Analysts see overlooked value in AI data center deals as bitcoin miners reinvent themselves
Compass Point analysts Michael Donovan and Ed Engel say several companies transitioning from bitcoin mining to artificial intelligence data center operations could be undervalued because the market is not fully recognizing the value of their signed AI infrastructure contracts.
The analysts developed a valuation framework that separates the worth of existing AI leases from future projects that have not yet secured customers. They argue that these companies should be assessed more like real estate and infrastructure operators that generate recurring rental income, rather than traditional bitcoin miners whose earnings fluctuate with cryptocurrency prices.
Using this approach, Compass Point estimates the potential value of future income from contracted AI data center agreements after deducting the remaining costs needed to complete construction. The firm then compares those estimates with each company’s enterprise value to determine whether investors are assigning value to future expansion plans.
The analysis identified Applied Digital (APLD), TeraWulf (WULF), and Cipher Mining (CIFR) as the companies with the largest mismatch between the value of their contracted AI businesses and their current valuations. Compass Point believes the market is giving little recognition to additional AI capacity that is still under development, even though those facilities could generate significant recurring revenue once operational.
The firm highlighted Core Scientific (CORZ) and Riot Platforms (RIOT) as different examples. Core Scientific’s existing customer agreements appear to already be reflected in its valuation, meaning future gains may depend on securing additional contracts. Riot, meanwhile, carries a valuation based more on future growth expectations, with investors focusing on its Corsicana campus and wider AI infrastructure strategy despite having fewer signed AI agreements today.
According to the report, the next phase of the sector will depend on execution as companies move from announcing AI partnerships to completing data centers and generating revenue. Once facilities are finished and customers begin using the capacity, investors will have a clearer picture of the recurring cash flows these businesses can deliver.
The shift toward AI has already made former bitcoin miners a notable part of the broader artificial intelligence investment theme. Several companies have seen strong stock performance after partnering with hyperscalers and AI firms seeking access to large-scale power and computing resources. However, returns have varied as investors continue weighing construction timelines, funding requirements, and the speed of new customer commitments.
The industry transformation reflects a strategic move by mining companies to repurpose existing energy infrastructure for AI and high-performance computing applications. Unlike bitcoin mining, where profitability depends heavily on crypto prices, long-term AI hosting agreements offer the potential for more stable and predictable revenue.
After recent declines across the sector, Compass Point believes investors are entering a stage where operational delivery will matter more than future promises. As AI facilities come online and contracts begin generating income, market participants are likely to place greater emphasis on actual cash flow rather than projected growth.
