On October 10, risk assets faced a downturn, impacting sectors such as cryptocurrency and crypto-related equities. The CoinShares Valkyrie Bitcoin Miners ETF (WGMI A-) was no exception to the broader market woes.
Despite the challenging environment, some of WGMI’s holdings managed to post modest gains, suggesting resilience amid adversity. This market pullback could serve as a healthy reset for the ETF, particularly after it experienced a significant 116.43% increase over the previous 90 days. For potential investors, this dip might present a timely buying opportunity for WGMI and its associated assets.
As the volatility in trade continues, the outlook for crypto stocks may appear unclear for some investors. However, negative market conditions could transform into favorable prospects for WGMI. Analysts on Wall Street are increasingly optimistic about the value of the non-cryptocurrency-related competencies presented by the ETF’s holdings. On the same day, Bernstein analyst Gautam Chhugani placed a spotlight on cryptocurrency miners, highlighting their emerging role as preferred partners for artificial intelligence (AI) cloud providers.
Chhugani specifically identified IREN (IREN), one of WGMI’s top holdings, as a standout choice within this investment landscape. He emphasized IREN’s impressive 3 gigawatt power portfolio, noting its potential to expand its AI cloud operations through various strategies, including constructing its own GPU cloud or leasing power to major tech companies. Additionally, IREN’s Bitcoin mining operations are currently yielding substantial profits, with a notable increase in computing power of over 200% in the past year and a relatively low cost structure of approximately $36,000 per Bitcoin. With Bitcoin values hovering around $120,000, IREN is expected to generate around $1.1 billion in annual revenue alongside $650 million in adjusted EBITDA.
The increasing power demands from AI hyperscalers present a unique advantage for WGMI and its holdings. The energy-intensive nature of cryptocurrency mining, combined with the established clean energy contracts these firms secured in previous years, positions them strategically for future growth. The substantial energy resources available through crypto mining operations can be redirected to AI firms, significantly shortening deployment times.
Market experts anticipate that shortages currently plaguing AI companies are likely to extend for some time, further opening the door for WGMI’s constituents to fulfill the burgeoning demand. Microsoft has indicated that data center shortages are expected to persist through 2026 as the demand for cloud services and AI technology continues to outstrip current infrastructure capabilities. This increasing demand for high-performance computing further bolsters the outlook that Bitcoin miners could seize opportunities to diversify into AI and data center operations.
