcoin Miners Poised for Growth
After weeks of sideways movement, Bernstein expects Bitcoin mining stocks to start reacting positively to Bitcoin price increases.
The report outlines several tailwinds for the mining industry:
- Investors are becoming more receptive to the "time to power" argument for Bitcoin miners, viewing them as energized power assets and more generalized data center facilities.
- Mining chip technology is seeing innovation in the U.S., with Block's latest 3nm mining chip and Core Scientific becoming Block's anchor client.
- Multiple deals have been announced between Bitcoin miners and AI data center companies, including partnerships involving Core Scientific, Hut 8, and Soluna Holdings.
Energy Assets Providing Competitive Advantage
The report emphasizes that Bitcoin miners have a significant advantage in terms of power infrastructure.
For example, the report noted that there's a 4-year queue for large-scale power interconnection to the grid in Texas, with 72% of that demand coming from data centers and miners.
However, Bitcoin miners already control 3 GW of "ready" power within Texas, starting the queue process much earlier.
Bernstein projects that the power capacity of Bitcoin miners within the U.S. will reach 12 GW by 2027, up from 6 GW in 2024.
AI Data Center Partnerships Driving Growth
The analysts highlight strong interest from specialized AI GPU cloud providers in collaborating with Bitcoin miners.
These partnerships allow AI data centers to leverage miners' ready power access, potentially cutting time to market by up to 75% compared to greenfield buildout options.
Recent deals cited in the report include:
- A 12-year, $4.75 billion agreement between Core Scientific and CoreWeave to retrofit Bitcoin mining sites for GPU use.
- A 36-month, $34 million contract between Soluna Holdings and HP for data center and cloud services.
- A $150 million investment by Coatue in Hut 8 for AI infrastructure buildout.
Mining Chip Innovation Shifting to U.S.
Bernstein notes that the balance of power in mining chip production is shifting from China to the United States.
Block's recent announcement of a production-ready 3nm Bitcoin mining chip, with Core Scientific as the first anchor client, represents a significant change in the industry landscape.
Based on similar agreements in the sector, the report estimates the deal to be worth approximately $300 million.
The analysts believe this shift will likely be adopted by other dominant U.S.-based miners and could improve power efficiency in mining operations.
Bitcoin-AI Synergies and Valuation Potential
The report suggests that AI data center partnerships could help balance out the cyclical nature of Bitcoin mining business models.
Currently, Bitcoin miners are valued at around $4 million per MW, compared to $40 million per MW for general data center stocks.
Bernstein believes the market has been penalizing miners for their cyclical business model.
However, increased AI data center revenues and a growing focus on "time to power" assets could lead to the potential re-rating of mining stocks.
The analysts maintain their 2025 Bitcoin price forecast of $200,000, driven by institutional solid adoption via ETFs and an improving crypto regulatory environment.
Edited by Stacy Elliott.