VanEck Signals Potential Rebound as Bitcoin Miners Suffer 35% October Loss

Bitcoin mining companies that have diversified into AI data center infrastructure could be undervalued following October’s sharp market correction, according to VanEck. The investment manager believes the average 35% decline in their share prices reflects excessive selling pressure rather than a deterioration in their long-term business outlook.

In a research note published Wednesday, VanEck explained that investors broadly sold AI infrastructure stocks in October, treating companies with different business models and financial profiles as part of the same trade.

Bitcoin miners transitioning into AI infrastructure, including Hut 8 and Core Scientific, were among those affected. VanEck classifies these businesses as powered shell providers (PSPs) and said they experienced spillover selling from concerns surrounding GPU rental companies such as CoreWeave.

The downturn was further intensified by concerns about credit exposure across the AI infrastructure sector. Broader market uncertainty, including higher-than-expected U.S. inflation in September and political uncertainty ahead of the November midterm elections, also weighed on investor sentiment.

Powered shell providers supply electricity and physical infrastructure to GPU rental operators. These companies have faced rising financing expenses as they invest in expensive graphics processing units to expand their AI computing capacity.

VanEck argues that access to electricity remains the most significant constraint on AI infrastructure growth. As a result, Bitcoin miners with existing power resources could hold a valuable position in an increasingly competitive market.

The investment manager also believes that current share prices fail to reflect the underlying financial strength of these businesses, particularly their long-term contracted cash flows.

Although GPU rental providers, also known as neocloud companies, are dealing with increased debt-servicing costs, VanEck highlighted that none of their signed lease agreements had been terminated.

Additionally, lengthy delays in connecting new facilities to the electricity grid are making existing power capacity increasingly scarce. Bitcoin miners that already control substantial energy resources could benefit from this imbalance as demand for AI computing continues to grow.

VanEck therefore views October’s 35% sell-off as a potentially attractive entry point for investors, arguing that the market decline does not necessarily signal weakness in Bitcoin miners’ transition toward AI data center operations.