Jefferies Sees Upside in WGMI Miners Pivoting to AI
Jefferies began coverage, rating Cipher, TeraWulf, Hut 8 and Core Scientific ‘buy’ and Riot ‘neutral’, noting miners repurposing power for AI data centers have upside; WGMI ETF +29% in one month.
Jefferies initiated coverage of several large holdings in the CoinShares Bitcoin Mining ETF (WGMI), assigning buy ratings to Cipher Digital (CIFR), TeraWulf (WULF), Hut 8 (HUT) and Core Scientific (CORZ) and a neutral rating to Riot Platforms (RIOT). The actively managed WGMI rose more than 29% over the past month following the research release and investor reaction to the firms’ AI plans.
The bank highlighted that several miners are converting electrical capacity originally secured for bitcoin mining into AI data center space. Jefferies’ analyst report pointed to signed leases and development plans as drivers of potential revenue beyond volatile mining income.
Jonathan Petersen, a Jefferies analyst, wrote in the research note that “one of the largest bottlenecks is interconnected power, which is where these developers have a head start, as they are repurposing power sourced for BTC mining to pivot toward AI data center development.” The report added that leasing and execution on development agreements could add material upside for shareholders.
Analysts said access to deliverable power is a competitive advantage because AI training equipment uses much more power per rack than traditional cloud servers. Firms that can provide immediate, power-dense capacity may meet near-term demand from large cloud customers racing to train and deploy models.
The push to AI follows years of pressure on pure-play bitcoin mining. Volatile bitcoin prices, higher energy costs and rising mining difficulty have reduced the reliability of mining revenue. Several WGMI constituents began offering data center and AI services as a revenue diversifier and have since redirected substantial electrical and cooling capacity to host AI hardware.
The Jefferies report cited early contracts with smaller cloud providers and more recent agreements tied to investment-grade hyperscalers or supported by parent-company guarantees. Those arrangements improve credit quality and revenue visibility compared with spot-dependent mining income, and repurposing existing power footprints can shorten the time needed to bring new data center space online.
Jefferies flagged leasing and development execution as key elements for value creation. The firm noted that securing long-term contracts with larger cloud customers and delivering ready power capacity are the main factors that would affect the future revenue mix of these miners.
The research and subsequent market reaction underline investor interest in miners that convert infrastructure built for bitcoin into facilities for AI workloads. Jefferies’ ratings and commentary focused attention on specific WGMI holdings that the bank views as best positioned to lease and operate AI data center capacity.
