Initially predicted to suffer greatly from the reduced Bitcoin block rewards following the latest halving event, Bitcoin (BTCUSD) mining operations, surprisingly, didn’t collapse. The surge in Bitcoin’s valuation provided a cushion, but a substantial recovery still proved elusive for many in the industry.
Faced with this challenge, some companies have adopted resourceful strategies. Leveraging the versatility of GPUs, commonly employed for Bitcoin mining, these businesses are exploring applications in artificial intelligence (AI) and cloud infrastructure. What began as a marketing ploy to attract investors by associating with AI is rapidly evolving into a genuine and significant line of business. Applied Digital (APLD) has demonstrated success in this transition, inspiring others to follow suit.
As major technology firms scramble to secure computing resources, two companies primarily recognized as cryptocurrency miners are poised for potential growth due to rising demand.
IREN Limited (IREN)
IREN Limited (IREN) stands out as a key player in the shift from Bitcoin mining to AI-powered services. The organization recently expanded its AI cloud capacity by doubling it to accommodate 23,000 GPUs, investing approximately $674 million in 12,400 additional units. The procurement included 7,100 Nvidia (NVDA) Blackwell B300s, 4,200 B200s, and 1,100 AMD (AMD) MI350X processing units.
IREN is now aiming for an annualized recurring revenue (ARR) of $500 million from its AI cloud division by the first quarter of 2026. In contrast, the ARR for Q1 2025 was $14 million.
The firm’s Bitcoin mining ventures currently generate roughly $1 billion in annualized revenue, based on prevailing market conditions. Their AI cloud operations are scaling with impressive margins, nearing 100%. The business is closing in on $1.25 billion in annualized revenue, exhibiting significant potential for future expansion.
IREN stock has already seen a massive increase of 526% in the last half-year alone, and 1,080% over the preceding two years.
Recently, Roth/MKM set a record-high target price of $82, acknowledging growth in the AI cloud sector. While the average analyst price target of $36.2 suggests a potential 14% decline, the present positive momentum may encourage more experts to take a bullish position.
Cipher Mining (CIFR)
Cipher Mining (CIFR) has also exhibited substantial growth, showing a 70.6% rise within the past month alone.
They secured a notable agreement illustrating the industry transition from Bitcoin to AI. The business signed a $3 billion contract with Fluidstack, a company specializing in AI computing; the arrangement involves Google’s (GOOG) (GOOGL) financial commitment of $1.4 billion in lease arrangements. The overall contract earnings are potentially as high as $7 billion.
Alphabet’s investment includes a 5.4% stake in Cipher Mining through warrants for roughly 24 million shares. Cipher’s facility, situated on 587 acres in Colorado City, Texas, will offer 168 megawatts of computational power, with potential for expansion to 500 megawatts.
It’s crucial to note that Cipher possesses a larger debt burden and has experienced dilution of shares. However, optimistic investors believe that the company’s growth compensates for the negative net income and existing debt levels.
The highest price target for CIFR stock is $12, while the average target of $7.82 implies some degree of possible decline. Much like IREN, analysts could become more confident if the joint cryptocurrency and AI rally resumes powerfully.