CoinDesk
Shares of Bitcoin miners that shifted into artificial intelligence data center infrastructure fell an average of 35% in October, but VanEck says the sell-off has left them disconnected from their fundamentals. The investment manager argues that investors treated different parts of the AI infrastructure market as one trade, even though their businesses face different risks.
Why it matters
Concerns about debt costs at companies that rent graphics processing units spread to power infrastructure providers, VanEck said. GPU rental firms face higher debt service costs as they finance expensive chips, while power providers supply the capacity needed to run them.
VanEck said no signed leases were canceled and pointed to long-term contracted cash flows as a reason it sees value in the miners' shares. It also argued that power is a key constraint on AI computing, with grid connection delays adding a scarcity premium to capacity already in place.
Market impact
The sell-off affected AI-pivoting miners including Hut 8, while a hotter-than-expected September U.S. consumer price index reading and uncertainty ahead of November's midterm elections also weighed on the trade, VanEck said.
For investors, VanEck's thesis hinges on the distinction between the financing pressures facing GPU rental companies and the contracted cash flows of power infrastructure providers. Its view is that depressed valuations present a potential opportunity, not evidence that demand for AI power has collapsed.
Frequently asked questions
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Why does VanEck consider the miners' shares oversold?
VanEck says the sell-off left shares disconnected from fundamentals, pointing to scarce power capacity and long-term contracted cash flows.
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How did GPU rental companies affect power infrastructure stocks?
VanEck says concerns about GPU rental companies' debt costs spread to power infrastructure providers, even though the businesses face different risks.
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Were any signed AI infrastructure leases canceled?
VanEck said no signed leases were canceled.
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Why does grid connection capacity matter to AI-focused miners?
VanEck argues that grid connection delays add a scarcity premium to the power capacity miners already provide.
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What other factors weighed on the miners' shares?
VanEck cited a hotter-than-expected September U.S. consumer price index reading and uncertainty ahead of November's midterm elections.
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