Morgan Stanley reports that Bitcoin mining firms control around 6.3 gigawatts of operational large-scale facilities, along with an additional 2.5 gigawatts of capacity under construction. This positions them as the “fastest and lowest execution risk” solution for AI companies seeking energy. If these mining operations transition to data centers, their equity value could range between $5 and $8 per watt, which is substantially higher than the current trading values of many Bitcoin mining companies.
The rapid expansion of artificial intelligence is leading to an unprecedented surge in electricity demand, whereas the immediate available supply is limited.
A research report from Morgan Stanley, released on the 21st, indicates that the U.S. may experience a power deficit of up to 45 gigawatts (GW) for data centers between 2025 and 2028. This shortage is projected to persist even with the inclusion of alternatives like natural gas and nuclear energy.
In contrast to new projects that may take years to connect to the power grid, Bitcoin mining firms boast large-scale facilities that come with immediate grid connectivity. The report highlights that these U.S.-based miners are operating approximately 6.3 gigawatts of significant operational sites, alongside 2.5 gigawatts currently under construction, thus presenting the “fastest and lowest execution risk” pathway for AI companies in need of power.
At present, many Bitcoin mining companies have their stock valuations strongly linked to their mining activities, resulting in notably low “Enterprise Value per Watt” (EV/Watt) ratios. The report suggests that repurposing mining facilities as data centers could generate equity values between $5 and $8 per watt—significantly surpassing these firms’ current market levels. This presents investors with a notable valuation discrepancy and potential opportunity for alpha.
The Impending Power Shortage
The demand for computing power driven by AI is escalating rapidly, limited by the availability of electricity. Morgan Stanley’s models predict that U.S. data centers will require 65 gigawatts of power from 2025 to 2028, while the existing grid can only provide about 15 gigawatts of readily accessible capacity, with an additional 6 gigawatts from facilities currently under development. This results in a notable shortfall of approximately 45 gigawatts.
Bitcoin Mining’s Essential Role
Given the looming energy bottlenecks, Bitcoin mining farms emerge as an unexpectedly viable solution. According to Morgan Stanley, these facilities house critical resources that are highly sought after by AI enterprises: approved grid connections and substantial power capacity. This setup allows them to circumvent the lengthy ‘large load interconnection’ approval process typically necessary for new data centers.
Statistics indicate that U.S. Bitcoin mining companies operate about 6.3 gigawatts of significant (over 100 megawatts) sites, with another 2.5 gigawatts under construction and 8.6 gigawatts of additional projects already approved for grid connections. The report emphasizes that these available power resources hold immense value for AI firms. Transforming these mining sites into data centers aligns perfectly with the timeframe needed to develop power infrastructure, typically 18-24 months.
Valuation Opportunities in Bitcoin Mining Facilities
Evaluating the economic benefits of converting Bitcoin mining facilities into high-performance computing (HPC) data centers reveals astonishing potential. Morgan Stanley’s analysis illustrates that if a Bitcoin miner repurposes a 100-megawatt site into a ‘powered shell’ data center (excluding chips and servers) and leases it to clients, noteworthy equity values can be achieved. If a major cloud service provider leases the space, it could yield approximately $519 million in equity value, or $5.19 per watt. For an emerging provider, the value could escalate to around $781 million, or up to $7.81 per watt. This possible value creation, ranging from $5 to $8 per watt, significantly outstrips current trading levels of many Bitcoin mining stocks. The favorability of this model arises from its project financing nature, which entails high leverage and mitigates commercial risks associated with holding chips.
