VanEck believes Bitcoin mining companies expanding into AI data center infrastructure have become oversold after their shares plunged 35% in October. The investment manager views the sharp decline as a market-driven dislocation rather than evidence that investors are losing confidence in the sector’s long-term business prospects.

In a research report published Wednesday, VanEck noted that these companies experienced an average 35% share-price decline last month as investors grouped businesses with different operating models into the same investment category.

The sell-off particularly affected Bitcoin miners transitioning toward AI infrastructure, including Hut 8 and Core Scientific. VanEck refers to these businesses as powered shell providers (PSPs) and said they were caught in broader concerns surrounding GPU rental companies such as CoreWeave.

Credit market concerns spread across AI infrastructure businesses, while economic and political uncertainty added further pressure. September’s hotter-than-expected U.S. inflation data and uncertainty surrounding the November midterm elections also contributed to investor caution.

PSPs provide the electricity and physical infrastructure needed by GPU rental companies to operate AI computing facilities. These rental businesses have faced rising financing expenses as they invest heavily in costly graphics processing units.

However, VanEck believes the availability of electricity remains the industry’s biggest infrastructure limitation. This gives Bitcoin miners with established power capacity a potentially important advantage as demand for AI computing expands.

The firm argued that current market valuations do not adequately reflect the underlying fundamentals of these businesses, especially their long-term contracted revenue streams.

VanEck also pointed out that although GPU rental companies, commonly known as neocloud providers, are experiencing higher debt-servicing costs, none of their signed leasing agreements have been canceled.

Meanwhile, lengthy grid connection delays are increasing the scarcity value of existing electricity infrastructure. Bitcoin miners that already control power resources could benefit from this imbalance as AI companies compete for available capacity.

Against this backdrop, VanEck considers October’s steep correction a potential investment opportunity, suggesting that the decline may have created an attractive entry point rather than undermined the broader AI expansion strategy adopted by Bitcoin miners.