When Galaxy Digital (GLXY) CEO Mike Novogratz purchased Argos’ Helios information 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 grow to be mainstream. Novogratz and co. had no concept that this information heart can be a strategic asset because the rising Synthetic Intelligence (AI) business clamours for extra information heart house, because of the explosive development of Giant Language Fashions (LLMs).
As analysts from Rittenhouse Analysis outlined in a brand new observe, Galaxy’s fortunate discover, which instigated the corporate’s transfer out of BTC mining altogether, may 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 corporations that shift away from BTC mining in the direction of AI infrastructure are set to be the subsequent development shares.
Rittenhouse Analysis is lengthy Galaxy Digital $GLXY $BRPHF
We imagine Galaxy’s flagship information heart Helios will generate $1.7B of EBITDA and $32B of fairness worth within the near-term, w/ vital additional upside.
Our full thesis may be discovered by way of PDF right here: https://t.co/mZ3JwW1CYD pic.twitter.com/4jNHn10oYV
— Rittenhouse Analysis (@RHouseResearch) Might 15, 2025
Analysts from Rittenhouse argue that AI information facilities characterize a considerably extra profitable enterprise mannequin than BTC mining as a result of they generate secure, 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 because of the scheduled halvinings. Successfully, the play for a miner is being a long-term bull on BTC’s worth and the flexibility for semiconductor fabs and designers to develop chips which might be perpetually extra environment friendly, and, for an investor, that is a whole lot of variables.
In distinction, AI information facilities like Galaxy’s Helios facility earn constant, high-margin income by way of long-term, triple internet leases to hyperscaler tenants (a large-scale cloud computing supplier), without having steady funding in mining gear.
“Galaxy stumbled upon Helios by advantage of excellent luck,” Rittenhouse wrote of their observe. Whereas rivals similar to Riot Platforms and Cipher Mining have publicly tried to “rewrite historical past,” retroactively suggesting their enterprise was at all times broader than BTC mining, analysts say, “in actuality, these miners had zero intentions to do something apart from 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 internet money and investments), profitable execution file, and credibility established by way 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 robust institutional backing.
The analysts emphasize that CoreWeave’s debt is rigorously structured by way of delayed draw time period loans, utilized particularly to finance infrastructure straight linked to secured buyer agreements, dramatically lowering default threat.
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 information heart ambitions, which sends a optimistic 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 disadvantage for bitcoin miners is that main counterparties say, ‘wow, that’s an enormous obligation for you guys to backstop for such an essential funding for us,’” Web page mentioned on the corporate’s Q1 2025 earnings name.
Galaxy would not have that downside. With this Helios deal in place and Novogratz’s firm completely out of mining, Galaxy’s unintended pivot may simply turn into crypto’s greatest strategic transfer in years – if Rittenhouse’s thesis is appropriate.
