SKN | Bitcoin Mining Stocks Fall 35% in October as VanEck Sees Potential Mispricing in AI Infrastructure Pivot

Key Points:

• Bitcoin mining companies expanding into AI data centre infrastructure declined approximately 35% in October, as investors reassessed financing risks across the broader AI infrastructure sector.
• VanEck argues that the sell-off overlooked differences between powered shell providers and GPU rental companies, particularly their contract structures and exposure to long-term cash flows.
• Electricity availability remains a critical constraint for AI computing: only 53 gigawatts of approximately 2,290 gigawatts in the U.S. electricity interconnection queue reached commercial operation in 2025.

Shares of Bitcoin mining companies transitioning into artificial intelligence infrastructure suffered a substantial correction in October, falling approximately 35% on average, according to investment manager VanEck. The firm argues that investors treated businesses with different operating models and financial risks as a single AI infrastructure trade, creating a disconnect between share prices and the fundamentals of certain companies.

The sell-off highlights a growing tension in the digital asset industry: Bitcoin miners are increasingly competing for capital and recognition as energy infrastructure providers, while investors remain concerned about borrowing costs, AI investment returns, and the availability of electricity needed to support expanding computing capacity.

October Sell-Off Reflects Financing Concerns Across AI Infrastructure

VanEck attributes the October decline partly to concerns about the cost and availability of financing. Higher debt yields among GPU rental companies, including CoreWeave, raised questions about whether businesses financing expensive computing equipment could sustain their expansion plans.

These concerns spread to Bitcoin miners that have repositioned themselves as powered shell providers (PSPs), including Hut 8 and Core Scientific. These companies provide energized, grid-connected facilities and power capacity to customers operating AI computing equipment.

Macroeconomic developments added to the pressure. A hotter-than-expected September U.S. consumer price index reading revived concerns about interest rates, while uncertainty ahead of the November midterm elections increased caution toward infrastructure projects.

VanEck nevertheless characterized the correction as a potential market dislocation rather than a rejection of the underlying business model. Its analysis noted that no signed leases across the public companies it covered had been cancelled during the sell-off.

Powered Shell Providers Have Different Risk Profiles From GPU Rental Firms

A central part of VanEck’s argument is that investors have not adequately distinguished between powered shell providers and neocloud companies.

PSPs operate more like infrastructure landlords, supplying buildings, electricity access, and grid connections to tenants that install their own computing equipment. GPU rental companies, by comparison, finance and operate the computing hardware and sell access to processing capacity.

The distinction is particularly relevant to contract duration. VanEck estimates that PSPs commonly sign leases lasting approximately 10 to 20 years, frequently with investment-grade tenants. CoreWeave’s average contract duration is closer to two to five years.

Longer contractual commitments can provide greater visibility over future cash flows, although they do not eliminate financing, counterparty, construction, or execution risks. VanEck argues that the market’s treatment of these businesses as one category has overlooked this difference.

Electricity Availability Strengthens the Value of Existing Infrastructure

The investment manager identifies electricity access as one of the most important constraints on AI infrastructure expansion. In 2025, only approximately 53 gigawatts of the 2,290-gigawatt U.S. electricity interconnection queue reached commercial operation, representing roughly 2% of the total.

The median time required for an electricity project to progress from an interconnection request to operation has increased to approximately 61 months, compared with 22 months in 2008. These delays can make already energized sites strategically valuable because new competitors may face years of development and approval requirements.

VanEck also cites Morgan Stanley’s projection of a 38-gigawatt U.S. data centre power shortfall through 2028. The firm believes that constrained electricity supply could strengthen the position of miners that already control approved or energized infrastructure.

However, access to electricity alone does not guarantee profitability. Companies must still secure tenants, complete construction, manage capital expenditure, and maintain commercially viable financing arrangements.

Valuation and Political Risks Remain Central to the Outlook

VanEck estimates that powered shell providers trade at approximately half the 2028 enterprise value-to-EBITDA multiple of data centre real estate investment trusts. It views this valuation gap, alongside existing contracted leases, as evidence that market pricing may not fully reflect the value of certain infrastructure assets.

Nevertheless, political uncertainty following the U.S. midterm elections introduces another variable, particularly in Texas, which represents approximately 30% of national data centre capacity currently under construction, according to VanEck. Proposed restrictions on new projects could complicate expansion plans, although companies with existing power connections may be relatively better positioned.

Looking ahead, investors will monitor financing conditions, lease execution, electricity approvals, and the ability of Bitcoin miners to convert infrastructure investments into recurring revenue. VanEck’s assessment presents a constructive interpretation of the October sell-off, but its thesis remains dependent on long-term contracts translating into sustainable cash flows. The distinction between temporary market repricing and genuine deterioration in business fundamentals will be central to evaluating the sector’s next phase.