The financial institution Keefe, Bruyette & Woods (KBW) has changed its stance on the Bitcoin mining sector, downgrading the ratings of Bitfarms, Bitdeer, and HIVE Digital. According to analyst Stephen Glagola, shifting a business model based purely on crypto assets toward artificial intelligence presents considerable operational and financial challenges.
This decision comes in an environment where profit margins are at critical levels following the last reward reduction process. Therefore, although the transition toward hosting high-performance computing is attractive, the real monetization of these services could take much longer than investors had initially projected or hoped for.
Faced with regulatory and technical uncertainty, mining firms have begun marketing themselves as digital infrastructure providers to capture part of the current technological boom. However, the transformation of facilities designed for specific processors into AI-ready data centers requires massive capital investments and extremely rigorous and costly operational standards for the companies involved.
Financial and operational challenges in the mining sector restructuring
Bitfarms, under the leadership of Ben Gagnon, has focused its strategy on developing its 120-megawatt site in Pennsylvania to attract corporate contracts. Despite this, the market seems to have already priced in these expectations, so no formal leasing agreements are expected until late next year 2026, according to financial projections.
On the other hand, Bitdeer faces a drastic reduction in its price target, which fell from $26.50 to $14 due to execution risks. Although the company seeks to lead the market through its Sealminer technology, its growing focus on the AI cloud adds layers of doubt about its ability to scale operations efficiently and profitably.
Will these companies be able to sustain their operations without excessively diluting their share value?
HIVE Digital, likewise, has seen its valuation slashed significantly as the durability of its competitive advantage in the infrastructure sector is questioned. By relying on external channels and equipment financing, the firm remains sub-optimally positioned against specialized competitors in pure data centers, which weakens its return on invested capital.
Ultimately, the consolidation of this technology demands a patience that many shareholders might not be willing to maintain over the coming quarters. KBW’s message is clear: the path from Bitcoin mining to high-performance infrastructure is a costly journey that could require new rounds of financing before bearing any significant fruit.
