Bitcoin miners IREN, RIOT, MARA face headwinds on AI/HPC infrastructure pivot as market sentiment cools.
Top Bitcoin mining stocks that pivoted to the artificial intelligence infrastructure sector have pulled back sharply amid slowdown and competition headwinds. These Bitcoin mining companies are facing substantial competition from larger neocloud companies like CoreWeave and Nebius, which have received backlogs worth over $99 billion and $50 billion, respectively.
Most Bitcoin mining companies, including Hive Digital, Core Scientific, Hut 8, TeraWulf, Cipher Mining, and Bitfarms, have all entered the AI infrastructure space, raising competition concerns. This is likely one of the key reasons these stocks continue to attract high short interest. IREN's short interest stands at 18%, while Core Scientific, TeraWulf, Riot Platforms, and MARA all have short interest above 15%.
The companies are also seeing elevated costs, as the prices of GPUs, servers, and memory products have soared. High Bandwidth Memory (HBM) prices have increased by over 50% in the past few months, with similar rises in CPU, GPU, and server costs. As a result, the companies are selling some of their Bitcoin holdings to fund growth and relying on debt and at-the-market offerings to raise capital. A recent report by VanEck found that these companies face a $50 billion funding gap, with over $221 billion needed in the long term.
CoreWeave exemplifies this trend, having boosted its outstanding shares from 317 million during its IPO to 428 million today, while its total debt jumped to $35 billion from $11.8 billion during the IPO. IREN Limited stock has dropped to $38.80, its lowest level since April 13 and 45% below its highest level this year. Similarly, Riot Platforms and MARA Holdings are down 27% and 25%, respectively, from their highest levels this year.
These capital raises are occurring at a critical time when signs suggest AI growth is starting to ease. OpenAI is considering postponing its IPO, while the price of AI tokens has slumped. Additionally, Meta Platforms, a key client to neocloud companies, is now set to become a competitor by selling its extra infrastructure space to other firms. SpaceX has also entered the space and already inked major deals, set to receive $920 million a month from Google, $150 million a month from Reflection AI, and over $1.25 billion a month from Anthropic.