Friday, October 10 was a forgettable day all the way around for risk assets. Those included cryptocurrency and crypto-related equities. The CoinShares Valkyrie Bitcoin Miners ETF (WGMI) wasn’t immune to the broader market pullback.
But give the ETF some credit. Some of its holdings managed to cobble together modest gains on the day. And the tariff-induced pullback could be healthy for a fund that gained 116.43% over 90 days ending October 10. It could also be a buying opportunity for investors interested in WGMI and its components.
If trade volatility lingers, it’d likely be hard for some investors to see the forest through the trees with crypto stocks. But that bad news could evolve into good news for WGMI. That’s because Wall Street is increasingly bullish on the noncrypto competencies offered by the ETF’s holdings. On October 10, Bernstein analyst Gautam Chhugani joined the sell-side chorus regaling crypto miners for their exposure to the AI infrastructure boom.
Chhugani said cryptocurrency miners, including some WGMI member firms, are increasingly “attractive partners for AI cloud providers.” The analyst anointed IREN (IREN), one of WGMI’s largest holdings, as the top pick of the lot. There’s a lot to like with that WGMI component.
“The analyst said IREN’s 3 gigawatt power portfolio gives it several options to grow its AI cloud business, such as building its own GPU cloud, leasing power to big tech firms, or using a mix of both,” according to TipRanks. “At the same time, he pointed out that IREN’s Bitcoin mining is highly profitable, with its computing power up more than 200% in the past year and a low cost of about $36,000 per Bitcoin. With Bitcoin trading near $120,000, IREN is generating about $1.1 billion in annual revenue and $650 million in adjusted EBITDA.”
Rhe power demands of AI hyperscalers is an area where WGMI and its holdings can truly shine. Mining digital currency is also an energy-intensive endeavor. And the power — including clean energy — contracts WGMI holdings notched years ago are paying dividends today. That’s because the gigawatts controlled by crypto miners can be shifted over to AI firms. That significantly reduces deployment times. Plus, the shortages faced by AI companies are expected to linger for awhile. That could potentially provide more opportunities for WGMI constituents to meet demand.
“Microsoft expects data center shortages to persist through 2026 as cloud and AI demand outpaces its infrastructure buildout. The surge in demand for high-performance computing is fueling optimism that bitcoin miners can capitalize by expanding into AI and data center operations,” reported CoinDesk.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
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