This Stock Pick Benefits From Bitcoin Price and AI Boom
These three bitcoin stocks should benefit from an emerging theme and I'm looking for more.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Not far from where I live in rural Catawba County, North Carolina, Microsoft MSFT is spending more than $1 billion to build four new data centers.
The artificial intelligence boom has created tremendous demand for data center space that can put Nvidia's NVDA powerful GPU chips to work. These centers need cheap energy, and rural North Carolina offers it in an area without the danger of extreme weather.
Major technology companies are in a rush to build data centers, but they are also exploring an industry that already has large data centers and tremendous computing power: That industry is bitcoin mining.
Bitcoin miners receive new bitcoin by running complex math problems that in turn validate the network's transactions. It takes major computing power and energy, which can be quite expensive, but if the bitcoin price stays strong, it can be very lucrative.
Bitcoin mining facilities can also be used by AI firms. This gives the bitcoin miners great value beyond bitcoin alone. If bitcoin moves on to new highs, as many strategists believe it will, the miners will see tremendous profits. But even if they don't, their facilities will be of great value to the AI ideal.
I already hold two bitcoin miners that are seeing interest from AI firms: Hut 8 HUT and Core Scientific CORZ. I'm adding a third name on Monday.
Cipher Mining, Inc. CIFR describes itself as "an industrial-scale bitcoin mining company dedicated to expanding and strengthening the bitcoin network's critical infrastructure in the United States. Our mission is to provide the vital foundation required for the bitcoin network to flourish."
Like all bitcoin mining companies, CIFR is correlated with the price of bitcoin and has computing power that can be harnessed for AI applications that also require massive computer power.
CIFR is particularly interesting because Bloomberg has reported that the company has received takeover interest "as soaring demand for data centers makes Bitcoin miners takeover targets…The artificial intelligence boom has created an unprecedented shortage of data center space. As a result, crypto-mining companies, which already sit on the necessary infrastructure, are being targeted by AI firms looking to boost their computing capabilities via acquisitions."
There is no guarantee that CIFR will make a deal, but because it has the support of bitcoin prices, the downside risk is limited. There has been speculation recently that Donald Trump is increasingly friendly to the crypto market and is even scheduled to speak at a conference in the near future. That will provide support for CIFR even if no takeover deal is ever made.
At the time of publication, DePorre was long HUT, CORZ and CIFR.
