Bitcoin Miners Merge with AI Data Centers in ‘Mullet Strategy,’ Says Bernstein

Bernstein analysts highlight the emerging trend of Bitcoin miners diversifying into AI data centers, dubbing it the “mullet strategy” — AI in the front, Bitcoin in the back. Miners like Core Scientific and Iris Energy are leading this shift, combining crypto mining with AI operations to leverage existing infrastructure and tap into the growing demand for AI compute power.

Bitcoin miners are increasingly exploring new avenues by merging cryptocurrency mining operations with AI data centers, according to a recent note by Bernstein analysts. This strategy, humorously referred to as the “mullet strategy” — AI in the front, Bitcoin in the back — represents a significant shift in how these companies operate.

Bernstein analysts have noted a surge in investor interest for miners who are pursuing AI and high-performance computing (HPC). The strategy allows miners to utilize their existing infrastructure and power capacity to meet the growing demand for AI compute power while continuing to mine Bitcoin.

Miners Leading the Charge

Core Scientific exemplifies this approach, recently securing a $6.7 billion deal to provide AI data center hosting for CoreWeave. Other major players, such as Iris Energy and Cipher Mining, are also pursuing similar AI partnerships and expanding their data center capabilities.

Caution Ahead

Despite the potential, Bernstein analysts caution that Bitcoin mining and AI data centers are fundamentally different businesses, with only some operational overlap. They suggest that miners will need to choose between two paths: either doubling down on Bitcoin mining or fully committing to the AI data center transition.

For those focused on Bitcoin, the analysts recommend increasing their hash rate faster than the total network growth and holding onto mined Bitcoin until market prices improve. Meanwhile, those shifting to AI will need substantial power portfolios and reliable data center capabilities to attract significant partners.

Natural Advantage

The report also highlights that U.S.-listed miners have a “natural advantage” in accessing capital markets to fund expansion, positioning them as potential market consolidators as the industry continues to evolve.

Bernstein analysts conclude that the mining landscape is “split right down the middle” between Bitcoin purists and those shifting focus to AI. As institutional interest in these operations grows, miners must carefully choose their strategy to attract investment and succeed in an increasingly competitive market.

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