KBW has taken a more cautious stance on the bitcoin mining sector, warning that the industry’s pivot toward artificial intelligence (AI) and high-performance computing (HPC) may take longer to generate returns than the market anticipates.
In investor notes published Monday, KBW analyst Stephen Glagola downgraded Bitfarms (BITF), Bitdeer (BTDR) and HIVE Digital (HIVE) from outperform to market perform. While the strategic case for moving into AI and HPC hosting is compelling, Glagola said execution risks, long lead times, and significant capital requirements make near-term monetization uncertain.
Following the 2024 bitcoin halving, which compressed mining margins to record lows, many miners are repositioning as digital infrastructure providers. By converting existing “warm shell” facilities — sites already equipped with high-density power and cooling — into AI-ready data centers, companies aim to swap volatile mining revenues for steadier enterprise contracts.
However, KBW cautioned that the transition is complex. HPC operations demand strict uptime and substantial upfront investment, creating a clear divide between operators who can successfully retrofit their facilities and those at risk of underutilized or stranded assets.
Bitfarms: Market pricing limits upside
Bitfarms was downgraded as KBW noted that the market has largely priced in potential from its 120-megawatt Sharon, Pennsylvania, facility. While Glagola raised his price target to $3.00 from $2.50, he does not expect a formal leasing agreement until the second half of 2026.
The analyst also questioned the timing and prospects of Bitfarms’ potential AI cloud expansion in Washington state and highlighted rising leverage as a key risk. Shares were little changed in early trading.
Bitdeer: Growth story faces uncertainty
Bitdeer’s downgrade came with a sharp price-target cut, from $26.50 to $14. KBW acknowledged that Bitdeer is on track to become one of the largest publicly listed miners by 2026, supported by its vertically integrated Sealminer technology, but warned that expanding AI cloud operations introduces additional execution risk.
Glagola cited the company’s small current scale, concentrated shareholder base, and related-party exposure as factors for caution. The stock was modestly higher at $13.91.
HIVE: Competitive edge questioned
HIVE Digital saw its price target slashed to $3.50 from $11.00 as KBW questioned the durability of the company’s AI cloud strategy. Glagola highlighted that HIVE’s reliance on partner channels and equipment financing leaves it at a disadvantage compared with established data center operators.
KBW also flagged HIVE’s negative pre-tax return on invested capital, noting that the company is expanding mining hashrate without generating adequate operating returns in a low hashprice environment. Shares were up 0.3% at $3.04.
Across all three miners, KBW’s message was consistent: transitioning from bitcoin mining to AI-focused data center operations is capital-intensive, slow to monetize, and likely to require more patience — and potential dilution — than the market currently expects.
