KBW is adopting a more guarded outlook on the bitcoin mining sector, warning that the industry’s push into artificial intelligence and high-performance computing (HPC) may take longer to deliver returns than investors expect.
In research notes released Monday, KBW analyst Stephen Glagola downgraded Bitfarms (BITF), Bitdeer (BTDR) and HIVE Digital (HIVE) from outperform to market perform. While the strategic rationale behind the move toward AI and HPC hosting remains sound, Glagola said execution risk, long development timelines and heavy capital demands complicate the path to meaningful monetization.
Following the 2024 bitcoin halving, miners have been grappling with historically low margins, prompting a rebranding as digital infrastructure providers. By retrofitting existing “warm shell” facilities — sites already equipped with high-density power and cooling — companies aim to pivot from volatile mining revenues to steadier, long-term enterprise contracts tied to AI workloads.
KBW cautioned, however, that the transition is far from seamless. The stringent uptime standards and significant upfront investment required for HPC infrastructure raise the risk of missteps, potentially leaving weaker operators with underutilized or stranded assets.
Bitfarms: upside largely reflected in valuation
Bitfarms was downgraded as KBW argued that the market has already priced in much of the potential from its 120-megawatt Sharon, Pennsylvania, site. Although Glagola raised the firm’s price target to $3.00 from $2.50, he does not anticipate a definitive leasing agreement until the second half of 2026.
The analyst also expressed caution over Bitfarms’ prospective AI cloud expansion in Washington state and flagged rising leverage as a concern. Shares were little changed in early trading.
Bitdeer: growth story meets execution risk
KBW cut its price target on Bitdeer to $14 from $26.50 while downgrading the stock to market perform. The bank acknowledged that Bitdeer is on track to become a leading public miner by 2026, supported by its vertically integrated Sealminer platform, but said the company’s growing exposure to AI cloud services introduces additional uncertainty.
Glagola pointed to Bitdeer’s limited current scale, concentrated ownership and related-party exposure as key risks. The stock was modestly higher at $13.91.
HIVE: limited competitive moat
HIVE Digital saw its price target reduced to $3.50 from $11.00 as KBW questioned whether its AI cloud strategy offers a sustainable competitive advantage. The analyst noted that reliance on partners and equipment financing leaves HIVE at a disadvantage versus dedicated data center operators.
KBW also highlighted HIVE’s negative pre-tax return on invested capital, suggesting the company continues to expand hashrate without generating adequate operating returns in a depressed hashprice environment. Shares were up 0.3% at $3.04 at the time of publication.
Across all three miners, KBW’s message was consistent: the shift from bitcoin mining to AI-focused data center operations is capital-intensive, slow to monetize and likely to require greater dilution — and patience — than markets are currently pricing in.
