Bitcoin Miners HIVE, Bitfarms, Bitdeer Downgraded as AI Transition Raises Concerns

KBW struck a more cautious tone on the bitcoin mining sector, cautioning that the industry’s pivot toward artificial intelligence and high-performance computing (HPC) could take longer to translate into earnings than the market expects.

In investor notes released Monday, KBW analyst Stephen Glagola downgraded Bitfarms (BITF), Bitdeer (BTDR) and HIVE Digital (HIVE) from outperform to market perform. While the strategic case for expanding into AI and HPC hosting remains intact, Glagola said execution challenges, extended development timelines and significant capital needs complicate near-term monetization.

After the 2024 bitcoin halving compressed mining margins to record lows, miners have increasingly repositioned themselves as digital infrastructure providers. By retrofitting existing “warm shell” sites — facilities already equipped with high-density power and cooling — firms aim to replace volatile block rewards with steadier enterprise-style revenue streams tied to AI workloads.

KBW warned, however, that the transition carries meaningful risk. The capital intensity and strict uptime requirements of HPC infrastructure create a sharp divide between operators capable of executing and those that may end up with underutilized or stranded assets.

Bitfarms: expectations running ahead of execution

Bitfarms was downgraded as KBW argued that optimism around its 120-megawatt Sharon, Pennsylvania, site is already reflected in the share price. Although Glagola lifted his price target to $3.00 from $2.50, he does not expect a formal leasing agreement until the second half of 2026.

The analyst also voiced skepticism around Bitfarms’ potential expansion into AI cloud services in Washington state and highlighted rising leverage as a risk. The shares were little changed in early trading.

Bitdeer: scale strengths, AI uncertainties

KBW also downgraded Bitdeer, slashing its price target to $14 from $26.50. While the bank acknowledged Bitdeer’s progress toward becoming one of the largest publicly listed miners by 2026, supported by its vertically integrated Sealminer technology, it said the company’s growing emphasis on AI cloud services introduces additional uncertainty.

Glagola cited Bitdeer’s limited current scale, concentrated shareholder control and related-party exposure as reasons for adopting a more cautious stance. The stock was modestly higher at $13.91.

HIVE: competitive positioning in question

HIVE Digital faced the steepest price-target cut, with KBW reducing its target to $3.50 from $11.00. Glagola questioned the durability of HIVE’s AI cloud strategy, noting that its reliance on partners and equipment financing leaves it at a disadvantage relative to established data center operators.

KBW also pointed to HIVE’s negative pre-tax return on invested capital, suggesting the company is expanding hashrate without generating sufficient operating returns in a depressed hashprice environment. Shares were up 0.3% at $3.04 at the time of publication.

Across all three miners, KBW’s conclusion was consistent: the shift from bitcoin mining to AI-focused data center operations is capital-intensive, slow to monetize and likely to demand greater dilution — and patience — than investors are currently assuming.