Why Bitcoin Miners Should Be in Your Portfolio: The Data Center Boom that Turns Energy Infrastructure into Strategic Assets
By Dan Walsh
Bitcoin mining, traditionally viewed as a pure play on cryptocurrency, has matured into a capital-intensive, highly competitive industry. However, a fresh narrative is emerging: the same energy contracts and infrastructure underpinning profitable Bitcoin mining operations are fast becoming prized assets in the booming data center market. As a result, even major technology companies are now courting Bitcoin miners – not for their cryptocurrency, but for access to their energy infrastructure. As demand for cloud and AI computing soars and data centers consume an ever-increasing percentage of total available energy, Bitcoin miners now find themselves uniquely positioned at the intersection of blockchain and traditional data infrastructure.[1] This convergence offers institutional investors a hybrid opportunity that combines the growth potential of digital assets with the stability of critical infrastructure.
Bitcoin Mining as a Profitable Core Business
By design, Bitcoin mining can be highly profitable, but it is also deeply capital-intensive. Success requires deploying tens or hundreds of millions of dollars into specialized hardware (ASIC servers) and building facilities capable of drawing enormous electrical power. Electricity costs are the single largest operating expense for miners, often determining whether a mining farm runs at a profit or loss. To secure operational stability, miners strategically lock in low-cost power through long-term contracts, direct investments in power generation, or by situating operations in energy-rich regions.
Traditionally, low-cost power can be challenging for miners to secure. Oftentimes, the cheapest energy sources are located in geographies that are either politically unstable or have environmental issues, like an unfavorable climate or are located in very rural areas. In the last several years, Bitcoin miners found an opportunity to tap into cheap power by going into rural markets in the U.S. that have large, available power infrastructure but have been largely underutilized since the offshoring movement of manufacturing occurred since post WWII. Miners have secured favorable deals with local utilities as they often serve as a grid stabilizer, briefly curtailing operations when there is peak demand and consuming vast quantities of power on the off peaks. These miners have developed sites on cheap land that are now starting to get some interest from technology companies as excess power in the U.S. has quickly run out due to the demand from data centers.[2]
While the margins in Bitcoin mining are very favorable if one has access to cheap power, not all miners are alike in their business model. Some keep and hold all the Bitcoin they mine, while taking on debt or raising funds to further expansion/site operations. Others sell their Bitcoin and cash it up to provide a de-risked way to enjoy the large margins of mining. Once expenses and fees are taken out, some fund managers return a dividend as well to investors that can be tax advantaged and can offset other passive income.
Bitcoin miners also increasingly act like savvy energy traders. Many participate in grid-balancing programs – selling unused power back to the grid or throttling down during peak demand in exchange for payments or credits. In August 2023, Riot Platforms – one of the largest U.S. miners – earned an unprecedented $31.7 million in energy credits by voluntarily shutting down during a Texas heatwave. Remarkably, this payout exceeded the value of the Bitcoin Riot mined that month, showcasing how well-structured power deals can bolster a miner’s bottom line.[3] In essence, robust energy arrangements – whether through favorable rates, on-site generation, or grid service programs – serve as valuable assets that backstop the mining revenue. They ensure consistent uptime and low costs - which can even become profit centers in their own right.
The Intersection of Bitcoin Mining and Traditional Data Centers
Bitcoin mining facilities bear a strong resemblance to conventional data centers: rows of servers, heavy-duty cooling systems, and high-capacity power feeds. The infrastructure miners build to run specialized hardware 24/7 can often be repurposed for other computing workloads. As AI and cloud providers race to add capacity (often constrained by lengthy power grid upgrade timelines), Bitcoin miners hold a critical advantage: they already operate large-scale, power-provisioned sites with substantial cooling and electrical infrastructure in place.
Bitcoin mining farms are essentially specialized data centers focused on running ASIC servers at scale. The significant capital invested in their power and cooling infrastructure can be redirected to support other high-performance computing tasks. In other words, every megawatt of power and square foot of space dedicated to Bitcoin can potentially double as capacity for other computing services.
Several forward-thinking miners have started diversifying into traditional data center services. Their aim is to earn revenue by hosting third-party servers or cloud computing workloads alongside Bitcoin mining. Hut 8, for example, received a $150 million investment in mid-2024 to expand into AI-focused data centers. Similarly, Australia’s Iris Energy now runs AI servers inside its Bitcoin mining facilities seamlessly. Even Core Scientific in the U.S. – once purely a crypto miner – has signed a deal to host 200 MW of AI hardware for the startup CoreWeave, a contract expected to generate nearly $4 billion to Core Scientific’s bottom
line.[4] These cases underscore a compelling synergy: a mining farm’s power and cooling capacity can serve double duty in the data center arena, allowing the company to earn new revenue without abandoning its core business.
Monetization Opportunities: Expanding or Selling Data Center Assets
One strategy for bitcoin mining firms is to expand into offering commercial data center services. The financial appeal is evident: clients in the AI/cloud sector are willing to pay a premium for access to ready-made power capacity. One public miner recently noted that AI infrastructure offers a “reliable income stream… uncorrelated to bitcoin prices” – meaning a diversified miner can enjoy steady hosting income even during crypto downturns.
Naturally, branching into data centers comes with challenges: it requires additional expertise, facility upgrades, and sometimes significant hardware outlays. Many miners are mitigating this through strategic partnerships – the miner provides the power and real estate while an AI/cloud firm supplies the servers and operational know-how. In this hosting model (similar to arrangements where miners host other investors’ ASIC machines), the Bitcoin miner simply leases out capacity without needing to run the new workloads itself. For those with sufficient scale, another route is constructing a dedicated data center unit or site, which can potentially boost valuations since data center businesses often command higher earnings multiples.
Another path is to sell or lease infrastructure assets outright. In today’s market, hyperscalers and cloud giants are eagerly hunting for ready-to-go data center sites, so miners with large power-connected facilities have seen interest from such buyers. Some have secured significant one-time gains by selling entire sites to tech. This approach lets a mining firm immediately unlock the value of its infrastructure, providing liquidity that can be used to pay down debt, reinvest in core operations, or even exit the industry if desired.
Each choice comes with trade-offs. Selling secures up-front capital but forfeits future recurring income from those assets, whereas expanding means taking on the complexity of a new business line. The optimal path depends on a miner’s financial position and long-term vision – some may even choose a hybrid strategy (for instance, selling one facility to fund the conversion of another into a data center). What’s clear is that the market now recognizes mining infrastructure and energy deals as valuable assets in their own right, whether kept for diversification or sold for profit.
Market Trends and Institutional Investment Potential
The broader backdrop to these strategies is a macro-level surge in demand for computing power. Data centers in the U.S. could consume roughly 9% of all national electricity by 2030, more than double current levels. This surge is fueling a boom in data center construction and investment; capital is pouring into data center real estate and infrastructure projects to ride this wave.
Bitcoin miners now present an increasingly attractive hybrid investment. They combine elements of a high-growth tech venture (tied to cryptocurrency) and a utility-like infrastructure business (via their energy and data center assets). Such companies can offer uncorrelated income streams – revenue from hosting contracts, for instance, flows in regardless of Bitcoin’s price. At the same time, in a crypto bull market, their mining operations can deliver outsized profits on top of those stable revenues. This combination provides downside protection without limiting the upside. Importantly, the physical assets on their balance sheets (land, power infrastructure, cooling systems) offer a margin of safety. Even in a severe crypto downturn, these hard assets retain value and can be repurposed or sold to recover capital.
As these firms pivot into the data center arena, they could attract new types of investors and even become acquisition targets for infrastructure funds or technology companies looking to accelerate their data center expansion. In turn, the market may start to value these hybrid firms more like data center operators than as pure crypto plays.
Strategic Takeaways for Investors
Focus on Energy Assets: When analyzing Bitcoin mining companies, pay close attention to their energy contracts, power capacity, and infrastructure resilience. These factors not only drive mining profitability but also represent real assets that can be leased or sold into the high-demand data center market, providing a floor value to the investment.
Geography is important: Oftentimes the cheapest power is located in politically unstable areas. While these sites may be good locations for Bitcoin mining, they are often poor locations for data centers and may turn away potential customers/acquirers.
Look for Diversification Moves: Miners integrating with the traditional data center industry – via hosting deals, AI partnerships, or infrastructure sales – may offer a more attractive risk-reward profile. Such moves can yield more stable income streams that complement volatile mining revenues.
Hybrid Growth Story: The strongest candidates in this sector present a hybrid growth story: participation in the upside of Bitcoin prices and network growth, plus exposure to the secular growth of cloud and AI computing. This dual exposure acts as a hedge; even if crypto markets underperform, the data center side can deliver returns (and vice versa). Investors should view advanced Bitcoin miners less as “crypto stocks” and more as next-generation digital infrastructure companies.
Conclusion
For years, critics argued that Bitcoin’s massive energy footprint was a liability for miners. Now, that very trait is becoming their greatest strength. By backstopping operations with highly desirable data center assets, miners are turning a former vulnerability into a strategic advantage. Investors who embrace this nuanced view may find opportunities in companies that others undervalue as “just miners.” Bitcoin miners-turned-hybrid operators are positioned to benefit from both the continued rise of decentralized finance and the insatiable growth of AI and cloud computing.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or opinions of Chicago Atlantic
1 McKinsey & Co: AI power: Expanding data center capacity to meet growing demand
2 Data Center Dynamics: A blueprint for rural data center growth
3 CNBC: Texas paid bitcoin miner Riot $31.7 million to shut down during heat wave in August
4 Core Scientific: Core Scientific to Provide Approximately 200 MW of Infrastructure to Host CoreWeave’s High-Performance Computing Services, Capturing Significant AI Compute Opportunity
Dan Walsh
Director, Capital Formation
Chicago Atlantic
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or opinions of Chicago Atlantic
