When Galaxy Digital (GLXY) CEO Mike Novogratz purchased Argos’ Helios knowledge heart in late 2022, on the depths of the post-FTX crypto winter, the corporate thought they have been bailing out a determined bitcoin (BTC) miner on the point of chapter.
This, nonetheless, was earlier than ChatGPT had develop into mainstream. Novogratz and co. had no concept that this knowledge heart can be a strategic asset because the rising Synthetic Intelligence (AI) business clamours for extra knowledge heart house, due to the explosive development of Giant Language Fashions (LLMs).
As analysts from Rittenhouse Analysis outlined in a brand new word, Galaxy’s fortunate discover, which instigated the corporate’s transfer out of BTC mining altogether, would possibly now be crypto’s most profitable pivot, as they make the case that the infrastructure used to mine digital gold is best used to course of AI algorithms, and companies that shift away from BTC mining in direction of AI infrastructure are set to be the following development shares.
Rittenhouse Analysis is lengthy Galaxy Digital $GLXY $BRPHF
We consider Galaxy’s flagship knowledge heart Helios will generate $1.7B of EBITDA and $32B of fairness worth within the near-term, w/ vital additional upside.
Our full thesis could be discovered through PDF right here: https://t.co/mZ3JwW1CYD pic.twitter.com/4jNHn10oYV
— Rittenhouse Analysis (@RHouseResearch) Might 15, 2025
Analysts from Rittenhouse argue that AI knowledge facilities signify a considerably extra profitable enterprise mannequin than BTC mining as a result of they generate steady, long-term money flows with minimal ongoing capital expenditures, contrasting sharply with the volatility and capital depth of bitcoin mining.
BTC mining revenues inherently decline by roughly 50% each 4 years as a result of scheduled halvinings. Successfully, the play for a miner is being a long-term bull on BTC’s value and the flexibility for semiconductor fabs and designers to develop chips which are perpetually extra environment friendly, and, for an investor, that is a whole lot of variables.
In distinction, AI knowledge facilities like Galaxy’s Helios facility earn constant, high-margin income by means of long-term, triple web leases to hyperscaler tenants (a large-scale cloud computing supplier), without having steady funding in mining tools.
“Galaxy stumbled upon Helios by advantage of fine luck,” Rittenhouse wrote of their word. Whereas opponents reminiscent of Riot Platforms and Cipher Mining have publicly tried to “rewrite historical past,” retroactively suggesting their enterprise was all the time broader than BTC mining, analysts say, “in actuality, these miners had zero intentions to do something in addition to mine BTC till ChatGPT was launched.”
A broader business shift?
Galaxy’s transition displays a broader development as BTC miners try to pivot towards AI and cloud computing.
But, analysts underscore Galaxy’s vital benefit, stemming from its superior steadiness sheet ($1.8 billion of web money and investments), profitable execution report, and credibility established by means of the CoreWeave lease.
Whereas some have raised considerations over CoreWeave’s creditworthiness, inflicting Galaxy’s shares to commerce at a major low cost, Rittenhouse analysts say these fears are considerably overblown, highlighting CoreWeave’s distinctive income stability from long-term contracts accounting for 96% of its revenues and its sturdy institutional backing.
The analysts emphasize that CoreWeave’s debt is fastidiously structured by means of delayed draw time period loans, utilized particularly to finance infrastructure immediately linked to secured buyer agreements, dramatically decreasing default danger.
Rittenhouse additionally notes that Galaxy has gone totally in on AI, and now would not have any publicity to mining.
“Galaxy has utterly exited all bitcoin mining actions to focus solely on its AI knowledge heart ambitions, which sends a constructive sign to potential hyperscaler tenants,” analysts wrote.
As Rittenhouse writes, Cipher Mining’s CEO Tyler Web page just lately acknowledged the uphill battle miners face when approaching main AI clients.
“It’s not misplaced on us that if we’re speaking to a counterparty with a $1 trillion market cap… One downside for bitcoin miners is that main counterparties say, ‘wow, that’s a giant obligation for you guys to backstop for such an vital funding for us,’” Web page stated on the corporate’s Q1 2025 earnings name.
Galaxy would not have that drawback. With this Helios deal in place and Novogratz’s firm completely out of mining, Galaxy’s unintended pivot would possibly simply develop into crypto’s finest strategic transfer in years – if Rittenhouse’s thesis is appropriate.
