Bernstein analysts see upside in two under-the-radar Bitcoin mining companies, citing their strategic shift towards housing artificial intelligence (AI) data centers.
In a note, the firm initiates coverage on Iris Energy (IREN) and Core Scientific (CORZ) with Outperform ratings.
Bernstein highlights the miners' hybrid business model, leveraging their existing Bitcoin mining infrastructure for AI data centers. They point to recent deals, like CORZ's $4.7 billion co-hosting agreement with Coreweave, as evidence of this trend.
"Bitcoin miners enjoy a lead in the 'large load' power interconnect queue," says Bernstein, giving them a significant advantage in the buildout of AI data centers. This, combined with their competitive power costs, positions them well for partnerships.
The analysts forecast that 20% of Bitcoin mining power capacity will be used for AI by 2027, with IREN, CORZ, and other similar players leading the charge.
Bernstein remains bullish on Bitcoin itself, predicting a price of $200,000 by 2025 and exceeding $1 million by 2033. However, they see the AI data center angle as a buffer against Bitcoin's price volatility, potentially attracting more institutional investors.
The report compares IREN and CORZ, noting CORZ's lead in co-hosting agreements, while IREN boasts a strong power pipeline and data center expertise. Bernstein values IREN and CORZ at a target Enterprise Value (EV) to EBITDA multiple of 9.7x and 6.4x for fiscal year 2025, respectively.
"If power is the key constraint, then Bitcoin miner's power access look undervalued," concludes Bernstein. They believe the current market undervalues these companies' potential in the booming AI data center space.