AI contracts could be the key driver of value for former bitcoin miners, analysts say

Compass Point analysts Michael Donovan and Ed Engel believe several bitcoin mining companies that are shifting toward AI data center operations may be trading below their potential value because investors are underestimating the importance of their signed AI infrastructure agreements.

The analysts created a valuation model that separates the value of secured AI data center contracts from future development projects that have not yet attracted customers. They argue these companies should increasingly be valued as infrastructure and real estate businesses with recurring lease revenue, rather than traditional miners whose financial performance depends on bitcoin prices.

To measure potential value, Compass Point calculated the estimated future rental income from existing AI contracts after accounting for the remaining construction expenses required to complete the facilities. The firm then compared those figures with each company’s enterprise value to determine whether investors are recognizing the worth of future growth opportunities.

The analysis showed that Applied Digital (APLD), TeraWulf (WULF), and Cipher Mining (CIFR) have the largest disconnect between their contracted AI operations and current market valuations. According to Compass Point, investors are placing little value on additional AI data center capacity still under development, even though these projects could eventually produce meaningful recurring revenue.

The analysts also pointed to differences among other industry players. Core Scientific (CORZ) has already received significant market recognition for its existing AI contracts, meaning future upside may rely on securing additional customers. Riot Platforms (RIOT), meanwhile, is valued largely on future potential, with investors focusing on its Corsicana facility and broader AI expansion plans despite having a smaller base of contracted capacity.

Compass Point believes the next several years will determine which companies successfully convert AI ambitions into real business growth. As facilities are completed, customers begin operations, and lease payments start flowing, investors will gain a clearer understanding of the long-term earnings potential of these businesses.

The move into AI infrastructure has become one of the strongest investment themes among former bitcoin miners. Many companies have seen their shares rise after announcing partnerships with hyperscalers and AI firms searching for large-scale computing power and energy capacity. However, stock performance has varied as investors evaluate construction schedules, capital needs, and the pace of securing new agreements.

The industry’s transformation highlights how bitcoin miners are leveraging existing advantages, including access to electricity and developed infrastructure, to support AI and high-performance computing workloads. Unlike bitcoin mining, where revenue can change dramatically with crypto market conditions, AI data center contracts offer the possibility of more consistent and predictable cash flows.

Following recent market weakness, Compass Point said the sector may be entering a new phase where successful execution becomes more important than future announcements. As companies bring projects online and turn contracts into revenue, investors are expected to focus increasingly on real-world cash generation rather than long-term potential alone.