Morgan Stanley Starts Miner Coverage, Favors Data Center Conversions Over Pure Bitcoin Exposure
Morgan Stanley initiated coverage of three bitcoin mining companies on Monday, drawing a clear line between firms pivoting toward data center infrastructure and those remaining heavily dependent on bitcoin price dynamics.
Analyst Stephen Byrd launched coverage of Cipher Mining (CIFR) and TeraWulf (WULF) with Overweight ratings and price targets of $38 and $37. Both stocks rallied sharply, with Cipher advancing 12.4% to $16.51 and TeraWulf rising 12.8% to $16.12.
Marathon Digital (MARA) was started at Underweight with an $8 target. Shares edged slightly higher to $8.28.
The core of Morgan Stanley’s thesis is that certain bitcoin mining facilities should be evaluated as infrastructure assets once they are backed by long-term leases with creditworthy customers. In that case, valuation should center on predictable, contracted cash flows rather than bitcoin price sensitivity.
Byrd compared these potential conversions to established data center REITs such as Equinix (EQIX) and Digital Realty (DLR), which trade at over 20x forward EBITDA due to their steady growth and diversified revenue streams. While he does not expect miner-developed data centers to command similar premiums, he sees room for multiple expansion if assets transition to stable leasing models.
Cipher Mining represents what Byrd described as a potential “REIT endgame.” If the company converts self-mining capacity into long-term data center leases with hyperscalers or enterprise clients, its sites could generate utility-like, recurring cash flows with reduced bitcoin exposure.
TeraWulf also fits this framework. Morgan Stanley highlighted the company’s track record in signing data center agreements and management’s expertise in power infrastructure. Byrd estimates uncontracted sites could be converted at a present value of roughly $8 per watt. His base case assumes the company achieves about half of its projected 250 megawatts of annual data center growth from 2028 to 2032, with upside if execution improves.
The stance on Marathon was more cautious. Byrd argued that MARA’s hybrid model — balancing mining with data center ambitions — limits the potential valuation uplift from conversions. The company’s continued strategy of increasing bitcoin exposure, including issuing convertible debt to acquire BTC, keeps its stock largely tied to mining economics.
Morgan Stanley also flagged structural challenges within bitcoin mining, noting that historical returns on invested capital across the industry have been weak. For Marathon, mining profitability remains the dominant driver of value.
