In our last Bitcoin analysis, Bitcoin After the Cycle Peak: What Comes Next and How We're Positioning, we argued that Bitcoin was closer to a cycle low than most believed, even if one final drop remained ahead. Since that publication, the probability of another drop occurring in the coming weeks has increased meaningfully. If it does, it should set up a tradeable bounce within what we believe is an ongoing bear market.
What gives us the confidence that we are in a new bear market cycle, rather than a pullback within a larger uptrend, is that Bitcoin continues to track sentiment patterns and global liquidity cycles with remarkable consistency. Recognizing this unconventional correlation has been the foundation of a framework that has filtered out narrative-driven noise and kept us on the right side of every major Bitcoin trend since 2020. These are themes that we first introduced in August of 2025, when Bitcoin was trading at around $115,000.
“Global liquidity appears to be stalling and setting up for a reversal. This is historically not good for Bitcoin and tends to coincide with major tops. This inflection point lines up with our Technical Analysis that has us in the final leg of the multi-year bull market.”
Today, the same sentiment patterns continue to suggest that we are likely going lower, while global liquidity is threatening to get even tighter, not better. Because of this, we continue to maintain a defensive posture regarding Bitcoin until we reach our targets, which we explain in detail in this article as well as our updated game plan.
Why the U.S. Dollar Is the Single Most Important Variable for Bitcoin Prices
By “liquidity”, what we mean is how easily one can access cheap debt. Interestingly, it is not the creation of new debt that dominates capital flows, but the ability to roll over existing obligations. In fact, three out of every four global financial transactions are related to debt refinancing, not expansion. Moreover, nearly 80% of global lending now requires collateral, typically in the form of high-quality, low-volatility assets like U.S. Treasuries.
This creates a framework where liquidity is dictated by how cheaply and easily borrowers can refinance without overcollateralizing. The more capital that’s freed up through this process, the more capital can rotate into risk-on assets such as Bitcoin.
A number of variables influence liquidity conditions. Collectively, these forces determine whether capital and confidence flow into the system or are pulled out:
Central bank policy
Fiscal spending
The Treasury General Account (TGA)
Federal Reserve repo operations
Broad equity market performance
Bond market volatility
However, among all these variables, the most powerful and persistent driver of global liquidity is the strength in the U.S. Dollar.
Roughly 64% of global debt is denominated in USD, which means foreign borrowers who accessed cheap U.S. capital must continue sourcing dollars to service that debt. When the dollar weakens relative to their local currencies, less local currency is needed to meet dollar obligations. This frees up capital that can chase higher-yielding risk assets, including Bitcoin.
It is no coincidence that the 2022 bear market in both Bitcoin and equities bottomed within six weeks of the U.S. Dollar peaking and entering a multi-year downtrend. The inverse correlation between the DXY (the U.S. Dollar Index) and Bitcoin has been remarkably consistent across every major Bitcoin trend cycle.
Weekly chart comparing Bitcoin and the U.S. Dollar Index (DXY) from 2012 to 2026, highlighting their persistent inverse relationship.
The chart above illustrates this clearly. When the dollar is rising, Bitcoin tends to experience heightened volatility and price pressure. When the dollar is in a larger decline, it has historically coincided with Bitcoin's major bull cycles.
After a 3.5-year drawdown, the evidence suggests the dollar's bear market has ended and a new uptrend is underway.
Weekly DXY chart highlighting a completed correction and the emergence of a higher‑high structure, signaling renewed dollar strength and a tightening global liquidity backdrop.
The above chart shows that the 2022 peak and bear market that followed has taken the form of a large corrective (A,B,C) pattern that has just been completed.
From the 2022 top, we have an initial drop into July 2023 (A Wave), followed by an overlapping bounce into January 2025 that failed to make a new high (B Wave). Finally, an aggressive, near-vertical decline that completed the final swing of this pattern (C Wave). Within the C Wave, the momentum indicator (MACD) reached its most extreme reading, characteristic of a third wave, before registering two higher lows against lower price lows, a classic fifth-wave signature.
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Confirmation that the dollar's bear market concluded in March 2026 came when DXY posted its first higher high since the C Wave began. It is now working on its first higher low. A sustained break above $100.60 in the coming weeks would guarantee that a new dollar uptrend is in place.
The impact on Bitcoin is already visible. DXY completed its bear market pattern on September 17, 2025. Bitcoin topped near $126,000 on October 6th, just 19 days later. Since then, Bitcoin has declined over 52%, confirming that the inverse correlation between DXY and Bitcoin remains firmly intact.
Should DXY break above $100.60 as the pattern suggests, it would signal an extended dollar uptrend ahead, further tightening global liquidity and continuing to be a meaningful headwind for Bitcoin and risk assets broadly.
Bitcoin Volume Analysis: A Bear Market Signal That Has Worked Since 2022
In our November 2025 report, we flagged a concerning shift in Bitcoin's buying patterns that was inconsistent with a healthy bull market. From the 2022 low onward, volume had been expanding as price rose – a sign that increasing buyer conviction was supporting the uptrend. Corrections in Bitcoin during this period tracked declining volume, meaning fewer sellers were showing up on pullbacks. This is a textbook characteristic of strong and healthy uptrends, illustrated by the green shading in the chart above.
Chart showing Bitcoin’s price action alongside aggregated volume, highlighting strong volume confirmation during the uptrend and weakening conviction during recent declines—consistent with a transition from accumulation to distribution.
That pattern broke down around March 2025. As Bitcoin made its final run to all-time highs, volume declined rather than expanded, which was the first time this had occurred since the 2022 low. That divergence was a significant warning, and in hindsight, signaling an early warning that volume was rejecting the move into the October top.
Volume has since told the opposite story. As shown in the red shading, it is now expanding as price falls and contracting as Bitcoin bounces. This is a textbook distribution pattern that signals a clear and meaningful shift in investor convictions.
Today, Bitcoin is in another overlapping bounce on decelerating volume, while the RSI (momentum indicator) is back within the range where bear market rallies have historically exhausted themselves. The setup is consistent with another leg lower ahead.
The developing pattern bears a notable resemblance to 2022, which featured a series of sharp vertical drops interrupted by weak, overlapping bounces — a complex corrective structure that took months to resolve. The current price action in 2026 appears to be forming a similar pattern.
Chart showing Bitcoin transitioning from a completed bull‑market top into a corrective bear‑market structure, with declining momentum and key downside support zones highlighted as potential areas for a more durable low.
The key levels to watch are straightforward. A break below $62,534 would likely trigger a continuation toward the $55,000–$40,000 range, with the $48,000–$46,000 zone representing our highest-probability target, and the region where a more meaningful low can develop.
Conversely, if Bitcoin holds $62,534 and rallies above $79,125, we will consider the larger bounce scenario in play, though we would expect that rally to ultimately fail below the $106,000–$116,000 resistance zone.
In conclusion, we sold over 80% of our crypto exposure between November 2024 – October 2025, locking in meaningful gains before the major decline unfolded. Today, we remain defensively positioned for continued volatility over the coming weeks to months. Whether this volatility resolves on the next drop or extends into 2027 and takes prices lower than most expect, our long-term outlook on Bitcoin remains firmly bullish, and the reasons are rooted not in price charts, but in the structural forces reshaping the global financial system.
It is worth stepping back to appreciate how far Bitcoin's credibility has come. The same established investors and institutions that once dismissed it as a fraud have not only reversed course; they have embedded it into the global financial system. BlackRock, Fidelity, JPMorgan, and the U.S. government itself now hold or facilitate Bitcoin exposure. This is not speculation. It is the current reality. And it did not happen by accident.
Bitcoin's ability to generally function as gold, without the storage, custody, or geographical constraints, makes it a uniquely compelling store of value in a world carrying 236% total Debt/GDP and no credible path to reducing it.
The numbers are sobering. The U.S. alone sits at 121% Debt/GDP, with 31% of all tax receipts now consumed by debt service alone. For the first time in recorded history, America spends more servicing its debt than funding its military. Historian Niall Ferguson, through his extensive studies of fallen empires, identified precisely this crossover as the inflection point marking the beginning of terminal decline for empires, without a single historical exception.
What makes this more alarming is that there is no relief in sight. The U.S. is projected to run a 5.8% of GDP deficit this year, averaging 6.1% over the next decade. The trajectory is not stabilizing; it is accelerating.
Governments in this position have three options: (1) They can grow GDP faster than debt, but with debt expanding at roughly 6% annually, sustaining that pace of nominal growth is not realistic for a mature economy. (2) They can raise taxes. However, closing a $1.9 trillion deficit gap through taxation alone would require a 34% increase in tax receipts, a figure that would almost certainly cross the threshold of diminishing returns and slow the very growth needed to service the debt. That leaves the third option, and the one most governments with reserve currency status have chosen throughout history without fail. (3) print money to cover the bills and pass the cost to citizens through inflation. The bill is always paid, just not in the way most people recognize it.
This is where Bitcoin becomes not merely interesting, but structurally important. Unlike the U.S. dollar, which must expand by roughly 6% annually just to cover the deficit, Bitcoin cannot be inflated. Its supply is relatively fixed, and its scarcity is absolute. More importantly, it is increasingly recognized, regardless of whether one agrees with it, as a store of value that crosses borders and transfers directly between parties without intermediaries or the permission of any government.
In a world where more currency must be created to fund ever-growing government spending, and where the political will to stop does not exist, an asset that is widely considered valuable and remains largely fixed in supply becomes, by definition, more valuable over time. This is not a narrative, but simple arithmetic.
This was Bitcoin's original purpose, as laid out in its founding white paper. The more acute the problem becomes, the more compelling Bitcoin becomes as an alternative to a centralized fiat system that is, by its own projections, borrowing its way toward an unavoidable reckoning.
However, unlike many, our system has, so far, helped us lock in gains from epic bull market runs, while side stepping the devastating drops that follow. We remain defensive over the intermediate term basis, as we patiently wait for the next best long-term buying opportunity to present itself.
Since our inception in May 2020, I/O Fund has delivered a cumulative return of 326%— if we were a hedge fund, we’d rank #1 and if we were a tech ETF or Mutual Fund, we’d rank #3 in the United States. 326%— if we were a hedge fund, we’d rank #1 and if we were a tech ETF or Mutual Fund, we’d rank #3 in the United States.
Combining broad market analysis to buy at the lows has helped us achieve these results, including 20 entries in April of 2025 that saw up to 400% returns in one stock. To get our Top 15 AI stocks, real-time trade alerts, weekly webinars and deep-dive research from a proven team in AI and tech stocks, Sign up now.Top 15 AI stocks, real-time trade alerts, weekly webinars and deep-dive research from a proven team in AI and tech stocks, Sign up now.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
Bitcoin rarely rewards narrative-based investors for long. Time and again, it has shown a habit of reversing its dominant trend against the prevailing story of the moment. A large portion of the I/O Fund’s edge has been staying on the right side of Bitcoin’s big turns in both directions by following a process rooted in analyzing sentiment through technical analysis, rather than headlines.
Since December 2022, when Bitcoin was trading around $16,000, we went against the crowd at the time and called for the start of a new bull cycle. In the months that followed, we published seven additional pieces reaffirming Bitcoin as a buy, and we issued 13 buy alerts to premium members at key points from roughly $25,000 up through $60,000.
Then, at the height of Bitcoin’s narrative hype, in October 2024, we did something we’ve learned is essential in crypto: we shifted from enthusiasm to discipline when risk was rising and narratives turned euphoric. In our article, Bitcoin Bull Market Intact As Risk Increases, we wrote:
“We do believe risk has increased. As a result, we will likely reduce some risk on the next rally to all-time highs.”
It was a classic period of exuberance—when pundits were confidently calling for $200,000+ in short order, yet the risk/reward was already deteriorating beneath the surface.
From there, we followed up with three additional articles and a free webinar explaining why Bitcoin’s risk was far higher than the mainstream narrative suggested. We backed that view with nine sell alerts, reducing most of our Bitcoin exposure between $95,000 and $113,000—once again stepping aside as conditions began to deteriorate.
Now, with a new bear cycle likely underway, sentiment is back in the driver’s seat. As the larger trend resolves, new narratives are emerging—most of them designed to pull investors in at precisely the wrong time.
In this report, I’ll outline where crowd psychology is most likely to push Bitcoin in the coming months. I'll also examine Coinbase—given its strong correlation with Bitcoin—to help confirm the path. While we still believe another generational buying opportunity will emerge, we believe Bitcoin will need to move higher first.
Bitcoin’s Narrative Trap: A Better Way to Navigate Volatility
Investing in Bitcoin based on narratives has historically been a poor strategy. While the logic can feel compelling, Bitcoin has repeatedly shown an uncanny ability to move in the opposite direction of what the prevailing narrative would suggest.
Showing large rallies followed by steep corrections, each aligned with major regulatory, technological, or institutional news. Key milestones—such as futures approval, corporate adoption, national adoption, fraud-driven collapses, and ETF approval—serve as markers showing how macro‑narratives and sentiment shifts impact Bitcoin’s volatile price trajectory.
Thematic investing certainly has its benefits, and the I/O Fund uses it as one component within a blended approach. However, when relied on in isolation, it can create misplaced confidence and prove detrimental—especially in crypto.
Instead, we’ve found that applying technical analysis to crypto positions, particularly when evaluating sentiment-driven patterns, has been a more effective way to participate in Bitcoin’s meteoric upside while helping to manage its inevitable volatility.
Decoding Bitcoin’s Price Moves Through Technical Analysis
If narratives don’t consistently explain Bitcoin’s price swings, many conclude that Bitcoin’s moves are simply random.
Viewed through the lens of technical analysis, it becomes clear that this isn’t true at all. What most often drives Bitcoin’s price action is sentiment, exactly what technical analysis is designed to measure. Sentiment is simply herd behavior, and herd behavior tends to repeat in recognizable patterns.
In the current setup, Bitcoin has been tracing a large degree, 5-wave pattern off the 2022 low, one that now appears likely complete.
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Within a 5-wave structure, the third wave is typically the most powerful phase of the trend. It’s the moment the market collectively “gets it” all at once – shorts rush to cover while sidelined participants panic-buy into longs. The result is often a sharp, near-vertical price advance that coincides with peak expansion in volume and momentum.
By contrast, the fifth wave is driven by late arrivals—those who missed the earlier move and assume the trend is only just beginning. It is often the riskiest segment of the advance and, in our view, should only be approached with a defined exit plan. In this phase, price may still push to a higher high, but it frequently does so on declining volume and weakening momentum.
As shown below, this is precisely the behavior Bitcoin’s price trend displayed.
Bitcoin (BTC/USD) chart displaying Bitcoin’s price action from early 2023 through early 2026 on a 3‑day timeframe, annotated with a five‑wave Elliott Wave structure. The price rises through waves (1), (2), (3), (4), and (5), culminating in a major peak in mid‑2025 before declining into 2026. A large “Vertical Price Swing” label marks the strong upward acceleration during wave (3). (1), (2), (3), (4), and (5), culminating in a major peak in mid‑2025 before declining into 2026. A large “Vertical Price Swing” label marks the strong upward acceleration during wave (3).
As price went vertical in 2024, both momentum and volume accelerated and ultimately peaked for the cycle – classic third-wave behavior. Price then continued to grind higher, but volume and momentum began to decelerate, a key signal that the advance had likely entered its final fifth wave.
These were not the only warning signs. Bitcoin’s internals shifted into a less constructive posture well before the top. Note how volume expanded alongside price from the 2022 low into the late-2024 high. During that stretch, rallies were generally confirmed by rising volume. RSI also tended to find support near the 33.5 level on pullbacks, often referred to as the bull-market support zone.
Bitcoin (BTC/USD) price chart (2023–2026) showing a completed five‑wave Elliott Wave cycle and a current A‑B‑C correction into support zones. Fibonacci retracement levels at 38.2%, 50%, and 61.8% mark potential downside targets. Volume is declining and RSI momentum shows lower highs and bearish signals.five‑wave Elliott Wave cycle and a current A‑B‑C correction into support zones. Fibonacci retracement levels at 38.2%, 50%, and 61.8% mark potential downside targets. Volume is declining and RSI momentum shows lower highs and bearish signals.
Since the last advance into 2025, volume decelerated as price increased and then expanded as price declined. Buyers appeared to fade and sellers became more aggressive, shifting supply/demand dynamics. This was reinforced by a break in RSI support and an inability to regain the prior trend line. These are the types of signals we often see early in trend transitions and do not bode well for Bitcoin.
Using the same technical analysis framework to map potential paths, it appears we may be approaching a tradable low ahead of a sizable bounce.
Bitcoin (BTC/USD) 4‑hour chart showing an A‑B‑C correction with price in the C‑wave inside a support zone. Potential (B) rebound targets are marked above with green arrows, while a deeper (C) downside box sits lower on the chart. Elliott Wave labels, support/resistance zones, and momentum indicators are displayed.A‑B‑C correction with price in the C‑wave inside a support zone. Potential (B) rebound targets are marked above with green arrows, while a deeper (C) downside box sits lower on the chart. Elliott Wave labels, support/resistance zones, and momentum indicators are displayed.
My base case is that Bitcoin is setting up for a large bounce to the $84,000 – $107,000 region. However, we may need one more minor swing into the $50,000 region first. This would be the final 5th wave in the decline, so should unfold with less volume and less momentum than the last drop. Alternatively, if Bitcoin breaks back above $72,500, I would treat that as evidence a low is already in place, as we bounce toward the $84,000–$107,000 range.
Whether the larger bounce has already begun or requires one more marginal low first, the most likely outcome is still a bear-market rally that tops out below $107,000. The structure of the advance will be the key signal. If the move higher is choppy, overlapping, and corrective, it would reinforce the bear-market thesis and increase the odds of a final decline toward the $40,000–$30,000 range in the months ahead.
If, however, Bitcoin breaks above $107,000 in a more vertical, impulsive move, we will re-evaluate the probability of new highs. Until that happens, the odds still favor the view that this bear cycle is not yet halfway complete.
Conclusion:
In conclusion, narratives often push Bitcoin investors into the wrong trade at the wrong time. We warned readers last year that this was Bitcoin’s recurring pattern, and it played out as expected. Technical analysis, particularly when used to map sentiment-driven patterns, remains a more effective tool for managing risk in Bitcoin.
While we believe Bitcoin is finishing the first leg of a multi-month bear cycle, it is likely closer to a meaningful bounce than most realize. Even if price dips into the $50,000s in a final push lower, we would still expect bulls to attempt a move back toward the $90,000 area. Until proven otherwise, however, we will treat any advance as a bear-market rally, with downside risk ultimately extending toward $40,000–$30,000 before this cycle completes. At that point, there will likely be a new narrative explaining why Bitcoin can only go lower.
If you are a crypto investor who saw gains turn into losses in the most recent drop, or are looking to become a crypto investor at a favorable price, we encourage you to attend our weekly premium webinar that we hold every Thursday at 4 pm EST. Next week, we will not only outline the warnings that we are seeing the equity market, and how we plan to navigate this, but we will outline our long-term plan for Bitcoin. Sign Up Hereweekly premium webinar that we hold every Thursday at 4 pm EST. Next week, we will not only outline the warnings that we are seeing the equity market, and how we plan to navigate this, but we will outline our long-term plan forBitcoin. Sign Up HereSign Up Here
Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own BTC at the time of writing and may own stocks pictured in the charts.
Within crypto, there are perma-bulls and perma-bears, but both are too emotional and dogmatic to consistently participate in Bitcoin’s epic swings. Bitcoin and crypto have consistently tested investors by doing the exact opposite of what the herd is expecting.
“…the system that helped us identify the $16,000 bottom in Bitcoin is telling a more complex story. Global liquidity appears to be stalling and setting up for a reversal. This is historically not good for Bitcoin and tends to coincide with major tops. This inflection point lines up with our Technical Analysis that has us in the final leg of the multi-year bull market.”
This is the core differentiator of our approach: we analyze Bitcoin not as a belief system, not as ideology, not as emotion — but as an asset driven by sentiment patterns, that also operates within a global liquidity machine.
Today, the buzz word is “liquidity” and how it’s draining from global markets, causing volatility in risk assets. This is not a surprise to our readers, as we have been discussing liquidity dynamics for months, as it is one of the few data-driven dynamics that can help predict Bitcoin’s swings. We even hosted a free webinar to the public in August alongside WealthUmbrella, explaining how these dynamics are threatening Bitcoin’s advance higher.
Since our free webinar, Bitcoin has dropped ~37% and even broke one of our critical supports. We followed through with four sell alerts to our premium members as Bitcoin traded between $95,000 and $113,000, securing exceptional gains and reducing our Bitcoin exposure by 80%. We did something similar with altcoins.
However, looking forward, we could see more volatility before Bitcoin resumes its leadership to all-time highs. If you hold Bitcoin or have large unrealized gains, this is a crucial moment. The technical picture has shifted, increasing overall risk, with a scenario where we head lower. Our analysis breaks down the exact support levels that must hold, the scenario for a final push to new highs, and the path that would confirm a deeper downturn.
Global Liquidity and DXY: The Inverse Relationship Driving Bitcoin's Cycles
Since the market peak in late October, “liquidity” has become a buzzword, casually invoked as though its meaning were universally understood. Instead, liquidity is one of the most overused – and least understood – terms in financial markets.
Liquidity refers to the availability of capital in the system—specifically, how easily businesses, consumers, and financial institutions can obtain cash or credit. But when it comes to actually positioning a portfolio through different liquidity regimes, how this impacts risk-on assets often gets lost in translation.
In modern markets, liquidity is inseparable from debt dynamics. It is not the creation of new debt that dominates capital flows, but the ability to roll over existing obligations. In fact, three out of every four global financial transactions are related to debt refinancing, not expansion. Moreover, nearly 80% of global lending now requires collateral, typically in the form of high-quality, low-volatility assets like U.S. Treasuries.
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This creates a framework where liquidity—and by extension, risk appetite—is dictated by how cheaply and easily borrowers can refinance without overextending their own balance sheets. The more capital that’s freed through this process, the more capital can rotate into risk-on assets such as Bitcoin.
A few key variables influence a country’s liquidity conditions:
Central bank policy
Fiscal spending
The Treasury General Account (TGA)
Federal Reserve repo operations
Broad equity market performance
Bond market volatility
Collectively, these forces determine whether capital and confidence flow into the system or are pulled out. An internal calculation we have created at the I/O Fund, which incorporates all of these factors, can be seen below. Domestic liquidity has broken through the 2022 low, driven predominantly by questionable FED policy, the Reverse Repo Operations at $0, and the Treasury General Account remaining elevated due to a shift in public financing policy.
I/O Fund chart showing Domestic Liquidity (WALCL) levels falling below the critical 2022 lows, tracked via Reverse Repo, TGA Balance, and Fed’s balance sheet, signaling increased downside risk for risk assets and equities.
Even with Domestic liquidity in free fall, there is one factor that is the most important when discussing this topic – U.S. Dollar.
Roughly 64% of global debt is denominated in USD—which means foreign borrowers who accessed cheap U.S. capital must continue sourcing dollars to service that debt. When the dollar weakens relative to their local currencies, less local currency is needed to meet dollar obligations. This frees up capital that can chase higher-yielding risk assets, including Bitcoin.
This inverse relationship between the U.S. Dollar Index (DXY) and Bitcoin has been both consistent and predictive across cycles:
I/O Fund chart comparing Bitcoin's price to the U.S. Dollar Index (DXY), demonstrating that every major Bitcoin bull market occurs during a declining dollar, and bear markets coincide with a rising dollar.
In the above chart, three dynamics are evident:
Every major Bitcoin bull market occurred during a declining dollar.
Every significant Bitcoin bear market coincided with a rising dollar.
The steepness of the dollar’s trend often defines the magnitude of Bitcoin’s move in the opposite direction.
In August, we approached a critical inflection point. The Dollar Index had been in a clear downtrend since peaking in late September 2022—just weeks before Bitcoin bottomed. The most recent leg of this decline in the dollar shows a completed five-wave structure, typically the final phase of a correction before a reversal. Momentum is starting to shift upward, and a sustained break above $101 on the DXY would confirm a major low and the onset of a new dollar uptrend.
However, if we analyze the technical pattern in DXY, as long as DXY stays below $101, there is a setup where it drops to new lows. – likely targeting between $93 – $89.
I/O Fund Technical Analysis of the U.S. Dollar Index (DXY) showing potential final 5th wave drop toward $93-$89. The chart highlights the critical $101 resistance level and uses momentum indicators to predict an imminent move lower, increasing global liquidity and likely pushing Bitcoin higher.
Note how the current bounce is not a direct move higher. It is a messy, and overlapping push higher, which is characteristic of corrections within a larger trend – in this case, pointing lower. Furthermore, the momentum indicators point to a rare overbought condition, while also showing that momentum is fading the higher we go. This is what we see at the end of swings, suggesting a move lower is imminent.
If DXY fails under $101, and the following drop is a more vertical and aggressive drop lower, then we could see an extended drop in DXY to new lows, which would increase global liquidity, and by extension, should push Bitcoin higher.
Having correctly called the U.S. Dollar Index low earlier this year, we noted that, “Until DXY can break above $101, it can still make another low, which will further support higher prices in Bitcoin. The takeaway here is to note that the U.S. dollar is closer to a major low than most think. While it can extend further, and likely will, once we get evidence of a major trend reversal, this should line up with a topping process in Bitcoin. Until then, we can and should see Bitcoin continue an upward trajectory.
Bitcoin Price Drivers: Why Sentiment and Technical Analysis Beat Fundamentals
Bitcoin is unlike stocks. There are no earnings reports, no 10-Ks, no revenue models, no management teams to evaluate, and no real competition—despite occasional claims that alternatives like Ethereum could challenge it. The reality is simple: Bitcoin has already established itself as the definitive digital store of value.
Thematic investing also suggests that the positive news developments are tailwinds for Bitcoin that should support higher prices from here. In fact, we are hearing the same today – A favorable administration that is supporting Bitcoin, as well as a strategic Bitcoin reserve being established. These are both bullish narratives for Bitcoin, which should logically support higher prices. However, if we look at history, Bitcoin has an uncanny inclination to do the opposite of what the news-based narrative at the time suggests. In other words, it likes to top on bullish news and bottom on bearish news.
Chart comparing Bitcoin Price to major news events, demonstrating that movements are driven by market psychology and technical analysis patterns—like the five-wave pattern—rather than fundamentals or bullish narratives.
So, if narratives do not seem to affect price, what actually drives its price? One of the major drivers of crypto is sentiment, which can only be measured through the lens of technical analysis.
Sentiment is simply analyzing herd mentality, which manifests in repeatable patterns. It is a powerful force in the markets. When you funnel human consciousness into a quantifiable system like public markets, strange patterns emerge and they emerge time and time again on all timeframes, on all markets and going back throughout history. Patterns like triangle, bull flags, bear flags, head and shoulder patterns, cup and handle patterns, are very common technical analysis patterns that gauge where the herd is likely moving next.
The most important pattern within technical analysis is the five wave pattern, which we have discussed in the clip below. It underpins all of this and is what marks a trend.
The clip below from our Free Bitcoin Webinar further explains the importance of a 5-wave pattern in markets…
I/O Fund Portfolio Manager Knox Ridley analyzes two potential scenarios that could push Bitcoin to a major top in the $200,000 range following the current pullback.
The fact that a clear 5 wave uptrend has completed off the 2022 low, with the final push moving higher on decelerating volume, had us quite concerned. The most likely path forward has been higher, which I presented in our August report – yet this has now been invalidated, forcing me to create a more unconventional path higher. While this path is possible, it is not probable, based on the technical outlook alone.
I/O Fund Technical Chart: Bitcoin's 2022 Bull Cycle has completed a full Five-Wave Pattern, with weakening Volume and RSI trends signaling increased market risk. The breaking of key support levels below $74,440 suggests a major warning for the bulls.
However, if any break lower can hold over $74,440, then this path is valid and worth monitoring, especially if we see DXY break lower. We could even see this drop push toward $67,000 in an extended move. However, below $67,000 and there is no path higher, before seeing an extended bear cycle take us back into the $40,000 region or lower.
What is also concerning can be seen in the volume and momentum patterns above. Note how volume has always expanded as price went higher, then contracted as price corrected. This is a healthy trend and one we have used to time buys along the way.
However, since the April low in 2025, we have reversed this trend. Volume has been decelerating as price went higher, and now it is expanding as price moves lower. This is not a healthy trend and is signaling that sellers are starting to show up in force.
This is further backed by the RSI breaking through its bull market support. Note how each correction found a low when the RSI bottomed out around 33. This support has held throughout the bull cycle. However, it recently broke this support, which is not what we typically see in bull cycles.
We are not only seeing critical supports break in Bitcoin, but the volume and momentum trends are shifting in real time. Technicals alone are flashing big warnings for the bulls, which has us in a much more defensive posture than any time during this bull cycle.
Regarding the bull scenario, we would need to see a vertical push over $114,000 before the odds start shifting in that direction. If this happens, we will continue our game plan to trade Bitcoin in its final swings of the epic bull cycle that started in 2022.
If you are sitting on outsized gains from Bitcoin or wondering how to professionally incorporate risk management into your process, join us Thursdays for our premium webinars. In the weekly webinars, we discuss what we are doing with our crypto positions in real-time.
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On-Chain Analysis by WealthUmbrella: A Healthy Ecosystem held Hostage by ETF Flows.
We’ve consistently relied on WealthUmbrella’s top-tier On-Chain Analysis throughout this cycle. Their model flashed a buy alert in December 2022, around the same time our own system showed a major opportunity in Bitcoin. The below section was contributed by Vincent Duchaine of WealthUmbrella, who sees higher levels before a cyclical top for Bitcoin.
Since the new bull cycle in Bitcoin started in December of 2022, we are seeing the largest price drop within this cycle, which is currently greater than -35%. Strangely, and unlike any period of notable volatility we have experienced in the last 3 years, the on-chain health of Bitcoin simply does not warrant the size of this drawdown.
While we are seeing a healthy on-chain ecosystem, what is driving the current period of volatility is ETF selling. We were expecting this dynamic at some point, because the hype around the BTC spot ETF created an unusually tight correlation between Bitcoin and the stock market. In that environment, Bitcoin was unlikely to thrive while market breadth was deteriorating and signaling a risk-off shift.
This new dynamic has linked Bitcoin to the state of the equity market, which could see another leg lower. However, our cyclical indicators suggest that we are likely not experiencing a cyclical top, and any further volatility could be considered a mini bear phase, within a larger bull cycle, like we experienced in 2013 and 2021.
For example, new non-zero-balance addresses remains quite healthy. People are still joining the network at a steady rate.
WealthUmbrella’s On-Chain Analysis chart showing Bitcoin's network adoption remains healthy and strong, evidenced by a steady increase in new non-zero-balance addresses despite the recent -37% price drop in the bull cycle.
Furthermore, this is happening while the sentiment of people who hold Bitcoin as an actual crypto asset on the blockchain remains far from bearish. Not only is the influx of new participants on the blockchain still very healthy, but whales have also been aggressively buying the dips.If we look at holders controlling more than one hundredth of the total supply (around 200,000 BTC), their balances have actually increased since the end of October.
WealthUmbrella On-Chain Chart illustrating significant Bitcoin Whale accumulation (approx. 110,000 BTC) during the recent price drop, contrasting underlying network strength with masking ETF outflows and signaling seller exhaustion.
In fact, their accumulation — roughly 110,000 BTC — is almost identical to what they accumulated during the “Tariff correction” earlier this year (about 120,000 BTC). These are not signs of desperation, and it’s entirely possible that the scenario where whales ultimately come out on top of this correction will play out once again.
The issue is that ETF outflows are masking this underlying strength. That being said, ETF balance sheets have already shrunk by about 4% in native units (from 1.362 million BTC to 1.307 million BTC), on top of a decline of roughly 36% in value at the worst point. Not only do we expect the stock market to rebound somewhat, but Friday’s flush happened on noticeably lower BTC ETF outflows, which is a classic pattern of seller exhaustion.
WealthUmbrella chart of Bitcoin Spot ETF Net Inflow/Outflow shows recent volatility driven by ETF selling, with a notable slowdown in outflows signaling potential seller exhaustion and a shift away from a full cycle top.
Now, as we sit nearly $10k above the recent low, it’s clear that we are at least in a bounce. The question is whether this is just a bounce or the beginning of a renewed bullish trend?
According to our analysis, while ETF dynamics are creating a new risk in our models, we are simply not seeing the type of signals that coincides with a cycle top. We created four cycle top indicators, which monitors different layers of the Bitcoin ecosystem. None of these indicators have reached levels that is consistent with a true euphoric/overbought top consistent with prior major tops.
WealthUmbrella On-Chain Chart showing Bitcoin Cycle Top Indicators remain below euphoric/overbought levels, suggesting the current volatility is due to ETF selling and not consistent with a final cyclical Bitcoin top consistentwith the end of bull cycles in Bitcoin.
The current correction, as shown above, has a unique dynamic, which is the result of ETF adoption. The volatility we are experiencing is being driven mostly by ETF selling and is a stark reminder of the risks associated with Bitcoin. Even in a neutral on-chain environment — not a bearish one — ETFs selling just 4% of their holdings triggered a 35% drop in price. This highlights how illiquid the market has been over the last few months. It’s something that has concerned us since 2022, when the proportion of long-term holders on the blockchain became extraordinarily high (the share of coins unmoved for a year peaked at 71% at the end of 2023). Bitcoin’s strength back then was that nobody was selling, unlike in 2017 when everyone was instead eager to buy. ETFs brought back a bit of that demand dynamic, but it became clear that unless euphoria returns on-chain, Bitcoin will remain tightly correlated to stock-market risk-off movements and may suffer from liquidity shortages during equity corrections. In our view, the long-term risk of holding Bitcoin will diminish once the balance between ETF-driven buying and on-chain buying normalizes, and once Bitcoin’s strength relies less on a pure hodler mindset and more on a healthy, rotating, and liquid market.
In Conclusion
Bitcoin is undeniably the most lucrative asset in market history with an astronomical return of over 100,000%. Even if you missed day one, there have been many opportunities to participate along the way. This is where our firm has excelled as we have a strong track record of trimming near local tops and loading back up at lower prices. This can significantly shift total return.
For example, while many chased the 2021 hype with $200,000 or $500,000 price targets, we took a disciplined approach—cutting crypto exposure by half to lock in gains at $58,000. We then went on record stating Bitcoin was a strong buy at $16,000. From there, we continued to highlight Bitcoin as a buying opportunity in six additional free articles (here, here, here, here, here) all the way through October of 2024. We didn’t just talk about the early stages of the bull cycle—we acted on it, issuing 12 buy alerts to our premium members as Bitcoin advanced from $25,000 onwards.
Beginning in August, our tone changed. We began to warn that the risk in Bitcoin was rising, even though the same talking heads that missed the lows were telling us the rally was just beginning. Since then, we’ve released two articles outlining this increased risk (here,here), and even hosted a free public webinar, just before Bitcoin dropped 35%
No investor is perfect — rather our results reflect a disciplined, data-driven approach that has delivered a track record surpassing many of Wall Street’s most recognizable firms. That same framework informs our AI research, including a leading AI-energy position up ~500% this year.
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Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
Riot had a lackluster report with no new surprises to speak of. In terms of timing, the initial 112MW build-to-suit data centers will not be complete until early 2027 despite being energized much earlier. For Riot, the timing issue is centered around design and construction rather than available power.
We’ve done some back-of-the-napkin math in our previous analysis to put a value around $792 million in average annual revenue for the 600MW for a total of $8 billion over ten years, with the understanding the beginning stages will begin at a much smaller size as capacity ramps and end much larger than the averaged figure of $792M.
Analyst estimates are currently for $805M next year, and Bitcoin operations are producing $160.8 million this quarter (this is lumpy of course). There’s certainly a path to where Riot sees strong upward revenue revisions when the 600MW is energized and delivered. Analysts have estimates for Q1 FY27 at $181M, which would theoretically create upside when the AI data center story materializes if we assume Bitcoin continues to offers the low end with a $200M run rate.
The upside in analyst estimates is more apparent on the bottom line with our back-of-the-napkin math suggesting net operating income of $673 million annually. Last year, Riot reported net operating income of $92.3 and has reported $5 million in NOI year-to-date (currently this is largely dependent on Bitcoin). Analyst estimates call for a decline in EPS of (43%) for FY2026 and net losses in FY2027. Therefore, if/when management truly delivers the 600MW in the next 1-2 years, it should drive a significant rebound on the bottom line.
What we must grapple with is the timing for this rebound as other Miners are executing more quickly. The AI market is moving like a freight train, and Q1 FY2027 seems awfully far away. The opportunity cost with stocks is tricky, as Riot could announce a deal with a hyperscaler at any time, yet so could its many peers – in fact, they’ve been doing so at a fast clip such as Applied Digital, TeraWulf, and more.
Below, we look at Riot and if the opportunity cost of remaining in the stock makes sense or not.
First 112MW to Enter Construction in Q1 2026
While Riot announced this quarter that it has initiated its data center strategy with development of the first 112MW of IT capacity at Corsicana, construction on these first two 56MW buildings is not expected to commence until Q1 2026.
Riot says that completion of the core and shell will enable it “to deliver full build-to-suit data centers in 2027,” hinting that any deals secured with tenants may not contribute meaningful lease revenue until then. Compare this to other miners such as TeraWulf, Applied Digital or Core Scientific, who will already be delivering hundreds of MW of capacity by the end of 2026 and who have deals in place with visible revenue ramps.
The reason this is important is because miners’ value lies within timing – this is a race for power and how quickly they can deliver data center power to customers. Currently, Riot is slower to execute on the construction side as the language here suggests that the power will be available without a need for further regulatory approvals, rather the build and design phase is the delay: “We have also further progressed on the ongoing infrastructure development at Corsicana, including the 600-megawatt substation expansion, where the first 400-megawatt auto transformer of this expansion development is now on site being installed and remains on track for energization in Q1 next year and the Core & Shell development of the first 2 buildings of our Phase 1 development plan, which will allow us to deliver full build-to-suit data centers in 2027.”
Later it was stated the Core & Shell development was the more time intensive aspect: “The first phase of construction of the Core & Shell is the most time-intensive but capital-light portion of the build-out with total expected development cost of $214 million, representing approximately $1.9 million per IT megawatt for the first 2 buildings.”
In total, Riot is aiming to develop 672MW of IT capacity at Corsicana across two separate phases, with this 112MW build part of its first 504MW phase across eight separate buildings. Riot did not provide an update on when it expects to complete this in full, rather stated the pace of development would be dictated by tenant demand.
For the first 112MW, Riot expects to spend ~$214 million on capex across the next six quarters, translating to ~$1.9 million per MW for the core and shell. Note that this does not include substation capex or land acquisitions, which are expected to be $18 million in Q4, taking total spend on both to ~$138.6 million for the full year.
Riot’s 1.86GW Offers Rebound on Bottom Line – But When?
Riot has 1.86GW of power permitted and readily available for use, with the company aiming to transition this entirely over to data center capacity when economically feasible. Riot lags peers with a smaller power pipeline than peers in the Miner Universe, with Applied Digital recently disclosing its active power pipeline tripling in two quarters to 4.3GW. Additionally, Galaxy has up to 3.5GW available, IREN has 2.9GW and Cipher has 2.4GW in its pipeline.
Similar to the numbers above, we had done some calculations on what the roughly 2GW is worth for Riot and came up with the following: “For Riot’s combined Corsicana and Rockdale facilities offering 1.7GW of available power, and assuming both are fully converted to AI with a 1.3 PUE for ~1.3GW of critical IT load, the two could be worth more than $23 billion for a 10-year deal structured at similar terms, or average annual revenue of $2.34 billion.”
When we look at 2030 analyst estimates, it seems to be pricing in most of the 2GW with estimates for $2.5B, up from $660M today. Therefore, I’m asserting that most of this has been priced in and there are better deals on the market – with the information I have today.
Brief Financial Update
Riot beat on the top and bottom line in Q3 with revenue up 112.5% YoY to $180.2 million, driven by 138% growth in Bitcoin mining revenue to $160.8 million. Engineering revenue was $19.1 million, up 51.1% YoY, while Engineering backlog rose 135.4% YoY and 34.5% QoQ to $159.6 million, with 90% originating from the data center sector. GAAP EPS was $0.26, ahead of estimates for $0.13.
For our perspective, the most important aspect for Riot boils down to cash and capex, as the company has not yet secured a data center tenant deal and for the moment will be fronting the capex for the powered shell itself.
Riot reported $330.8 million in cash and equivalents in Q3, while holding 19,287 Bitcoin worth nearly $2.1 billion (including 3,300 BTC held as collateral). Debt was $839.7 million, with $253.2 million current.
Capex is projected to be $153 million in Q4, with $131.6 million going to miner purchases and miner infrastructure, and the remaining going towards Corsicana’s substation, land and initial capex for the first 112MW. Riot says its key capex needs through year-end are fully-funded with cash on hand, yet current debt suggests the company will need to raise more cash sooner rather than later to progress with more phases at Corsicana.
Conclusion:
There is a disconnect between analyst estimates for Riot on the bottom line once Corsicana’s 600MW is delivered as the net operating income will provide a significant boost to the bottom line. We’ve seen this across the board where Miners rebound from being deep in the red from their Bitcoin mining operations to seeing healthy margin expansion.
However, this one is hard to time – it is a complete guess if Riot can deliver sooner than Q1 2027. In the meantime, we’ve identified some strong trends in play right now that we prefer to re-allocate to.
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Galaxy’s Q3 was the best quarter in company history, per management, with the company seeing record crypto trading volumes, facilitating the sale of 80,000 Bitcoin worth more than $9 billion for a major client. Initial Data Center revenue was recorded in Q3 of just $2.7 million, though management explained that Data Center would be immaterial to results until the first half of 2026 when the first phase at Helios is delivered to CoreWeave.
Management had some interesting comments about being tied to CoreWeave when it comes to future financing and the economic opportunities around diversifying to possible hyperscale customers, as well as why they will not pursue a GPUaaS model like IREN. Management also teased a “big update” in Q2 next year for the newly-launched consumer-facing platform GalaxyOne.
Adjusted Gross Profit Surges in Q3
Galaxy reported revenue of $29.2 billion in Q3, though as we had explained in our initial analysis, Galaxy Bridges Crypto and Asset Management with AI Data Centers, this reflects gross principal trading (Digital Asset sales) that are subsequently offset by transaction expenses.
As such, adjusted gross profit is a better metric for investors to track, as it strips out the inflated appearance of the top line from Digital Asset sales, which were $28.8 billion in Q3 with transaction fees of $28.3 billion. The reported revenue figure does provide clues into the health of Galaxy’s crypto business, as Digital Asset sales surged nearly 231% QoQ, including the 80K Bitcoin trade, but even backing that out, this still would represent north of 100% QoQ growth.
Galaxy reported record adjusted gross profit in Q3, driven by the sharp uptick in Digital Assets and an improvement in adjusted gross margin in the segment, as well as strong performance in Treasury & Corporate. Data Center did contribute ~$2.7 million in adjusted gross profit in the quarter, though it will not become a more material driver until 2026 when revenue ramps as the first phase of Helios is delivered to CoreWeave.
Adjusted gross profit was $728.4 million this quarter, up more than 143% QoQ and 976% YoY. Adjusted gross margin was 2.5%, down from 3.3% in Q2 due to the much higher revenue base ($29.2 billion versus $9.1 billion).
Brief Updates on Digital Assets, Data Center
Galaxy provided some insights into its Digital Assets business, which saw its strongest monthly performance in July, bolstered by that 80K Bitcoin sale. Management said that this momentum carried through the remainder of the quarter, with a meaningful 140% QoQ increase in trading volumes, growth in its client base and increased institutional engagement.
Assets under management and under stake also saw strong QoQ growth, reaching a combined $15.4 billion, with $8.8 billion AUM and $6.6 billion AUS, up from $8.9 billion at the end of Q2. Sequentially, this represented growth of ~$3 billion in AUM and ~$3.5 billion in AUS. Galaxy explained that this level of AUM/AUS would represent more than $40 million in annual recurring revenue from fees, as management expects a majority of the new growth in AUM to be long-lasting, high-fee paying assets.
Galaxy also launched its first consumer-facing platform GalaxyOne in the quarter, with four initial product offerings: Premium Yield, offering 8% yield on cash for accredited investors; GalaxyOne Cash, an FDIC-insured high-yield cash account; GalaxyOne Crypto, support trading and transfers of select crypto products, and GalaxyOne Brokerage, support commission-free equities trading. This boosts Galaxy’s competitiveness with Coinbase and Robinhood in the realm of consumer-facing equity and crypto platforms.
Data Center Progress & Funding
Galaxy’s delivery of 800MW of contracted power to CoreWeave at Helios remains on track and on time, with the first 133MW phase set to be delivered in the first half of 2026, the second 260MW in 2027 and the third and final 133MW in 2028. Galaxy owns a 345kV substation at the campus, capable of supporting 900MW of capacity, with an adjacent 345kV substation owned by Wind Energy Transmission of Texas (WETT) under development to help meet future power needs.
Galaxy noted that it is also in queue with a handful of other interested parties for more power in Texas, and hinted that 800MW will not be their total powered footprint, with an additional 2.7GW under study at Helios, though the future pipeline may remain limited beyond that.
In Q3, Galaxy secured a $1.4 billion, three-year project financing facility to fund the $1.7 billion build-out of the first phase. Management stated that they have been drawing on the facility pretty regularly and on a straight-line basis, and by the end of the quarter the company had drawn ~$430 million so far, taking its total debt outstanding to $1.15 billion. Additionally, Galaxy closed a $460 million PIPE deal for the data center side, with the $325 million in net proceeds going to further fund the expansion of Helios beyond the first phase.
The project financing draw provides a rough idea of how much capital Galaxy will need through 2028 to support the entire 800MW capacity for CoreWeave. Assuming further financing needs come at similar terms and construction at similar costs, Galaxy may need to finance $4.2 billion in total, with $2.8 billion for the second phase. Galaxy now has $1.9 billion in cash and stablecoins on its balance sheet, up ~$700 million sequentially, providing ample room for self-funding the equity to secure financing for the upcoming phases.
Net Income and EPS
Driven by the surge in adjusted gross profit, Galaxy reported a very strong $505.1 million in net income in Q3, up a whopping 1,546% QoQ. Net margin on the reported revenue figure was 1.7%, up from 0.3% in Q2 and up from (0.4%) in the year ago quarter.
This translated to $1.01 in GAAP EPS, or $1.12 in adjusted EPS, or ~5x higher than consensus estimates for $0.21 in the quarter. However, it is important to note that this figure should not be annualized as it is likely to be reliant on the health of the crypto industry and trading volumes, which can vary wildly from quarter to quarter.
Adjusted EBITDA was $629.4 million, nearly 3x the $211.4 million generated in Q2. Adjusted EBITDA margin was 2.2%, down slightly from 2.3% in the prior quarter.
Earnings Q&A:
More Context and Clarity on Helios Build-out
Management provided an important update on the construction progress for the first phase of Helios, confirming that it remains on schedule, with the first data hall to be powered on in December of this year before reaching full operational status in the first half of 2026.
CIO Chris Ferraro explained that 70% of Galaxy’s concrete and civil work is complete and that equipment deliveries and installation is underway. He added that Galaxy is “now placing chillers and putting together the piping system that will form the backbone of our advanced liquid cooling design, an essential component to support next-gen GPUs at industry-leading cabinet densities. Our e-houses, which contain the critical electrical infrastructure have started to ship from the integrators and medium-voltage switchgear and transformers are already being set on their pads.”
With this progress, Galaxy expects the building to be sealed from weather within the next few weeks, allowing work on the interior to proceed regardless of outdoor weather. The next major milestone on deck is powering on the first data hall in early December, then shifting to preparing the hall for service.
For the second and third phases, management provided a quick update, stating that they are “proactively securing long lead time items like backup diesel generators and medium-voltage switchgear early, locking in cost certainty and delivery time lines.” This is important as it will help de-risk the build-out from an infrastructural viewpoint and mitigate potential impacts from equipment delays.
Update on Power
Considering that Galaxy has already contracted out all 800MW of its approved power, management provided a deeper look into power delays and connection requests in ERCOT’s grid.
Ferraro explained that “ERCOT's interim process and the level of scrutiny applied to large loads requesting to interconnect to the system has led to delays in additional capacity approvals” across Texas, as the state’s grid has been overwhelmed over the last 12 months and ERCOT does not want to take on projects that would risk destabilizing the grid.
Piper Sandler’s Patrick Moley questioned about approval timelines, considering Galaxy has a substantial 2.7GW awaiting approval, to which management responded that they will not have an exact timeline for approval until it happens and that “predicting the date is probably a fool's game.” However, they believe that signs from ERCOT, WETT and their utility partner AEP approving and finalizing studies at a faster pace give them a higher degree of confidence in approval for capacity coming online in late 2028 to 2029.
Management had mentioned that WETT’s Pitchfork 345kV substation is expected to “deliver an additional 3 gigawatts of power capacity with 2 synchronous condensers adjacent to the Helios campus starting in 2028,” which would support the entirety of the campus’ remaining buildout with some buffer room. Galaxy stated that there are “increasing proactive reach outs to us from very large customers in addition to our current partner, CoreWeave, who all want to know when are we getting approval for how much and over what time period,” so getting approval for the entire 2.7GW of additional capacity will unlock a tremendous opportunity to meet future demand.
Looking beyond Helios, management implied that there may not be much more in the pipeline until prices come down: “Markets for some of these companies without contracts, without customers, the market is pricing in a tremendous amount of optimism. And so that feeds through to the price of projects. And so in the short run, I don't think you're going to see us reaching out and buying a whole lot more power at these prices.” Considering the capital intensity of simultaneous multi-GW build-outs, this is a smart move as it would prevent Galaxy from overstretching its cash with too many builds.
CoreWeave’s Credit Quality as Anchor Tenant
Another interesting discussion circled around to CoreWeave as Galaxy’s primary anchor tenant, the economics of being this closely linked to CoreWeave and the transition to a multi-tenant site at full capacity.
When questioned about the potentiality of refinancing the project financing facility to unlock some capital, CIO Chris Ferraro explained that their ability to refinance this debt and raise future debt at attractive rates is linked rather directly to CoreWeave’s credit profile:
“The views of CoreWeave's credit profile, which lenders are very focused on, in addition to Galaxy's credit profile are changing and getting better by the day on both fronts. And so the ultimate outcome is really going to be a function of where we and CoreWeave and the markets are then.” He added that if rates were in the high single-digits and if Galaxy and CoreWeave remain successful, financing rates may more lower.
However, CEO Mike Novogratz seemed to contradict this, stating that the market is in a period of “trying to understand what CoreWeave's credit quality is today and what it should be on the forward. And that's going to be a big, big determinant of their ability to get better lease rates, their ability to get financing, [and the] ability for us as the landlord to finance our projects. And so where that goes, how the market evolves is thinking on CoreWeave is something we're very focused on and something that's a little unknown today.”
This is quite an important quote, as Galaxy’s financials and ability to secure future financing at attractive rates is inextricably linked to CoreWeave’s financial health. As we discussed in our free newsletter on CoreWeave, the neocloud is facing a wall of capex in Q4 and may continue to turn to the debt market to fund its expansion, likely weakening its credit profile. This could then hamper Galaxy’s ability to find attractive financing for its upcoming projects.
Considering CoreWeave is Galaxy’s only AI tenant for the time being, it raised a crucial point about diversifying the customer base in the future to a multi-tenant structure as Helios expands beyond 800MW. Novogratz stated that there is a “real decision to be made as to whether on a net economic basis, whether a lower-yielding lease from a higher credit quality tenant, net balances out to a better economic equation for us as we think about broadening the portfolio.”
What he is implying here is that an investment-grade hyperscaler will be able to secure a lower-yield lease, carrying a lower annualized opportunity to Galaxy, but because the creditworthiness of the hyperscaler exceeds that of CoreWeaves, Galaxy’s associated costs and funding will be more attractive and translate to a better return on investment (long-term revenue minus funding costs and interest expenses on debt).
Shying Away from GPU-as-a-Service
Unlike IREN, Galaxy is not going to prioritize or even attempt to shift towards renting GPUs out as a service, opting instead to take deals like the one it signed with CoreWeave. Galaxy said this is because they do not have the same software + hardware advantage that CoreWeave and others may have where they have a strong value-add proposition on top of the bare metal, and it is not something they have invested in.
Management also chalked this decision up to a lack of understanding over the useful life of GPUs, preferring to invest instead in long-lived infrastructure where their expertise is more suited:
“We’re not confident in what useful life of GPUs are ultimately going to be, and the cycles of GPU efficiency are pretty nascent still. And so we like very much investing in long-lived infrastructure that we understand useful life of, and we don't quite yet understand what the useful life of GPUs are. And so the business model around return on capital on GPUs, particularly if you haven't added real expertise in real value add, I think is a really challenging thing to decide to do. So we're not thinking about it.”
GalaxyOne: Expect “Big Update” in Q2 2026
Considering how recent the launch of GalaxyOne was, the impact on growth is likely to be minimal in the near-term as Galaxy works to build out the product suite. Management expects it to take a handful of quarters to get momentum on the platform, and tentatively expects to have a “big update” for investors in Q2 2026.
Galaxy teased that it has a “really ambitious” road map over the next six to 18 months to transform GalaxyOne into a “one-stop serves all wallet,” with the aim to add products and offerings that help high net worth consumers invest and store wealth, and reallocate across equities, bonds, digital assets and more. The platform also would open up an ability for cross-platform collaboration between trading, asset management and staking, and serve as a new outlet for Galaxy to continue growing its AUM/AUS and increase its fee-based ARR rather substantially.
Conclusion
There is a lot to like from Galaxy’s Q3 report, with adjusted gross profit surging from a strong crypto backdrop while data center updates show continued progress towards start of service for CoreWeave in 2026. Management remains focused on building out Helios and is encouraged by signs from utility partners and regulators about receiving approval for additional power to expand the campus later this decade.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
The saying that “good things come to those who wait,” is what Riot Platforms is banking on. The company is taking its time in preparing its two major sites for AI data center customers. Meanwhile, Bitcoin mining peers seem to be rushing toward deals, and their stocks have been popping off over the past few weeks as a result.
When asked in the earnings call what the hold up is, Riot explained they are looking to maximize the deal terms as they have one of the most attractive sites in the country (an analyst’s words regarding the Corsicana site, not theirs). Corsicana is especially attractive as it’s located near the Tier 1 market of Dallas and has ample power and water for liquid cooling. The Rockdale site is the second priority for securing a lease and will be used for Bitcoin mining in the interim.
Overall, Riot has stated they have “over 1.7 gigawatts of power immediately available near major markets.” Riot’s balance sheet also stands out with $2.4 billion in liquidity due to having $330 million in cash and 19,000 Bitcoin.
However, what investors are up against is navigating near-term volatility while a deal announcement could be another quarter (or two) away. This is because Riot is going through a master site design this quarter (ending now in Q3), which helps to start the discussions for a deal. It was stated the site design is what would kick off discussions with customers: “And if you're talking about engaging with serious counterparties, this is the type of information that they [want] you to come to the table with in order to advance discussions substantially.”
While Riot is currently in the final stages of designing the data center and working to secure a lease, it may be Q4 or later before a firm deal is announced. On the revenue side, if a deal is done in Q4, it will likely be more geared toward mid-year 2026 or the second half based on current timing for substation development at Corsicana.
In the opening remarks, Riot explained they are in no rush: “To be clear, we are not pursuing a so-called pivot into AI HPC initiatives with a view of doing a "deal.” Rather, we have added a new data center development capability, which we will apply to as much of our power portfolio as possible and which will transform our company in the years to come.”
Riot’s 8-Step Process for AI Data Center Pivot
Riot has outlined its eight step process behind its AI data center pivot, with the company now focusing fully on the sixth, seventh and eight steps:
Engage consultants: Riot tapped data center industry consultant Altman Solon in January to explore feasibility of AI/HPC pivot at Corsicana
Add experience to board: Riot added three new board members in February with relevant data center experience
Engage financial advisors: Riot tapped Evercore as a financial advisors and Northland as a co-placement agent to lead discussions with possible AI customers
Continue infrastructure development: Pertains to the development of the 600MW substation at Corsicana
Build internal expertise: Riot stated it is making key hires to build out its internal data center expertise
Complete basis of design: Riot is leveraging new hires and external consultants to best design data centers that fit its available infrastructure
Secure lease with tenant: Riot says it is “actively progressing” towards securing a lease with a “high-quality” tenant and collaborating on final design iterations
Build future pipeline: Pertains to further expanding its AI data center footprint in the future with powered land acquisitions and development
While Riot is currently in the final stages of designing the data center and working to secure a lease, it may be Q4 before a firm deal is announced. On the revenue side, it will likely be more geared toward mid-year 2026 or the second half based on current timing for substation development at Corsicana.
Riot’s Corsicana Data Center Can Offer 600MW for AI Data Centers
Riot is working to expand its Corsicana data center, purchasing 355 acres of land in May and an additional 238 acres in July, taking its total acreage to 858 and allowing it to “accommodate various data center designs and development plans.”
Corsicana has 1 GW of power capacity, with 400 MW currently operational and earmarked for Bitcoin mining, with the additional 600MW of power capacity for AI/HPC hosting is expected to be ready in early 2026. The facility also has two fiber providers on-site, offering ample connectivity and low latency to major hubs Dallas and Austin. Riot also disclosed that its all-in power costs at Corsicana (for BTC mining) were ~$0.035/kWh, matching IREN with industry-low power prices.
The entire 1GW is expected to be available sometime over the next 4-5 quarters: “So first, for some of the critical infrastructure that's needed to build this capacity, we have already secured. I'm referring to the 600-megawatt substation that's being built that's expanding the site to 1 gigawatt. We have already procured that equipment. That equipment is already arriving, and that is going to take our Corsicana site to 1 gigawatt in 2026.”
What’s unique about Riot is they already have approval for power to both sites, whereas newer sites are subject to legislation like Texas Senate Bill 6, which requires Bitcoin miners to cover some of the costs of expanding the grid. There are also curtailments to where miners/HPC operators have to reduce usage when the grid is maxed out and are required to have backup power. The company stated they will be able to power the pivot to AI without any further steps: “This power isn't pending certain steps happening. This power is coming in the next 6 months and scaling up from there.”
In Q4 FY24, Riot estimated it would spend ~$65 million in capex on developing the 600MW substation and acquiring other long-lead items required to energize this phase. Through the first half of FY25, Riot spent $51.3 million in capex related to the substation, and projected an additional $17.9 million in spending through Q4, or ~$69.2 million in total capex, a 6.5% overrun. Riot’s Q4 acquisition of E4A likely plays a critical role as the company is engaged in substation equipment, transformer assembly and power plant servicing. Additionally, the mid-year land purchases, water lines and other site costs are expected to total approximately $77 million this year.
The company is evaluating more expansion opportunities for AI/HPC, and assessing feasibility for developing further power capacity, but has not made any strides outside of Corsicana yet. Combined with its 700MW Rockdale facility, Riot can offer 1.7GW of power in close proximity to Tier 1 Dallas and also Austin, though Corsicana’s first 400MW phase and Rockdale are presently fully outfitted for Bitcoin mining and will be retrofitted in phases when management believes the timing is right.
How Much Could Corsicana be Worth?
Riot is well aware of the opportunities in pivoting to AI data center hosting, more so now considering the flurry of AI deals that have been signed with miners recently. As we pointed out in our Advanced analysis in January, Marathon Digital and Riot Platforms: Leveraged Bitcoin Bets, Riot’s management had said in Q3 2024 that there is “notable sense of urgency for power access in 2025 with AI HPC companies willing to pay a premium for timely access at attractive sites.” Riot also stated at the time that it was in preliminary discussions with AI HPC firms over some level of capacity, and it would see if there are deals to monetize capacity at a better rate than mining.
As of now, Riot has yet to sign an AI hosting deal, though analysts from Needham expect the company to be in advanced discussions by Q4 and sign a lease agreement as early as Q1 2026. This would be a few quarters behind some of the earlier movers in the industry, but this hinges on its Corsicana facility, with its AI side still under development. Notably, Riot likely will not transition its entire footprint over to AI hosting, stating in its 10-Q that is in developing a “scalable data center platform designed to allocate a portion of our power capacity toward supporting AI/HPC workloads.”
Despite the lack of a deal, allocating 600 MW of power capacity to AI (assuming ~440 MW of critical IT load as Needham estimates) allows a reasonable projection for what Corsicana could be worth under similar terms as other miners.
Assuming a deal structured around $1.8 million in average annual revenue per MW of critical IT load, Corsicana’s AI data center side could fetch a deal worth ~$8 billion over ten years, or ~$792 million in average annual revenue. Other miners have outlined targeted net operating income or adjusted EBITDA margins on these deals of >85%, suggesting that Corsicana could deliver adjusted EBITDA or net operating income of ~$673 million annually on average. As a reminder, these are average annual figures, meaning that revenue in the initial stages will begin at a much smaller size as capacity ramps and end much larger than these stated figures.
For Riot’s combined Corsicana and Rockdale facilities offering 1.7GW of available power, and assuming both are fully converted to AI with a 1.3 PUE for ~1.3GW of critical IT load, the two could be worth more than $23 billion for a 10-year deal structured at similar terms, or average annual revenue of $2.34 billion.
Bitcoin Mining Expansion Remains on Track
On the flip side, Riot is still committed to expanding its Bitcoin mining fleet and hash rate, even though the Corsicana pivot reduced its 2025 deployed hash rate target by 8 EH/s.
In Q2, Riot updated its year-end hash rate target to 40 EH/s, up from 38.4 EH/s, likely driven by its recent addition of 125 MW of capacity for Rockdale by acquiring additional assets from Rhodium and closing pending litigations. This represents ~26% YoY growth in Riot’s deployed hash rate, aligning with Riot’s target to maintain ~4% of the global network, currently at ~984 EH/s. By Q1 2026, Riot is aiming to bring its hash rate up to 45 EH/s, what would represent its largest sequential expansion in hash rate since Q3 2024 as it works to double its power in Kentucky to 127 MW.
Rockdale will remain a Bitcoin mining operation until Corsicana finds a customer. Riot positioned it as a strength to keep Rockdale as Bitcoin mining operations for now, stating: “So you can think of our strategy as using Bitcoin mining at sites like Rockdale to monetize that power to ensure that no power stranded and wasted, turning that into meaningful cash flows for the company and then ultimately looking to transition that capacity to data center leases when the time is right.”
Financials
Bitcoin Mining Remains RIOT’s Core Revenue Driver
Riot’s Q2’25 results reaffirm its position as one of the largest self-mining operators in the world. The Company reported total revenue of $153 million, more than doubling from $70 million in the year ago quarter. Most of this revenue came from Bitcoin Mining segment, which contributed $140.9 million, up 152% year-over-year. The drivers here are straightforward: Riot produced significantly more Bitcoin, at higher prices. On top of that, Bitcoin itself averaged roughly $98.8k during the quarter compared to $66k last year. The combination of higher volume and higher pricing powered a sharp rise in top-line contribution.
Average operating hash rate increased from 11.3 EH/s last quarter to 31.7 EH/s this quarter, while deployed hash rate reached 35.4 EH/s by quarter-end. Think of hash rate as Riot’s “factory horsepower”. The more horsepower it has online, the larger its share of Bitcoin production – but it also burns more energy which makes power contracts and efficiency just as critical.
Engineering revenue, though a fraction of mining, also provided a small boost. The segment generated $10.6 million in revenues, up modestly from $9.6 million last year. This now includes contributions from December 2024 acquisition of E4A Solutions, which expanded Riot’s capabilities in custom electrical and fabrication work. Engineering also carries $22.7 million of contract liabilities, suggesting a healthy pipeline of projects yet to be recognized.
“Other’” Revenue totaled just $1.5 million, largely residual income from legacy hosting contracts that have since been terminated. Importantly, Riot no longer reports hosting a standalone segment, underscoring the Company’s shift to pure self-mining plus a smaller engineering team.
Looking forward, consensus expects continued topline growth through FY25 and into FY26, albeit at a decelerating pace. Seen in the chart above, analysts expect 99.6% and 30.47% YoY growth in Q3 and Q4 to round out FY25. Estimates moderate looking further into FY26 with growth drifting off to mid-teens (17.6%) by Q4’26.
For investors looking at AI upside, there are no contracts signed and no AI revenue recognized in Q2. The AI narrative remains aspirational, not actual. Compared to peers like Applied Digital and Terawulf, both having already signed multi-year, multi-billion dollar hosting agreements with hyperscalers, Riot is behind on the diversification curve. At this point, AI should be viewed as upside optionality embedded in Riot’s power infrastructure, rather than a near-term driver of financial results.
Key Metrics:
Total Revenue: $153.0M (+119% YoY)
Bitcoin Mining: $140.90 (+152% YoY)
Engineering: $10.6M (+10% YoY)
Other: $1.5M (hosting residual)
Avg. BTC price: $98.8k (vs ~$66.6k YoY)
Gross Margin Expansion Driven by Healthy Mining Economics, Operating and Net Margins Inflated by Crypto Gains
Mining economics remained healthy. Cost of revenue in the Bitcoin Mining segment of $78.2 million implying mining gross profit of $62.7M and margin of 44.5%. Power accounted for the majority of costs at $62.2M, 79% of total segment costs. Other items included $5.7M in taxes and fees, $4.7M in compensation, $4.1M in miscellaneous operating expenses, and $1.5M in insurance.
All-in power costs rose from 2.1 cents /kWh last year to 3.5 this quarter as Riot added Corsicana and Kentucky to its portfolio. Even with this increase, Riot remains one of the lowest-cost operators in the sector. Rockdale’s 345 MW PPA remains a key differentiator, locking in fixed-price power through 2030 with the ability to resell curtailed load back into ERCOT during peak demand.
On a GAAP basis, Riot’s margins were eye-popping. Operating income was $216.1 million, translating to an operating margin of 141% compared to negative 167% last year. Net income of $219.5 million equated to a net margin of 143%, compared to negative 121% a year ago. As always, context matters. Riot’s operating and net margins reflect the heavy influence of new Bitcoin accounting rules.
Prior to 2025, Bitcoin and other digital assets were classified as “indefinite-lived intangible assets” under US GAAP, meaning that Company’s had to carry them at cost on the balance sheet and test annually for impairment. If BTC prices dropped below carrying value, an impairment charge was booked. If BTC prices recovered later, you could not mark the assets back up, leading to asymmetric accounting – lots of impairments, but no mark-ups.
Effective January 2025, the Financial Accounting Standards Board (FASB) implemented a new rule which requires digital assets like Bitcoin to be carried at fair value, with changes flowing through net income. This means that each quarter, Company ‘s must revalue their BTC to market prices as of balance sheet data, causing non-cash gains / losses that distort operating income and GAAP figures.
In Q2, this resulted in a $262.8 million “Change in fair value of Bitcoin” gain flowing directly through the income statement. This single item more than explains the swing to profitability. Without it, Riot’s core operating performance looks much thinner. Further, operating profitability was also pressured by Depreciation and amortization ($83.2M), stock-based compensation ($59.7M), and unrealized losses on securities reached ($57.1M).
GAAP EPS came in at $0.65 basic and $0.58 diluted, versus ($0.32) loss in Q2’24. Looking forward, analysts do not expect annual improvement toward profitability in FY25 or FY26, as EPS estimates are ($0.35) and ($0.48) in FY25 and FY26 respectively. GAAP EPS is not a reliable measure of Riot’s underlying profitability. Investors should instead focus on cash operating margins and Adjusted EBITDA to understand the true economics of the mining business.
Key Metrics:
Mining gross profit: $62.7M
Mining gross margin: 44.5%
Operating income: $216.1M
Operating margin: 141% (vs – 167 YoY)
Net Income: $219.5M
Net Margin: 143% (vs –121 YoY)
Basic EPS $0.65
Diluted EPS: $0.58
Cash Flow and Balance Sheet
Despite reporting net income, Riot’s operating cash flow was sharply negative at ($231.3 million), compared to ($122.1 million) in the prior quarter and ($42.5 million) in the prior year. That equates to an OCF margin of (151%). That disconnect again stems from the way Bitcoin revenue is recognized. Riot books revenue at the fair value of BTC when mined, but no cash is received unless those coins are sold. In Q2, Riot mined about $283.7 million worth of BTC, inflating revenue and net income, but none of that translated into cash inflow.
Working capital shifts added further drag. Accounts Payable fell by ~$78M, deferred revenue declined ~$34M, and accrued liabilities decreased ~$12M, all of which consumed cash, resulting in negative OCF even as GAAP profits surged.
On the balance sheet, Riot remains well capitalized but increasingly levered. As of June 30, 2025, the Company held $255.4 million in cash, plus $74.9 million in restricted cash. Bitcoin holdings amounted to $1.71 billion unrestricted and $353.7 million restricted, giving Riot one of the largest corporate Bitcoin treasuries globally. Total assets stood at $4.29 billion, offset by $838.4 million in debt and equity of $3.30 billion.
While liquidity is ample, leverage has crept higher as Riot continues to finance its large-scale buildouts in Corsicana and Kentucky. ATM equity issuances also remain part of the funding toolkit, with share count rising in the quarter form new issuances and an acquisition-related issuance. The trade-off here is clear: Riot has the liquidity to scale, but at the costs of higher leverage and dilution.
Capital intensity remains high. Riot has $83.5 million in remaining commitments to MicroBT for miner purchases, expected to be paid in 2025. During the first half of the year, the Company placed $86.4 million in deposits on new equipment and added $93.2 million of property and equipment. These figures highlight the scale of ongoing investment required to maintain Riot’s leadership in hash rate capacity:
Litigation is a non-trivial overhang. Riot is facing a lawsuit seeking nearly $500 million from GMO, a Japanese IT and mining company, related to termination colocation agreement. GMO alleges that Riot wrongfully terminated the agreement and is seeking damages. Riot disclosed the case it’s in legal proceeding footnote but stated it cannot reasonably estimate the outcome or probability of loss at this time.
This claim is significant: ~$500M represents almost 15% of total assets ($4.29B) and is more than double the Company’s quarterly income. While Riot has a strong equity base and deep liquidity, an adverse ruling would be material. Notably, peers like APLD or IREN don’t face comparable litigation exposure, making Riot’s risk profile a bit heavier by comparison. Investors should treat this as a tail risk that could swing sentiment if unfavorable developments occur.
Bulls vs Bears
The Bull Case:
Scale and Cost Advantage: Riot operates one of the largest fleets in North America with over 35 EH/s deployed and maintains a competitive power cost of ~$3.5 cents per kWh, keeping it at the low end of the industry cost curve.
Balance Sheet Optionality: With $255 million in cash and $1.7 bitcoin of Bitcoin holdings, Riot has liquidity unmatched by most peers, providing downside cushion and upside leverage to BTC prices.
AI / HPC Upside: While not yet monetized, Riot is positioning its multi-gigawatt power platform for future AI/HPC hosting, offering optionality that could re-rate the stock if contracts materialize.
The Bear Case:
Accounting Noise: GAAP earnings are dominated by Bitcoin fair-value revaluations, making reported profitability a less useful metric that is volatile and disconnected from underlying cash economics.
Litigation and Leverage: The $496 GMO lawsuit and rising debt levels ($838M) create potential balance sheet and legal overhangs, especially if BTC retraces.
Lagging AI Execution: Unlike peers APLD and WULF, RIOT has yet to sign meaningful AI/HPC deals, leaving it more exposed to Bitcoin cycles with less diversification.
Conclusion:
Analysts have called Riot’s Corsicana data center site one of the most attractive in the country, as it’s located near the Tier 1 market of Dallas with ample power and water for liquid cooling. Riot is taking its time in preparing the 600 MW site for AI data center customers, and it may be Q4 or later before a firm deal is announced. This timing dynamic, possibly months behind other mining peers who have already secured deals, opens the door for potential near-term volatility.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
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Galaxy is a crypto infrastructure company that is branching out to power AI data centers. Unlike the other Bitcoin miners we have covered recently, Galaxy is deeply entrenched in the crypto industry and will continue its crypto operations while expanding to build an AI campus in Texas called “Helios.”
On the crypto side, Galaxy offers trading, crypto wallet, custody staking and tokenization. They also offer investment products including a treasury for Solana and recently handled one of the largest trades in Bitcoin’s history at $9 billion. They provide infrastructure for popular Layer-1 crypto company Solana, including being a node validator and helping both Solana and Ethereum to offer liquid staking to institutions. In total across all of the funds and investment products, Galaxy has $9 billion AuM.
When it comes to data center capacity among the Miners, Galaxy is pursuing one of the largest with a planned 3.5GW of data center capacity. However, management stated they will not see a big impact on revenue until 12-24 months from now: “I do think, to highlight what Chris said, this next 12 months is really important because we go from putting out a lot of money to having an asset that starts spitting out cash. And once 12 months from now, 24 months from now, Helios becomes a big cash generator for us, it allows a lot more flexibility in how we deploy capital.”
There will be an initial impact on revenue come Q1 2026. CoreWeave is the only customer for Galaxy at this time with the company beginning to recognize revenue at the start of next year: “As a reminder, in the Data Center segment, we do not expect to report financial results until Q1 of 2026 when we begin recognizing revenue from CoreWeave under Phase 1 of our lease agreement.”
There are puts and takes to Galaxy having a successful, core operation in crypto while also expanding into AI energy. The company only recently began trading on the Nasdaq after being on the Toronto Exchange (TSX) for about five years. The operating margin of 3.4% is better than other Miners due to crypto infrastructure and investment services that offset any losses from mining. However, this may be inconsequential over time given data center deals are high margin. One could argue the lack of focus may make it difficult to compete in two highly competitive markets.
As discussed further in the call, Galaxy will become more attractive once it diversifies beyond CoreWeave and/or once we are nearer to more substantive delivery of the Helios campus.
Below, we look at what separates Galaxy and a few items we’d like to see before initiating a position.
Helios Campus is Massive, and is a Top 5 or Top 10 Data Center Site
Galaxy’s Helios offers 3.5GW of power with management stating this likely qualifies them for a Top 5 data center site: “We executed and bought another 1 gigawatt of potential capacity around the Helios site. That would make that a 3.5-gigawatt site, got to be one of the top 5 data centers in the world if we get that fully built out.”
Here is the timing for how that’s expected to come online:
CoreWeave is committed to the 800MW currently approved at the site. This is considered Phase 1, Phase 2 and Phase 3.
Of this Phase 1 is expected to deliver 133MW “throughout the first half of 2026.”
The company is moving toward breaking ground on Phase 2
Timeline is not clear on the additional GWs yet but it was stated there would be an acceleration of sorts on ERCOT approval to where the additional 1GW recently added would likely be approved on the timeline of the 1.7GW that has been under approval. Here is what was stated: “So I would think about the additional 1 gigawatt of interconnect request at the land we are acquiring to be somewhat on par with our existing 1.7 gigawatts in the backlog. And so think about 1.7 gigawatts going to 2.7 gigawatts in terms of timeline.”
When you combine the fact that management has stated Helios will become a big generator of cash in 12 to 24 months from now, it’s likely they are referring to the 1.7GW to 2.7GW being built out and energized.
One thing that stood out in Galaxy’s commentary was (at this time) they do not have other customers in the pipeline beyond CoreWeave, stating “I think our partnership with CoreWeave is going to take up the vast majority of our attention over the next few years.”
Funding Remains the Hurdle
By now, you may be noticing a theme which is that real estate is the easy part, and even access to GPUs is easing, yet powering the data centers and funding these massive projects remain the bigger hurdles.
Galaxy ended Q2 with $2.6 billion in equity capital, up more than $700 million sequentially. This increase was fueled by the $480 million primary capital raise in May, appreciation in digital assets and balance sheet investments, and a $292 million one-time accounting adjustment from the corporate reorganization. This equity raise is allocated for Phase 1 Helios (133 MW) and project debt financing is nearly complete.
While Phase 1 is essentially de-risked from a funding standpoint, it represents just a fraction of Helios’ full 3.5GW potential. At management’s estimated capex of $11-13 million per MW, Phase 1 requires roughly $1.5 billion of total spend. Scaling Phases 2 and 3 to reach the multi-gigawatt buildout will demand tens of billions in additional capital, well beyond the cash and balance sheet equity Galaxy has today. Management has flagged private equity partnerships and refinancing strategies as potential levers, but the implied cost of capital (~10-11%) underscores the financing challenges ahead.
The takeaway is that the Phase 1 financing is locked in, but the enormity of capital required for subsequent phases remains a gating factor for realizing Helios’ 3.5GW vision.
Galaxy has secured funding only for Phase 1 thus far, leaving the far majority of the 3.5GW open in terms of how to raise the capital to expand the Helios site.
Here is what was shared on the earnings call: “As a reminder, the equity portion of Phase 1 has already been funded through our existing equity capital. Once we have secured the project level debt financing, we will have the capital necessary to fund the anticipated CapEx for Phase 1 of approximately $11 million to $13 million per megawatt. For Phase 2, we are still finalizing the design and engineering specifications, but expect the total project CapEx to be slightly higher than the Phase 1 on a per-megawatt basis. We have already commenced work on project level debt financing for the Phase 2 project. Throughout the Phase 1 financing processes, we've established strong relationships with a wide range of banks and private credit managers who are active in the space, and I have confidence in our ability to secure debt financing for Phase 2 in the coming months.”
The company called out potential private equity deals as one source of capital, with the goal of refinancing mid-project as terms become more attractive. With that said, the rates the company is seeing now were stated to be around 10%, which is quite steep.
“Yes. James, so I think our expectation on where we land on Phase 1 is in line with what we've articulated in the past. It will come out at a sub-10% stream rate. But when you take into account upfront fees and potential breakage, depending on when you assume we'd have a refinancing event or not, we'll likely end up in the 10% to 11% expected yield in terms of cost of capital, even as credit spreads are tightening in real time.”
Brief Overview of the Crypto Operations
Galaxy’s crypto offerings are multi-faceted as the company is deeply entrenched in the crypto industry. Primarily, of the many different crypto products and asset management solutions the company offers, the tokenization of assets could be the most lucrative. Galaxy is one of the largest infrastructure companies by staking weight on the Solana platform, where the tokenization of assets is expected to do quite well. Solana accounts for 46% of on-chain trading volumes compared to Ethereum’s 22%.
According to the earnings call, Galaxy saw the strongest month in the company's history in July for its digital assets business. Part of this was representing a large transaction worth 80,000 Bitcoin for a value of $9 billion.
Crypto trading desk that offers both spot trading and derivatives. The company is said to have over 1400 institutional partners that trade on its platform.
It’s OTC derivatives platform saw $20 billion in volume last year.
The company is also a large crypto lender with $1.1B in loans in Q2 2025.
The company recently integrated with Fireblocks, a digital asset security platform with 2,000 institutions to help broaden access to Galaxy’s staking solutions.
Galaxy asset management oversees $4.7B across ETFs and other alternative/venture funds. In the case of asset management, it was stated that Galaxy makes a 1% fee.
Six days ago, it was announced that Galaxy will provide the asset management and treasury service for a $1.65B Solana treasury. A primary goal of the treasury is to help integrate Solana into traditional finance markets. It’s expected that Galaxy will provide treasury services for additional assets, as well.
The company was an early investor in Solana and recently tokenized Galaxy’s stock on the Solana blockchain.
Galaxy is also partnered with Invesco as they launched a joint spot Bitcoin ETF in 2023-2024 and have filed for a Solana spot ETF.
Financials Overview:
Galaxy Digital is evolving into a hybrid model: part crypto financial services platform, part AI / HPC infrastructure developer. Unlike some of the other miners (APLD, WULF, IREN) that have pivoted hard into AI data center hosting, Galaxy is choosing to maintain its crypto roots while simultaneously building one of the largest AI campuses in the world. This dual-track approach creates both unique optionality and added complexity. This shows up most clearly in the financials, where Galaxy’s reported revenue is inflated by crypto trading inflows, unlike peers whose top lines are directly tied to contracted hosting revenue.
Revenue Optics vs. Economic Reality
Galaxy’s revenue optics differ sharply from peers, and it is critical to distinguish between reported revenue from its assets under management (AuM). Reported Q2’25 revenue was $9.1 billion, (-30% QoQ, flat YoY), but this figure primarily reflects grossed-up digital asset sales that are subsequently offset by transaction expenses. By contrast, Reported AuM of roughly $9 billion reflects capital managed or staked on behalf of clients across asset management products, staking platforms, and funds.
While fee income from this pool was just $17 million in Q2, AuM remains an important context metric because it shows the scale of Galaxy’s crypto franchise and potential fee base as markets expand. For peer context, APLD, WULF and IREN have no comparable AuM base, as their reported revenue reflects directly contracted hosting or mining economics.
As Management cautioned, “top line is overshadowed by gross principal trading, investors should focus on Adjusted Gross Profit (AGP) instead. On that basis, Q2 AGP of $299 million marked a swing from ($204) million in Q1’25. Given the hybrid model, Galaxy further bifurcates AGP at the segment level:
Digital Assets: $71 million, up 10% QoQ
Treasury & Corporate: $228 million, driven by market-to-market gains on crypto holdings and balance sheet investments.
Data Centers: No revenue yet: Phase 1 lease with Coreweave begins in Q1’26
Where Galaxy diverges from peers is that once Helios begins contributing, the step-change in recurring revenue could be massive:
Company guidance: For the first 393 MW (Phase I + II), Galaxy disclosed ~$900 million in average annual revenue over the 15-year term, with >$700 million expected in the first full year of energization.
Implied economics: $900M / 393 MW = ~$2.3 million revenue per MW per year.
Scaling up:If the 526 MW of contracted / committed IT load (Phases I – III) is built, this would imply ~$1.2 billion in annual revenue at similar economics. If the full 800 MW of gross approved power were contracted on similar terms, that could reach ~$1.8 billion per year.
Contrast this with:
APLD: Q4’25 revenue of $38 million was entirely from hosting, backed by $11 billion in contracted CoreWeave HPC lease (~15 years of ~$730 million per year, which scales to ~49x FY25 revenue)
WULF: Began recognizing AI lease revenue is Q3’25 from its Core42 partnership, with early revenue flow already diversifying away from BTC mining.
The takeaway here is that Galaxy’s reported revenue is inflated by trading flows, but its economic revenue base ($299 million) is far smaller and more volatile. Peers like APLD, WULF, and IREN are already stacking up contracted, recurring HPC revenue, whereas Galaxy’s step-change won’t show up until 2026. When it does, back-of-the-envelope math suggests $900 million to $1.2 billion annually from CoreWeave alone, making it one of the largest HPC lease arrangements in the space.
Margins Inflect but Volatility Remains
Operating income improved to $166 million vs. a ($392) million loss in Q1. By comparison, APLD and WULF are still reporting large operating losses as they front-load HPC build outs. These peers are loss-making today but will structurally expand margins as long-term leases begin flowing. Galaxy is already GAAP profitable, but primarily due to market-sensitive mark-to-market gains.
Net income landed at $30.7 million, compared to losses of ($295 million) QoQ and ($126 million). Its worth noting that these margins remain razor thin: GAAP net margin of 0.3% versus APLD’s recurring hosting margins in the 20 – 30% range. Drivers of the swing:
$135 million digital asset gains and $195 million investment gains, with Bitcoin up 30% QoQ and Ethereum up 36% QoQ
Offset by $127 million impairments and a $125 million loss on derivative notes.
While peers will see margin expansion as AI leases ramp, Galaxy’s profitability remains tied to crypto market cycles until Helios revenue turns on.
EPS Turns Positive on Market Gains
GAAP EPS was positive in Q2’25. Management introduced Adjusted EBITDA as a clearer profitability lens, arguing this better reflects operating trends in Digital Asset and Treasury, removing derivatives noise. Like APLD, Galaxy’s non-GAAP metrics show progress. However, investors should be aware – Galaxy’s adjusted figures are still market sensitive and not contracted.
Balance Sheet and Cash Flow
Galaxy’s balance sheet is both its strength and its complexity, as it is large in scale but more volatile than peers due to crypto exposure. As of Q2’25, Galaxy held $1.18 billion in cash / stablecoins and $2.0 billion in net digital assets, giving it more self-funding capacity than miners reliant on continuous external financing.
Q2’25 Balance Sheet Highlights:
Total Assets: $9.08B, up 43% QoQ from $6.34B
Total Equity: $2.62B, up 38% QoQ from $1.90B
Cash & Stablecoins: $1.20B, flat QoQ
Balance Sheet Net Digital Assets: $1.28B, up 40% QoQ from $908M
Balance Sheet ventures, Fund, and Other Investments: $718M, up 15% QoQ from $623M.
Net Income of $30.7M vs. ($295M) in Q1’25.
Adjusted EBITDA of $211M vs. ($290M) in Q1’25.
These figures underscore Galaxy’s liquidity advantage today, though the reliance on digital assets and investments make them inherently more sensitive than contracted revenue streams. The crux here is that crypto assets create valuation swings that peers with cleaner hosting-focused balance sheets don’t face to the same degree.
WULF: Similar leverage profile to APLD, funded via staged equity and project-level partnerships for its Core42 build-outs.
IREN: Cleaner balance sheet with low net leverage and industry-low power costs, though at a smaller absolute scale.
Conclusion:
Galaxy Digital’s Q2’25 is a case study of complexity vs. visibility. Bulls would say that GLXY provides unique optionality, allowing investors to gain exposure to both crypto financial services (trading, custody, asset management) and one of the largest AI campuses globally (Helios at 3.5GW). Compared to peers, Galaxy also has superior balance sheet flexibility (vs. APLD and WULF) and is already showing GAAP profitability.
Bears would argue that earnings quality is lower due to market sensitivity, recurring fee revenue is declining, and Coreweave remains the sole data center tenant. Execution risk associated with ERCOT approvals and multi-phase financing is material. Ultimately, Galaxy is a barbell play consisting of crypto upside coupled with AI optionality. While APLD, WULF, and IREN are purer HPC pivots, investors must decide whether Galaxy’s dual exposure should be considered a healthy form of diversification, or distraction.
In the near-term, upward price action could be driven by Solana’s price, tokenization of assets, or stablecoins. As we go along into 2026, additional positive price action could occur if Galaxy secures a larger hyperscaler or offers visibility on how they will fund the 3.3GW that are left to fund beyond Phase 1. However, there are an equal number of reasons Galaxy and other miners could see volatility as they all greatly depend on high beta being in favor in the broad market. For now, the bulk of a decision on entries and exits will be made with technicals.
Note, this is a momentum stock and if we were to enter the positions, we plan to adhere strictly to risk management.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
This analysis was published on the Discovery tier on August 29, 2025. Learn more about Discovery hereLearn more about Discovery here
Time to power is the most important focal point for AI investors at the moment, considering the high level of demand for compute, the inability of Big Tech to meet said demand in the cloud, and the rapid upgrade cycle between GPU generations.
Once exposed to the volatility and uncertainty of Bitcoin prices and halving, transitioning to offering AI hosting provides more lucrative, predictable, and higher-margin revenue streams for Bitcoin miners. The AI industry is now giving miners a vote of confidence, with up to $50 billion committed in long-term deals this year for AI/HPC data center hosting.
This boils down to two key advantages miners can provide: the ability to retrofit or repurpose existing space for GPUs with lower incremental capex than building AI data centers from scratch, and quicker time to power.
Below, we discuss why time to power is of utmost importance to the AI industry and for AI investors, how Bitcoin miners can bridge the gap and meet near-term power needs, and which BTC mining stocks are engaged in multi-billion dollar AI deals.
The I/O Fund bought shares in Core Scientific early in this trend after first analyzing its AI angle exclusively for our Discovery members. We closed the position shortly after CoreWeave’s acquisition announcement for a 193% return. To subscribe to Discovery with 30% off, please click here to email us or email premium@io-fund.com and mention code DISCOVERY30.click here to email us or email premium@io-fund.com and mention code DISCOVERY30.
Why Time to Power is Mission-Critical
Power connection is quickly becoming a primary constraint for the AI industry as GPU bottlenecks ease relative to the last two years. Essentially, long lead times for grid interconnection means hyperscalers and specialized AI neoclouds like CoreWeave simply cannot get enough capacity online to meet high demand. This was noted by Microsoft in April and Amazon this quarter, with Amazon CEO Andy Jassy not shy in saying that “the single biggest constraint is power.”
Here's why time to power is now emerging as a critical focal point:
Grid connection timelines in key regions are 36+ months, per data from TD Cowen and Riot Platforms, with major Data Center Alley in North Virginia at 42 months or longer. Even in 2024, Bloomberg reported that utility Dominion said large data centers in Virginia (>100MW) were facing seven year wait times for new connection hookups.
Additionally, the most powerful GPUs from Nvidia (and now AMD) are being upgraded on an annual cadence, so any delays in getting GPU clusters online shortens the time these chips are ‘useful’ before becoming outdated by the next generation. Think of it this way: hyperscalers and GPU providers do not want to spend tens of billions of dollars on AI hardware to then have it sit idle while waiting for power, as this translates directly into lost revenue and lost profits.
Tying into this, if a company like Microsoft can get new data centers connected to the grid and stood up faster than competitors such as Amazon, they can then meet higher demand, win new customers and gain market share. For example, AI startups simply seeking capacity to train models likely have lower cloud switching costs, meaning that these companies could easily and quickly shift workloads to whichever cloud provider can offer them the capacity they need the quickest.
Bitcoin Miners Provide a Path to Meet More Immediate Power Needs
While some companies like Meta are building 1GW+ clusters from scratch, for others in the neocloud arena that do not have access to tens of billions in cash, Bitcoin miners are recently attracting increased levels of interest. Miners help address immediate power needs with multiple gigawatts of grid-connected facilities that can quickly be converted from mining to AI GPUs. As TeraWulf’s executives put it, the “ability to scale quickly provides a meaningful advantage in today’s race to secure power and compute capacity.”
Consider some of those challenges that exist on the power side when building data centers from the ground up – short power supply in key markets like Virginia, grid connection requests extending four to seven years, or permitting delaying full power delivery to new infrastructure. Miners, on the other hand, streamline this process by offering access to readily available grid-connected power, cooling infrastructure, and low latency to major hubs.
Core Scientific, Applied Digital and Galaxy are expecting to bring their first AI-focused facilities online by Q4 2025 through 1H 2026, or four to ten months from now, substantially quicker than new construction. Transitioning existing facilities also offers rapid time to operation; for example, IREN stated that it seamlessly transitioned from mining ASICs to AI GPUs at its 50 MW Prince George facility in six to eight weeks, though this is likely at a very small scale considering the size of its GPU fleet.
For a company like CoreWeave or Fluidstack, signing long-term contracts for capacity with BTC miners and fronting the cash for capex allows them to build hyperscale clusters for a fraction of the cost and time. As CoreWeave’s CEO Michael Intrator put it, “Right now the key bottleneck really is the powered shell. When you think about that, that’s really the building, the cooling, the distribution of electricity.”
Instead of having to worry about the prolonged process of site selection, permitting, planning, and more before final power delivery, these neoclouds instead have near immediate access to the powered shell. While retrofitting for liquid cooling, networking and connectivity may still be necessary and pose some challenges, miners offer a fast time to operation and relatively cheaper capex costs for a hyperscale-size data center outfitted with tens to hundreds of thousands of GPUs.
Considering that most of the miners that have struck deals are rather cash-strapped, these GPU cloud firms behind the deals are putting up all (or the majority) of the capex required to retrofit existing facilities for high-end AI GPUs. Miners are highlighting the capex costs per MW for these facilities, and these costs, while varying quite wildly between miners, help emphasize the industry’s rather attractive positioning when factoring in quick time to power.
Core Scientific had offered one of the cheapest project costs, costing CoreWeave approximately $1.5 million per MW, though Core Scientific’s executives had stated in Q3 2024 that “they were able to significantly buy down their rates.”
IREN is touting the next lowest capex costs at ~$6-7 million per MW of IT load, for its Horizon 1 facility in Texas, which it says is catered to liquid-cooled NVIDIA Blackwell GPUs and provides ~6ms latency to Dallas. IREN says it expects the capex to be funded primarily by colocation customer prepayments and debt financing.
TeraWulf expects its capex per MW of critical IT load to be in the range of $8-10 million for its recent deal with Fluidstack, while offering <8ms latency to New York City and Boston and <2ms to Toronto.
Applied Digital and Galaxy are a bit on the higher end – both are anticipating capex of $11-$13 million per MW, with Galaxy recently securing $1.4 billion in project financing to aid development of its first 133MW phase with CoreWeave. However, Galaxy expects capex to move higher for its second 260 MW phase.
Compared to new construction costs per MW, miners can offer some capex savings, with savings becoming more attractive the lower capex costs go, such as in the case of IREN and TeraWulf. Cushman & Wakefield estimates construction costs per MW in the range of $9-15 million across key markets, averaging $11-13 million. This aligns with estimates from CBRE for $10-14 million per MW, though costs can reach $16-20 million per MW in certain cases (or higher).
While Applied Digital and Galaxy may not offer much of a discount relative to new construction, IREN and TeraWulf can offer more pronounced capex savings. Based on a $12 million per MW construction cost estimate, TeraWulf could offer up to 33% savings per MW and IREN up to 50% savings, translating into hundreds of millions to billions in savings at a 400-800 MW scale.
Time to Power Comparison
Theoretically speaking, miners with the quickest time to power should enjoy a two-fold advantage: quicker time to revenue recognition, and potentially better deal economics arising from the ability to meet customers’ demand faster.
For example, Core Scientific’s ability to bring 250MW of power online for CoreWeave’s AI compute needs supports why it was the first to be acquired, as no other miner could match that scale within the same timeframe.
There are nuances in delivery timelines and expectations that make it difficult to offer a direct quarter-by-quarter comparison, such as Galaxy only offering vague delivery comments for 1H or throughout the year. However, roughly speaking (and excluding Core Scientific), by the end of 2025, Applied Digital should lead with 100MW, yet this shifts by year-end 2026 with TeraWulf aiming to deliver more power.
By Q4 2025:
Applied Digital expects its first 100MW of power online.
TeraWulf expects 60MW of power online.
IREN could have 50-130MW of AI-dedicated power online, depending on how it retrofits its Prince George and Mackenzie facilities.
Galaxy does not expect to have capacity online.
By Q4 2026:
TeraWulf expects to have 420MW of capacity online as it progresses with quick expansion.
Applied Digital expects to have 250MW of capacity online.
Galaxy expects to have 133MW of capacity online.
IREN is aiming to energize its 1.4GW Sweetwater facility in early 2026, though there is no indication yet that it will be able to stand up fully operational infrastructure by year-end.
Long-Term Power Needs Far Outstrip Miner Capacity
Looking at the bigger picture, the contracted power that miners can provide will only meet a small portion of the projected demand growth over the next three to ten years, and are unlikely to be the sole solution to this structural power shortfall. As we had covered in our free newsletter, Nuclear Power Emerging as a Clean AI Data Center Energy Source, data center power demand is expected to grow at an accelerated 16% CAGR from 2023 to 2028 and beyond.
For example, Boston Consulting Group forecasts 45 GW of growth in global data center power demand in just three years, from 82 GW in 2025 to 127 GW by 2028.
In the US, data center demand was forecast to rise as much as 5x over the next decade. Deloitte estimated US data center power demand to triple from 2025 to 2030, from 41 GW to 120 GW, before rising further to 176 GW by 2035. In terms of power consumption, the DOE recently forecast data centers will consume 6.7% to 12% of total US power production by 2028, up from 4.4% in 2023.
Bitcoin miners can only meet a fraction of this growth, likely around several gigawatts in total. Yet their innate ability to deliver this power over the next 12 to 24 months, supporting up to hundreds of thousands of high-end GPUs in larger-scale facilities, is why miners are prime targets to meet hyperscalers and neoclouds’ immediate power needs.
Below, we discuss miners that have secured large-scale deals and/or progressing with building out GPU fleets for self-hosted AI cloud services. As it stands, CoreWeave has been the primary undertaker of major AI deals with miners, committing to over $35 billion including its acquisition of Core Scientific; though Fluidstack is making a splash with a deal worth up to $16 billion with TeraWulf.
Core Scientific Acquired by CoreWeave Following $10B+ Deal
CoreWeave made a statement to the industry with its acquisition of CoreScientific for $9 billion, a Bitcoin miner and key compute partner. The acquisition communicates that immediate power at scale is paramount. This stems from Core Scientific’s key advantage, as the only miner that will be able to bring 250MW online this calendar year, capable of hosting >100,000 GB200 chips.
Prior to the acquisition, CoreWeave had contracted 590MW of total capacity from Core Scientific as of February, worth $10.2 billion in cumulative revenue to the miner over the 12-year lease terms. Core Scientific stated in May that it was on track to deliver 250MW of billable capacity to CoreWeave by the end of 2025, with expectations for the full 590MW to be delivered by 2027.
CoreWeave says that with the acquisition, it will now own 1.3 GW of gross power across Core Scientific's national footprint (including BTC mining facilities), with an incremental 1 GW+ of potential gross power available for future expansion. The acquisition also adds $500 million of estimated fully ramped, annual run rate cost savings by eliminating CoreWeave’s $10 billion lease obligations to Core Scientific.
This combination of hundreds of MW of deliverable power by year end and substantial long-term cost savings from owning infrastructure outright versus leasing underscore why CoreWeave was quick to progress with the acquisition.
TeraWulf Signs up to $16B Deal with Fluidstack, Backed by Google
TeraWulf is no stranger to AI/HPC hosting, having signed a $1 billion, 72.5 MW deal with Core42 in December 2024, with dedicated GPU compute infrastructure coming online throughout 2025. However, its recent deal with Fluidstack represents one of the largest deals to date between an AI cloud firm and a Bitcoin miner.
TeraWulf had originally announced a $3.7 billion, 10-year AI hosting deal with AI cloud startup Fluidstack for 200+ MW capacity at its CB-3 and CB-4 buildings at its Lake Mariner data center in upstate New York.
Only a few days later, TeraWulf announced that Fluidstack was expanding its deal to include ~160MW at CB-5, bringing its total contracted IT load to 360MW and contracted revenue to $6.7 billion. Including potential lease extensions, the new deal could be worth up to $16 billion.
Perhaps more importantly, Google is backstopping $3.2 billion of Fluidstack’s lease obligations to support project financing, and has taken a 14% stake in the miner (up from a $1.8 billion backstop and 8% stake with the original deal).
TeraWulf is aiming for quick delivery of power to Fluidstack, with the first 40MW phase expected to come online in the first half of 2026 and all 200+MW delivered by year-end; additionally, operations are expected to commence for the 160MW tranche at CB-5 in 2H 2026. Multiple different OEM GPU equipment is expected to be deployed, likely GPUs from Nvidia and AMD, able to serve a variety of AI training and inference workloads.
Overall, Fluidstack’s deal represents just over 70% of the current available power at Lake Mariner of 500MW, though TeraWulf does have 250MW additional power pending regulatory approval for expansion. This would bring the facility’s total power potentially up to 750MW with its targeted upgrades, or allowing a second deal of similar size to be signed in the future.
TeraWulf also recently signed an 80-year ground lease with purchase option at Cayuga, securing its exclusive rights to develop 400MW of data center infrastructure “on a fully equipped site, with high-capacity transmission, industrial water intake and redundant fiber.” The company expects to bring the first 130MW online in 2027, while boosting its long-term power capacity to over 1GW.
Applied Digital a Secondary Benefactor of CoreWeave with $11B Deal
If CoreWeave’s acquisition of Core Scientific wasn’t enough, it also committed to leasing 400MW of capacity from Nvidia partner Applied Digital at its Ellendale, North Dakota facility, worth ~$11 billion over the 15-year terms. Ellendale (now referred to as Polaris Forge 1) has the potential to scale up to over 1GW capacity over the long run, though the 400MW represents the maximum current capacity.
Applied Digital expects the first 100 MW data center to be ready for service in Q4 2025, while the second 150 MW data center is expected to be ready in mid-2026. The third 150 MW facility is expected to be ready in 2027. Applied shared some details on the campus, saying that the campus “will feature high-density racks and direct-to-chip closed-loop liquid cooling and air cooling combo” as it entered a $150 million, 36-month convertible preferred equity financing to advance construction.
On August 18, Applied announced that it is expecting to break ground on its $3 billion, 280MW Polaris Forge 2 data center in Harwood, North Dakota. Applied is aiming to have initial capacity online in 2026 and the facility reaching full capacity by early 2027, a quick 16-20 month time to power. The company also claimed in 2024 to offer approximately 30% lower costs than AWS, Azure and GCP for cloud compute on Nvidia’s GPUs with short, 8-10 week lead times, a key advantage in the race to deliver compute.
Galaxy: Another CoreWeave Partner with ~$15B Deal
CoreWeave has struck another deal with digital asset platform and now data center infrastructure provider Galaxy Digital, committing to the entire 800 MW of approved capacity (~526MW critical IT load) at Galaxy’s Helios data center. With 2.7GW of power under load study, Helios has the potential to expand up to 3.5GW, which would make it one of the largest single data center facilities in the US and the world.
Galaxy stated that they anticipate average annual revenue of more than $1 billion over the 15-year term, based on committed contractual terms, internal capex estimates, and full capacity utilization. This estimate would place the deal value above $15B.
Galaxy is expected to deliver its first 133 MW phase of power to CoreWeave in the first half of 2026, followed by the next 260 MW phase throughout 2027 and a subsequent 133 MW phase throughout 2028.
To fund this first phase, Galaxy has secured $1.4 billion in project financing debt, providing the $350 million equity requirement for the funding. Management also stated in Q2 that its $480 million in cash proceeds from its May equity raise would go towards capex related to the Helios DC buildout. Overall, the combined phases are no small task, likely requiring close to $10 billion over the next few years, especially considering management stating Phase 2’s will likely be slightly higher than Phase 1 due to the size of the committed load.
Galaxy made it clear that for Phase 2, discussions for project financing are still “pretty preliminary,” though management expects that as they produce results with Phase 1 and generate returns/revenue, they will “earn the right to achieve larger financings at lower cost.” Simply getting the second phase financed is the company’s primary goal, considering the 16-20 month timeline to delivery.
IREN Building Out its Nvidia GPU Fleet, Targeting Deals
In March, IREN hit the pause button on its bitcoin mining expansion as it pivoted to focus more on AI and HPC, given the revenue potential stemming from its >2.9 GW of grid-connected power.
Unlike peers, IREN is primarily focusing on short-duration contracts, from on-demand use to three-year term lengths, while expanding its GPU fleet to drive growth in its self-hosted AI cloud business. Revenue for its AI Cloud Services surged 94% QoQ to $7 million in fiscal Q4, after rising 33% QoQ to $3.6 million in its fiscal Q3. The company laid out an aggressive $200-250 million annualized AI Cloud Services revenue target by December 2025, up 8-10x versus its current annualized run rate.
IREN is working to expand its GPU fleet, which is still extremely small considering its power pipeline as GPUs are not cheap at scale. IREN purchased 2,400 Blackwell GPUs in early July for ~$130 million including fit-out costs, comprised of 1,300 B200s and 1,100 B300s.
In late August, IREN doubled its fleet to ~8,500 GPUs with another purchase of 4,200 B200s for ~$193 million, while securing $102 million in funding for the July purchase. The company has already contracted out its first batch of 256 B200s to an undisclosed customer.
In its fiscal Q4 report, IREN also stated that it has secured $200 million in GPU financing, aiming to increase its GPU fleet to ~10,900, or an additional ~2,400 GPUs.
Given that a 50MW data center could be outfitted with ~25K GPUs, IREN is far from outfitting its own facilities with its current fleet, though it is somewhat capital constrained given its $564 million cash on hand.
The company says that it is “observing demand for multi-thousand air-cooled Blackwell GPUs,” and has ~47MW of capacity still available at its Prince George, British Columbia facility, capable of supporting ~20,000 Blackwell GPUs.
For its other AI data centers, IREN is targeting calendar Q4 2025 delivery at its Horizon 1 facility in Texas with up to 50 MW of IT load. IREN says that it has several customers undergoing due diligence and contractual negotiations with interest expanding beyond 50MW, though it has not announced any signed deals. The company is also eyeing a complete transformation for Horizon to reach the full 750MW power capacity, noting in fiscal Q4 that procurement is underway for a second 50MW.
IREN is looking to create an interconnected 2GW data center hub at its Sweetwater 1 and 2 facilities, with the 1.4GW Sweetwater 1 facility expected to be energized by April 2026 and the 0.6GW Sweetwater 2 facility expected to be energized in late 2027. This is a slight acceleration for Sweetwater 2 from early 2028. Together, Sweetwater could support 700K liquid-cooled Blackwell GPUs, in close proximity to Stargate’s Abilene data center.
Other Miners Considering AI Pivots
Riot Platforms and Hut 8 are two other miners that are pivoting towards AI hosting, though the two have yet to secure long-term contracts.
Riot is aiming to transition from Bitcoin mining to AI hosting when “economic and feasible,” and said last quarter that it is “actively progressing toward securing a lease with a high-quality tenant” at its Corsicana facility. As of January, Riot was evaluating using the remaining 600MW of power capacity at the facility for AI/HPC, with 400MW currently geared towards mining. Needham analysts are encouraged by Riot’s possible pivot, saying they “believe Riot’s Corsicana site is one of the most attractive HPC sites in our universe” with amplefiber connectivity for low latency AI inference. Needham believes Riot could be in advanced discussions with potential tenants by 2H 25 and sign a lease as early as Q1 2026.
Hut 8 has ~3.4MW of HPC capacity operational and ~670MW of mining capacity, and similar to IREN is leasing Nvidia GPUs in the cloud. Hut reported a $2.3 million increase in revenue from leasing ~1,000 H100 GPUs to an unnamed AI developer, which launched in September 2024. Hut 8 also just broke ground on a ~300MW data center in Louisiana, and is expected to invest ~$2.5 billion, while undisclosed future tenants are expected to contribute ~$10 billion in compute equipment. However, it is reported that Hut will likely need external financing or a partner for the project.
Earlier in 2025, Bitfarms announced it was mulling a shift to AI, and in early August, the miner announced a partnership with T5 Data Centers to advance the development of its Panther Creek facility in Pennsylvania. The two are expected to engage in pre-construction design planning and development approval processes, with Bitfarms also submitting its master site plan to Macquarie for future development.
Cipher is also considering a pivot, saying that it created a new strategic plan at its 150MW Black Pearl Phase II to bridge both AI compute and hydro-bitcoin mining, though in the long run it expects the site to be fully leased by AI/HPC tenants. Cipher added that it is seeing continuing HPC interest at its Barber Lake site.
AI/DC Deals are High-Margin, Highly Visible Revenue for BTC Miners
These AI hosting deals are very attractive for miners as they provide highly visible, high-margin revenue streams, a major operational shift from the prior business model with growth and earnings tied to Bitcoin’s price volatility, network difficulty and halving.
Applied Digital’s deal with CoreWeave has pricing set upfront with an annual escalator, with average annual revenue of ~$733 million based on the $11 billion, 15-year terms. Revenue is likely to start small and begin to ramp rapidly once full capacity is online. Applied is also targeting 88%, +/- 3% net operating income margins on the AI hosting revenue, or ~$645 million average annual net operating income for the duration of the deal.
TeraWulf’s expanded deal with Fluidstack will generate average annual revenue of $670 million at its current scope, though the full extension to $16 billion could provide significant revenue upside. TeraWulf is eyeing an 85% net operating income margin for the Fluidstack deal, or ~$570 million on average annually. This is at the low end of Applied Digital’s range, likely accounting for higher operating costs due to location (upstate New York vs North Dakota). Combined with the Core42 deal, TeraWulf has visibility into ~$770 million in average annual revenue, with the first revenue from Core42 now being recognized.
Galaxy is targeting 90% adjusted EBITDA margins on its AI hosting deal with CoreWeave, implying adjusted EBITDA of ~$900M+ on its average annual revenue estimate of more than $1 billion. Given energization times spanning into 2028 and a longer 15-year term structure, Galaxy’s initial revenue ramp may be more prolonged than peers.
IREN does not have a firm hosting deal, though it has touted a 97-98% hardware profit margin for its AI Cloud Services, or revenue minus electricity costs. This is more than 20 points above its Bitcoin hardware profit margin, highlighting why AI is more attractive than mining at scale. However, margin tailwinds are likely minimal in the near-term given AI Cloud Services contributes less than 3% of revenue.
Accelerated Revenue CAGR
While there are nuances in deal sizes and lengths, IREN, Applied Digital and TeraWulf are seeing accelerated forward revenue growth CAGRs as AI capacity soon comes online. These miners’ growth rates are much stronger than others such as Riot and MARA who have not jumped headfirst into AI hosting.
Applied Digital and TeraWulf are expected to see revenue increase at an 88-90% 2-year CAGR from 2025 to 2027, a significant acceleration from their respective historical 61% and 73% CAGRs from FY23 to FY25.
IREN is expected to see revenue grow at a 42% CAGR from FY25 to FY27, though this is a bit skewed as the company has benefitted from rapid mining hashrate expansion and rising Bitcoin prices over the past two quarters.
Compare this to Riot and MARA, with both expected to see FY25 to FY27 revenue growth at a 17-18% CAGR, decelerating sharply from the 55-60% level over the past two years. While revenue is coming off a higher base than say APLD or WULF, the difference in forward growth rates is notable for AI-engaged miners and these two who have not yet pivoted in full force.
Thin Balance Sheets Present Capital Raise Risk
Miners are rather cash-strapped, and while neoclouds and partners are fronting the cash for capex, capital raises and dilution are still a risk, considering IREN and TeraWulf both recently launched larger-scale convertible note offerings.
Here’s a quick snapshot into the health of IREN, TeraWulf, Applied Digital, and Galaxy’s cash versus debt, with the chart below showing how thin and lumpy cash balances are:
IREN reported cash and equivalents of $196 million in Q3, down from $455 million in the prior quarter. As of Q4, IREN reported $564 million in cash and equivalents, after closing an upsized $550 million convertible note offering in June, while debt is now at $963 million. This presents possible dilution risk in the high-teens, based on IREN’s $5 billion valuation.
Applied Digital reported cash and equivalents of $114 million, down from $254 million in the prior quarter. Applied has a deal with Macquarie for up to $5 billion in financing, including a $900 million initial investment at Ellendale and $4.1 billion on retainer to for future data center expansion. For any future builds, Macquarie would invest $2.25 million per MW and Applied would invest $0.75 million per MW.
TeraWulf reported cash and equivalents of $90 million, down from $220 million in the prior quarter. However, shortly after the Fluidstack deal, the company announced the full exercise of its $1 billion convertible note offering, or ~27% of its current market cap. Based on prior capital allocation projections, this would likely leave TeraWulf with ~$600-700 million in unallocated cash, for project cost overruns or other expansion needs.
Galaxy reported cash and stablecoins of $1.18 billion in Q2, including $691 million in cash and $489 million in stablecoins, approximately flat from the prior quarter. Notes and loans payable were $1.07 billion.
Galaxy President and CIO Christopher Ferraro offered some very important perspective on funding and capacity growth, and why capital is likely to be the limiting factor for miners’ current buildouts:
“There’s also a practical component, which is, these are very large-scale, long-term development projects that take a lot of capital. And so our ability to grow into the opportunity is wholly dependent on 2 things: one, us executing excellently; but then also two, growing and getting bigger as a company so that we can actually support the growth, meaning like it would be totally imprudent for us to now take on in parallel, for example, like another $10 billion build, because that requires a capital base and the attention and resources that we're just not built out for today.”
This matches our statements in our Core Scientific analysis from May, Core Scientific Q1: Expects 250MW of Billable Capacity to CoreWeave by Year-End, where we explained that if CoreWeave did not front the capex for the data centers, the “business model would not work as CORZ would struggle to raise the level of capital required to acquire more sites and modify the existing infrastructure.”
These comments that the current builds underway for CoreWeave and Fluidstack are likely to be the main focus of the miners over the next few years, especially considering the thin balance sheets, convertible note raises, and difficulty from CoreWeave to keep funding multiple different projects.
Customer Concentration Another Risk to Consider
One other risk to consider is customer concentration, given the fact that CoreWeave is the sole backer for a majority of the miners discussed here. TeraWulf has the benefit of Google backstopping Fluidstack’s obligations, offering early termination protection for the first six years.
Considering CoreWeave has made the move to acquire Core Scientific and has signed deals with Applied Digital and Galaxy, it may be more limited in its ability to fund future projects. It also means that miners signing away all or a majority of their power to CoreWeave find it hard to diversify revenue streams away, with Galaxy noting that the deal with CoreWeave “is going to take up the vast majority of our attention over the next few years” and prevent other hyperscaler engagements.
Also, if CoreWeave should pull away from a deal down the road, it could create a significant blow to revenue and earnings for miners it is currently engaged with. This is due to two factors: high-margin, high concentration of revenue CoreWeave’s deal will drive, and that there is little room for diversification as new capacity is expensive for miners to handle without major financing.
Technical Analysis
The risk associated with Bitcoin miners is present in the potential setups outlined below. As you will see, some have the potential for wild swings in either direction, which follows very messy and overlapping uptrend patterns. For this reason, we approach these charts only from the mindset of risk management. If we do take a position in any of these names, we do not view them as buy-and-hold vehicles, and all will come with relatively tight risk controls.
Galaxy Digital (GLXY)
Green – GLXY appears to be tracing a very large diagonal pattern. If we zoom into the current drop in GLXY, it appears to be a 4th wave, and needs one more swing higher to complete the larger pattern. The target for this swing is $34 – $43. As long as we hold $19, this setup remains valid.
Blue – Instead of getting one more swing higher, we should see two more. Once we reach $35 – $43, we’ll see another 3-wave drop and a final swing to $56 – $67. Once again, if we break below $19, then both of these scenarios are no longer valid, and a larger top will likely be in.
TeraWulf (WULF)
Blue- We have completed wave 1 in a very large diagonal, as well as wave 2. We are just now completing wave A of 3. This should be a double top that turn lower in 3 waves toward $5.25 – $3.65. The drop needs to be a 3-wave drop to confirm this count. Once this ends, we should see a 5-wave pattern turn higher. This would point toward $69 – $105 in a pretty direct path.
Green – If we instead keep pushing higher over $12.50, with volume and momentum expanding with price, then we could be in a more direct path higher. Instead of a large diagonal pattern, it would be a standard 5 wave pattern. Wave 1 of 3 would push toward $35 – $69.
Please note, while the pattern below allows for these counts, we still only have 3 waves up off the 2022 low. So, until we see either the green count get confirmed, or a 3-wave correction, risk remains high. Any drop below $4.20 will be the first warning. If we see a 5-wave drop break below this level, the risk will increase that something more bearish might be in play.
Applied Digital (APLD)
Green – APLD is tracing a very large 3 wave pattern, which best fits as a diagonal pattern. If we can see a breakout on heavy volume and expanding momentum over $17.25, it will confirm this count, which should see a continuation towards $23 – $29.
Blue – We fail to breakout over $17.25 and instead drop back into the $14.50 – $12.50 range. We’ll then break through the $11.35 region and head toward $9 in a larger 2nd wave.
Riot Digital (RIOT)
Blue – We are completing the B wave in a larger 2nd wave. We will fail under $14.10 – $15.35 and see a sharp, 5-wave drop back to $9 – $8. This will hold, as we set up for a larger 3rd wave breakout to new highs.
Green – We completed the 2nd wave, and it was shallow. We’ll see a strong breakout over $14.10 – $15.35 on expanding volume and momentum. the 3rd wave target is $27 – $31.
Both counts must hold $7.56 on any weakness, or they will get invalidated.
Iren Limited (IREN)
Green – Note how the most recent push higher is happening on less volume and momentum. This is the 5th wave, which can continue as high as $35. Once complete, this will end a large 3rd wave within a diagonal pattern. The target for the 4th wave is around $8. We should then see a large 5th wave to new highs.
Red – We only have 3 waves up off the 2022 low. This is not ideal, and until we see a 3 wave retrace, it is a risk that should not be ignored. If this is all we get, then we should see a large 5 wave drop develop that takes us through $8 and then $2.80. We would then be on our way to new all-time lows.
While both counts have IREN in a 5th wave, if we can see volume and momentum expand with price over $35, then something more bullish may be going on. If we see this then we will adjust accordingly.
Conclusion
Bitcoin miners are not able to solve the long-term power deficit that the industry is coming head-to-head with, but in the 12 to 36 month window, miners are uniquely positioned to meet hyperscale and neocloud power needs. AI hosting deals provide highly-visible, high-margin revenue over the next decade and beyond, a major operational shift for miners once reliant on volatile Bitcoin prices for growth.
The catch is that miners cannot finance these AI data center builds themselves, as they have thin balance sheets and larger debt loads. Instead, they are reliant on their backers such as CoreWeave, and in TeraWulf’s case, Fluidstack and Google, to front the cash for the projects and provide the necessary compute.
While risk does stem from the fact that CoreWeave is the sole backer for a majority of these AI hosting deals, limiting opportunities for revenue diversification and minimizing concentration risk, AI presents much stronger, higher-margin forward growth opportunities.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
Time to power is the most important focal point for AI investors at the moment, considering the high level of demand for compute, the inability of Big Tech to meet said demand in the cloud, and the rapid upgrade cycle between GPU generations.
Once exposed to the volatility and uncertainty of Bitcoin prices and halving, transitioning to offering AI hosting provides more lucrative, predictable, and higher-margin revenue streams for Bitcoin miners. The AI industry is now giving miners a vote of confidence, with up to $50 billion committed in long-term deals this year for AI/HPC data center hosting.
This boils down to two key advantages miners can provide: the ability to retrofit or repurpose existing space for GPUs with lower incremental capex than building AI data centers from scratch, and quicker time to power.
Below, we discuss why time to power is of utmost importance to the AI industry and for AI investors, how Bitcoin miners can bridge the gap and meet near-term power needs, and which BTC mining stocks are engaged in multi-billion dollar AI deals.
The I/O Fund bought shares in Core Scientific early in this trend after first analyzing its AI angle exclusively for our Discovery members. We closed the position shortly after CoreWeave’s acquisition announcement for a 193% return. To access the I/O Fund’s full portfolio, full research library, webinars and more, take advantage of our exclusive Labor Day sale with $110 off Pro and $200 off Advanced.exclusive Labor Day sale with $110 off Pro and $200 off Advanced.
Why Time to Power is Mission-Critical
Power connection is quickly becoming a primary constraint for the AI industry as GPU bottlenecks ease relative to the last two years. Essentially, long lead times for grid interconnection means hyperscalers and specialized AI neoclouds like CoreWeave simply cannot get enough capacity online to meet high demand. This was noted by Microsoft in April and Amazon this quarter, with Amazon CEO Andy Jassy not shy in saying that “the single biggest constraint is power.”
Here's why time to power is now emerging as a critical focal point:
Grid connection timelines in key regions are 36+ months, per data from TD Cowen and Riot Platforms, with major Data Center Alley in North Virginia at 42 months or longer. Even in 2024, Bloomberg reported that utility Dominion said large data centers in Virginia (>100MW) were facing seven year wait times for new connection hookups.
Additionally, the most powerful GPUs from Nvidia (and now AMD) are being upgraded on an annual cadence, so any delays in getting GPU clusters online shortens the time these chips are ‘useful’ before becoming outdated by the next generation. Think of it this way: hyperscalers and GPU providers do not want to spend tens of billions of dollars on AI hardware to then have it sit idle while waiting for power, as this translates directly into lost revenue and lost profits.
Tying into this, if a company like Microsoft can get new data centers connected to the grid and stood up faster than competitors such as Amazon, they can then meet higher demand, win new customers and gain market share. For example, AI startups simply seeking capacity to train models likely have lower cloud switching costs, meaning that these companies could easily and quickly shift workloads to whichever cloud provider can offer them the capacity they need the quickest.
Bitcoin Miners Provide a Path to Meet More Immediate Power Needs
While some companies like Meta are building 1GW+ clusters from scratch, for others in the neocloud arena that do not have access to tens of billions in cash, Bitcoin miners are recently attracting increased levels of interest. Miners help address immediate power needs with multiple gigawatts of grid-connected facilities that can quickly be converted from mining to AI GPUs. As TeraWulf’s executives put it, the “ability to scale quickly provides a meaningful advantage in today’s race to secure power and compute capacity.”
Consider some of those challenges that exist on the power side when building data centers from the ground up – short power supply in key markets like Virginia, grid connection requests extending four to seven years, or permitting delaying full power delivery to new infrastructure. Miners, on the other hand, streamline this process by offering access to readily available grid-connected power, cooling infrastructure, and low latency to major hubs.
Core Scientific, Applied Digital and Galaxy are expecting to bring their first AI-focused facilities online by Q4 2025 through 1H 2026, or four to ten months from now, substantially quicker than new construction. Transitioning existing facilities also offers rapid time to operation; for example, IREN stated that it seamlessly transitioned from mining ASICs to AI GPUs at its 50 MW Prince George facility in six to eight weeks, though this is likely at a very small scale considering the size of its GPU fleet.
For a company like CoreWeave or Fluidstack, signing long-term contracts for capacity with BTC miners and fronting the cash for capex allows them to build hyperscale clusters for a fraction of the cost and time. As CoreWeave’s CEO Michael Intrator put it, “Right now the key bottleneck really is the powered shell. When you think about that, that’s really the building, the cooling, the distribution of electricity.”
Instead of having to worry about the prolonged process of site selection, permitting, planning, and more before final power delivery, these neoclouds instead have near immediate access to the powered shell. While retrofitting for liquid cooling, networking and connectivity may still be necessary and pose some challenges, miners offer a fast time to operation and relatively cheaper capex costs for a hyperscale-size data center outfitted with tens to hundreds of thousands of GPUs.
Considering that most of the miners that have struck deals are rather cash-strapped, these GPU cloud firms behind the deals are putting up all (or the majority) of the capex required to retrofit existing facilities for high-end AI GPUs. Miners are highlighting the capex costs per MW for these facilities, and these costs, while varying quite wildly between miners, help emphasize the industry’s rather attractive positioning when factoring in quick time to power.
Core Scientific had offered one of the cheapest project costs, costing CoreWeave approximately $1.5 million per MW, though Core Scientific’s executives had stated in Q3 2024 that “they were able to significantly buy down their rates.”
IREN is touting the next lowest capex costs at ~$6-7 million per MW of IT load, for its Horizon 1 facility in Texas, which it says is catered to liquid-cooled NVIDIA Blackwell GPUs and provides ~6ms latency to Dallas. IREN says it expects the capex to be funded primarily by colocation customer prepayments and debt financing.
TeraWulf expects its capex per MW of critical IT load to be in the range of $8-10 million for its recent deal with Fluidstack, while offering <8ms latency to New York City and Boston and <2ms to Toronto.
Applied Digital and Galaxy are a bit on the higher end – both are anticipating capex of $11-$13 million per MW, with Galaxy recently securing $1.4 billion in project financing to aid development of its first 133MW phase with CoreWeave. However, Galaxy expects capex to move higher for its second 260 MW phase.
Compared to new construction costs per MW, miners can offer some capex savings, with savings becoming more attractive the lower capex costs go, such as in the case of IREN and TeraWulf. Cushman & Wakefield estimates construction costs per MW in the range of $9-15 million across key markets, averaging $11-13 million. This aligns with estimates from CBRE for $10-14 million per MW, though costs can reach $16-20 million per MW in certain cases (or higher).
While Applied Digital and Galaxy may not offer much of a discount relative to new construction, IREN and TeraWulf can offer more pronounced capex savings. Based on a $12 million per MW construction cost estimate, TeraWulf could offer up to 33% savings per MW and IREN up to 50% savings, translating into hundreds of millions to billions in savings at a 400-800 MW scale.
Time to Power Comparison
Theoretically speaking, miners with the quickest time to power should enjoy a two-fold advantage: quicker time to revenue recognition, and potentially better deal economics arising from the ability to meet customers’ demand faster.
For example, Core Scientific’s ability to bring 250MW of power online for CoreWeave’s AI compute needs supports why it was the first to be acquired, as no other miner could match that scale within the same timeframe.
There are nuances in delivery timelines and expectations that make it difficult to offer a direct quarter-by-quarter comparison, such as Galaxy only offering vague delivery comments for 1H or throughout the year. However, roughly speaking (and excluding Core Scientific), by the end of 2025, Applied Digital should lead with 100MW, yet this shifts by year-end 2026 with TeraWulf aiming to deliver more power.
By Q4 2025:
Applied Digital expects its first 100MW of power online.
TeraWulf expects 60MW of power online.
IREN could have 50-130MW of AI-dedicated power online, depending on how it retrofits its Prince George and Mackenzie facilities.
Galaxy does not expect to have capacity online.
By Q4 2026:
TeraWulf expects to have 420MW of capacity online as it progresses with quick expansion.
Applied Digital expects to have 250MW of capacity online.
Galaxy expects to have 133MW of capacity online.
IREN is aiming to energize its 1.4GW Sweetwater facility in early 2026, though there is no indication yet that it will be able to stand up fully operational infrastructure by year-end.
Long-Term Power Needs Far Outstrip Miner Capacity
Looking at the bigger picture, the contracted power that miners can provide will only meet a small portion of the projected demand growth over the next three to ten years, and are unlikely to be the sole solution to this structural power shortfall. As we had covered in our free newsletter, Nuclear Power Emerging as a Clean AI Data Center Energy Source, data center power demand is expected to grow at an accelerated 16% CAGR from 2023 to 2028 and beyond.
For example, Boston Consulting Group forecasts 45 GW of growth in global data center power demand in just three years, from 82 GW in 2025 to 127 GW by 2028.
In the US, data center demand was forecast to rise as much as 5x over the next decade. Deloitte estimated US data center power demand to triple from 2025 to 2030, from 41 GW to 120 GW, before rising further to 176 GW by 2035. In terms of power consumption, the DOE recently forecast data centers will consume 6.7% to 12% of total US power production by 2028, up from 4.4% in 2023.
Bitcoin miners can only meet a fraction of this growth, likely around several gigawatts in total. Yet their innate ability to deliver this power over the next 12 to 24 months, supporting up to hundreds of thousands of high-end GPUs in larger-scale facilities, is why miners are prime targets to meet hyperscalers and neoclouds’ immediate power needs.
Below, we discuss miners that have secured large-scale deals and/or progressing with building out GPU fleets for self-hosted AI cloud services. As it stands, CoreWeave has been the primary undertaker of major AI deals with miners, committing to over $35 billion including its acquisition of Core Scientific; though Fluidstack is making a splash with a deal worth up to $16 billion with TeraWulf.
Core Scientific Acquired by CoreWeave Following $10B+ Deal
CoreWeave made a statement to the industry with its acquisition of CoreScientific for $9 billion, a Bitcoin miner and key compute partner. The acquisition communicates that immediate power at scale is paramount. This stems from Core Scientific’s key advantage, as the only miner that will be able to bring 250MW online this calendar year, capable of hosting >100,000 GB200 chips.
Prior to the acquisition, CoreWeave had contracted 590MW of total capacity from Core Scientific as of February, worth $10.2 billion in cumulative revenue to the miner over the 12-year lease terms. Core Scientific stated in May that it was on track to deliver 250MW of billable capacity to CoreWeave by the end of 2025, with expectations for the full 590MW to be delivered by 2027.
CoreWeave says that with the acquisition, it will now own 1.3 GW of gross power across Core Scientific's national footprint (including BTC mining facilities), with an incremental 1 GW+ of potential gross power available for future expansion. The acquisition also adds $500 million of estimated fully ramped, annual run rate cost savings by eliminating CoreWeave’s $10 billion lease obligations to Core Scientific.
This combination of hundreds of MW of deliverable power by year end and substantial long-term cost savings from owning infrastructure outright versus leasing underscore why CoreWeave was quick to progress with the acquisition.
TeraWulf Signs up to $16B Deal with Fluidstack, Backed by Google
TeraWulf is no stranger to AI/HPC hosting, having signed a $1 billion, 72.5 MW deal with Core42 in December 2024, with dedicated GPU compute infrastructure coming online throughout 2025. However, its recent deal with Fluidstack represents one of the largest deals to date between an AI cloud firm and a Bitcoin miner.
TeraWulf had originally announced a $3.7 billion, 10-year AI hosting deal with AI cloud startup Fluidstack for 200+ MW capacity at its CB-3 and CB-4 buildings at its Lake Mariner data center in upstate New York.
Only a few days later, TeraWulf announced that Fluidstack was expanding its deal to include ~160MW at CB-5, bringing its total contracted IT load to 360MW and contracted revenue to $6.7 billion. Including potential lease extensions, the new deal could be worth up to $16 billion.
Perhaps more importantly, Google is backstopping $3.2 billion of Fluidstack’s lease obligations to support project financing, and has taken a 14% stake in the miner (up from a $1.8 billion backstop and 8% stake with the original deal).
TeraWulf is aiming for quick delivery of power to Fluidstack, with the first 40MW phase expected to come online in the first half of 2026 and all 200+MW delivered by year-end; additionally, operations are expected to commence for the 160MW tranche at CB-5 in 2H 2026. Multiple different OEM GPU equipment is expected to be deployed, likely GPUs from Nvidia and AMD, able to serve a variety of AI training and inference workloads.
Overall, Fluidstack’s deal represents just over 70% of the current available power at Lake Mariner of 500MW, though TeraWulf does have 250MW additional power pending regulatory approval for expansion. This would bring the facility’s total power potentially up to 750MW with its targeted upgrades, or allowing a second deal of similar size to be signed in the future.
TeraWulf also recently signed an 80-year ground lease with purchase option at Cayuga, securing its exclusive rights to develop 400MW of data center infrastructure “on a fully equipped site, with high-capacity transmission, industrial water intake and redundant fiber.” The company expects to bring the first 130MW online in 2027, while boosting its long-term power capacity to over 1GW.
Applied Digital a Secondary Benefactor of CoreWeave with $11B Deal
If CoreWeave’s acquisition of Core Scientific wasn’t enough, it also committed to leasing 400MW of capacity from Nvidia partner Applied Digital at its Ellendale, North Dakota facility, worth ~$11 billion over the 15-year terms. Ellendale (now referred to as Polaris Forge 1) has the potential to scale up to over 1GW capacity over the long run, though the 400MW represents the maximum current capacity.
Applied Digital expects the first 100 MW data center to be ready for service in Q4 2025, while the second 150 MW data center is expected to be ready in mid-2026. The third 150 MW facility is expected to be ready in 2027. Applied shared some details on the campus, saying that the campus “will feature high-density racks and direct-to-chip closed-loop liquid cooling and air cooling combo” as it entered a $150 million, 36-month convertible preferred equity financing to advance construction.
On August 18, Applied announced that it is expecting to break ground on its $3 billion, 280MW Polaris Forge 2 data center in Harwood, North Dakota. Applied is aiming to have initial capacity online in 2026 and the facility reaching full capacity by early 2027, a quick 16-20 month time to power. The company also claimed in 2024 to offer approximately 30% lower costs than AWS, Azure and GCP for cloud compute on Nvidia’s GPUs with short, 8-10 week lead times, a key advantage in the race to deliver compute.
Galaxy: Another CoreWeave Partner with ~$15B Deal
CoreWeave has struck another deal with digital asset platform and now data center infrastructure provider Galaxy Digital, committing to the entire 800 MW of approved capacity (~526MW critical IT load) at Galaxy’s Helios data center. With 2.7GW of power under load study, Helios has the potential to expand up to 3.5GW, which would make it one of the largest single data center facilities in the US and the world.
Galaxy stated that they anticipate average annual revenue of more than $1 billion over the 15-year term, based on committed contractual terms, internal capex estimates, and full capacity utilization. This estimate would place the deal value above $15B.
Galaxy is expected to deliver its first 133 MW phase of power to CoreWeave in the first half of 2026, followed by the next 260 MW phase throughout 2027 and a subsequent 133 MW phase throughout 2028.
To fund this first phase, Galaxy has secured $1.4 billion in project financing debt, providing the $350 million equity requirement for the funding. Management also stated in Q2 that its $480 million in cash proceeds from its May equity raise would go towards capex related to the Helios DC buildout. Overall, the combined phases are no small task, likely requiring close to $10 billion over the next few years, especially considering management stating Phase 2’s will likely be slightly higher than Phase 1 due to the size of the committed load.
Galaxy made it clear that for Phase 2, discussions for project financing are still “pretty preliminary,” though management expects that as they produce results with Phase 1 and generate returns/revenue, they will “earn the right to achieve larger financings at lower cost.” Simply getting the second phase financed is the company’s primary goal, considering the 16-20 month timeline to delivery.
IREN Building Out its Nvidia GPU Fleet, Targeting Deals
In March, IREN hit the pause button on its bitcoin mining expansion as it pivoted to focus more on AI and HPC, given the revenue potential stemming from its >2.9 GW of grid-connected power.
Unlike peers, IREN is primarily focusing on short-duration contracts, from on-demand use to three-year term lengths, while expanding its GPU fleet to drive growth in its self-hosted AI cloud business. Revenue for its AI Cloud Services surged 94% QoQ to $7 million in fiscal Q4, after rising 33% QoQ to $3.6 million in its fiscal Q3. The company laid out an aggressive $200-250 million annualized AI Cloud Services revenue target by December 2025, up 8-10x versus its current annualized run rate.
IREN is working to expand its GPU fleet, which is still extremely small considering its power pipeline as GPUs are not cheap at scale. IREN purchased 2,400 Blackwell GPUs in early July for ~$130 million including fit-out costs, comprised of 1,300 B200s and 1,100 B300s.
In late August, IREN doubled its fleet to ~8,500 GPUs with another purchase of 4,200 B200s for ~$193 million, while securing $102 million in funding for the July purchase. The company has already contracted out its first batch of 256 B200s to an undisclosed customer.
In its fiscal Q4 report, IREN also stated that it has secured $200 million in GPU financing, aiming to increase its GPU fleet to ~10,900, or an additional ~2,400 GPUs.
Given that a 50MW data center could be outfitted with ~25K GPUs, IREN is far from outfitting its own facilities with its current fleet, though it is somewhat capital constrained given its $564 million cash on hand.
The company says that it is “observing demand for multi-thousand air-cooled Blackwell GPUs,” and has ~47MW of capacity still available at its Prince George, British Columbia facility, capable of supporting ~20,000 Blackwell GPUs.
For its other AI data centers, IREN is targeting calendar Q4 2025 delivery at its Horizon 1 facility in Texas with up to 50 MW of IT load. IREN says that it has several customers undergoing due diligence and contractual negotiations with interest expanding beyond 50MW, though it has not announced any signed deals. The company is also eyeing a complete transformation for Horizon to reach the full 750MW power capacity, noting in fiscal Q4 that procurement is underway for a second 50MW.
IREN is looking to create an interconnected 2GW data center hub at its Sweetwater 1 and 2 facilities, with the 1.4GW Sweetwater 1 facility expected to be energized by April 2026 and the 0.6GW Sweetwater 2 facility expected to be energized in late 2027. This is a slight acceleration for Sweetwater 2 from early 2028. Together, Sweetwater could support 700K liquid-cooled Blackwell GPUs, in close proximity to Stargate’s Abilene data center.
Other Miners Considering AI Pivots
Riot Platforms and Hut 8 are two other miners that are pivoting towards AI hosting, though the two have yet to secure long-term contracts.
Riot is aiming to transition from Bitcoin mining to AI hosting when “economic and feasible,” and said last quarter that it is “actively progressing toward securing a lease with a high-quality tenant” at its Corsicana facility. As of January, Riot was evaluating using the remaining 600MW of power capacity at the facility for AI/HPC, with 400MW currently geared towards mining. Needham analysts are encouraged by Riot’s possible pivot, saying they “believe Riot’s Corsicana site is one of the most attractive HPC sites in our universe” with amplefiber connectivity for low latency AI inference. Needham believes Riot could be in advanced discussions with potential tenants by 2H 25 and sign a lease as early as Q1 2026.
Hut 8 has ~3.4MW of HPC capacity operational and ~670MW of mining capacity, and similar to IREN is leasing Nvidia GPUs in the cloud. Hut reported a $2.3 million increase in revenue from leasing ~1,000 H100 GPUs to an unnamed AI developer, which launched in September 2024. Hut 8 also just broke ground on a ~300MW data center in Louisiana, and is expected to invest ~$2.5 billion, while undisclosed future tenants are expected to contribute ~$10 billion in compute equipment. However, it is reported that Hut will likely need external financing or a partner for the project.
Earlier in 2025, Bitfarms announced it was mulling a shift to AI, and in early August, the miner announced a partnership with T5 Data Centers to advance the development of its Panther Creek facility in Pennsylvania. The two are expected to engage in pre-construction design planning and development approval processes, with Bitfarms also submitting its master site plan to Macquarie for future development.
Cipher is also considering a pivot, saying that it created a new strategic plan at its 150MW Black Pearl Phase II to bridge both AI compute and hydro-bitcoin mining, though in the long run it expects the site to be fully leased by AI/HPC tenants. Cipher added that it is seeing continuing HPC interest at its Barber Lake site.
AI/DC Deals are High-Margin, Highly Visible Revenue for BTC Miners
These AI hosting deals are very attractive for miners as they provide highly visible, high-margin revenue streams, a major operational shift from the prior business model with growth and earnings tied to Bitcoin’s price volatility, network difficulty and halving.
Applied Digital’s deal with CoreWeave has pricing set upfront with an annual escalator, with average annual revenue of ~$733 million based on the $11 billion, 15-year terms. Revenue is likely to start small and begin to ramp rapidly once full capacity is online. Applied is also targeting 88%, +/- 3% net operating income margins on the AI hosting revenue, or ~$645 million average annual net operating income for the duration of the deal.
TeraWulf’s expanded deal with Fluidstack will generate average annual revenue of $670 million at its current scope, though the full extension to $16 billion could provide significant revenue upside. TeraWulf is eyeing an 85% net operating income margin for the Fluidstack deal, or ~$570 million on average annually. This is at the low end of Applied Digital’s range, likely accounting for higher operating costs due to location (upstate New York vs North Dakota). Combined with the Core42 deal, TeraWulf has visibility into ~$770 million in average annual revenue, with the first revenue from Core42 now being recognized.
Galaxy is targeting 90% adjusted EBITDA margins on its AI hosting deal with CoreWeave, implying adjusted EBITDA of ~$900M+ on its average annual revenue estimate of more than $1 billion. Given energization times spanning into 2028 and a longer 15-year term structure, Galaxy’s initial revenue ramp may be more prolonged than peers.
IREN does not have a firm hosting deal, though it has touted a 97-98% hardware profit margin for its AI Cloud Services, or revenue minus electricity costs. This is more than 20 points above its Bitcoin hardware profit margin, highlighting why AI is more attractive than mining at scale. However, margin tailwinds are likely minimal in the near-term given AI Cloud Services contributes less than 3% of revenue.
Accelerated Revenue CAGR
While there are nuances in deal sizes and lengths, IREN, Applied Digital and TeraWulf are seeing accelerated forward revenue growth CAGRs as AI capacity soon comes online. These miners’ growth rates are much stronger than others such as Riot and MARA who have not jumped headfirst into AI hosting.
Applied Digital and TeraWulf are expected to see revenue increase at an 88-90% 2-year CAGR from 2025 to 2027, a significant acceleration from their respective historical 61% and 73% CAGRs from FY23 to FY25.
IREN is expected to see revenue grow at a 42% CAGR from FY25 to FY27, though this is a bit skewed as the company has benefitted from rapid mining hashrate expansion and rising Bitcoin prices over the past two quarters.
Compare this to Riot and MARA, with both expected to see FY25 to FY27 revenue growth at a 17-18% CAGR, decelerating sharply from the 55-60% level over the past two years. While revenue is coming off a higher base than say APLD or WULF, the difference in forward growth rates is notable for AI-engaged miners and these two who have not yet pivoted in full force.
Thin Balance Sheets Present Capital Raise Risk
Miners are rather cash-strapped, and while neoclouds and partners are fronting the cash for capex, capital raises and dilution are still a risk, considering IREN and TeraWulf both recently launched larger-scale convertible note offerings.
Here’s a quick snapshot into the health of IREN, TeraWulf, Applied Digital, and Galaxy’s cash versus debt, with the chart below showing how thin and lumpy cash balances are:
IREN reported cash and equivalents of $196 million in Q3, down from $455 million in the prior quarter. As of Q4, IREN reported $564 million in cash and equivalents, after closing an upsized $550 million convertible note offering in June, while debt is now at $963 million. This presents possible dilution risk in the high-teens, based on IREN’s $5 billion valuation.
Applied Digital reported cash and equivalents of $114 million, down from $254 million in the prior quarter. Applied has a deal with Macquarie for up to $5 billion in financing, including a $900 million initial investment at Ellendale and $4.1 billion on retainer to for future data center expansion. For any future builds, Macquarie would invest $2.25 million per MW and Applied would invest $0.75 million per MW.
TeraWulf reported cash and equivalents of $90 million, down from $220 million in the prior quarter. However, shortly after the Fluidstack deal, the company announced the full exercise of its $1 billion convertible note offering, or ~27% of its current market cap. Based on prior capital allocation projections, this would likely leave TeraWulf with ~$600-700 million in unallocated cash, for project cost overruns or other expansion needs.
Galaxy reported cash and stablecoins of $1.18 billion in Q2, including $691 million in cash and $489 million in stablecoins, approximately flat from the prior quarter. Notes and loans payable were $1.07 billion.
Galaxy President and CIO Christopher Ferraro offered some very important perspective on funding and capacity growth, and why capital is likely to be the limiting factor for miners’ current buildouts:
“There’s also a practical component, which is, these are very large-scale, long-term development projects that take a lot of capital. And so our ability to grow into the opportunity is wholly dependent on 2 things: one, us executing excellently; but then also two, growing and getting bigger as a company so that we can actually support the growth, meaning like it would be totally imprudent for us to now take on in parallel, for example, like another $10 billion build, because that requires a capital base and the attention and resources that we're just not built out for today.”
This matches our statements in our Core Scientific analysis from May, Core Scientific Q1: Expects 250MW of Billable Capacity to CoreWeave by Year-End, where we explained that if CoreWeave did not front the capex for the data centers, the “business model would not work as CORZ would struggle to raise the level of capital required to acquire more sites and modify the existing infrastructure.”
These comments that the current builds underway for CoreWeave and Fluidstack are likely to be the main focus of the miners over the next few years, especially considering the thin balance sheets, convertible note raises, and difficulty from CoreWeave to keep funding multiple different projects.
Customer Concentration Another Risk to Consider
One other risk to consider is customer concentration, given the fact that CoreWeave is the sole backer for a majority of the miners discussed here. TeraWulf has the benefit of Google backstopping Fluidstack’s obligations, offering early termination protection for the first six years.
Considering CoreWeave has made the move to acquire Core Scientific and has signed deals with Applied Digital and Galaxy, it may be more limited in its ability to fund future projects. It also means that miners signing away all or a majority of their power to CoreWeave find it hard to diversify revenue streams away, with Galaxy noting that the deal with CoreWeave “is going to take up the vast majority of our attention over the next few years” and prevent other hyperscaler engagements.
Also, if CoreWeave should pull away from a deal down the road, it could create a significant blow to revenue and earnings for miners it is currently engaged with. This is due to two factors: high-margin, high concentration of revenue CoreWeave’s deal will drive, and that there is little room for diversification as new capacity is expensive for miners to handle without major financing.
Technical Analysis
The risk associated with Bitcoin miners is present in the potential setups outlined below. As you will see, some have the potential for wild swings in either direction, which follows very messy and overlapping uptrend patterns. For this reason, we approach these charts only from the mindset of risk management. If we do take a position in any of these names, we do not view them as buy-and-hold vehicles, and all will come with relatively tight risk controls.
Galaxy Digital (GLXY)
Green – GLXY appears to be tracing a very large diagonal pattern. If we zoom into the current drop in GLXY, it appears to be a 4th wave, and needs one more swing higher to complete the larger pattern. The target for this swing is $34 – $43. As long as we hold $19, this setup remains valid.
Blue – Instead of getting one more swing higher, we should see two more. Once we reach $35 – $43, we’ll see another 3-wave drop and a final swing to $56 – $67. Once again, if we break below $19, then both of these scenarios are no longer valid, and a larger top will likely be in.
TeraWulf (WULF)
Blue- We have completed wave 1 in a very large diagonal, as well as wave 2. We are just now completing wave A of 3. This should be a double top that turn lower in 3 waves toward $5.25 – $3.65. The drop needs to be a 3-wave drop to confirm this count. Once this ends, we should see a 5-wave pattern turn higher. This would point toward $69 – $105 in a pretty direct path.
Green – If we instead keep pushing higher over $12.50, with volume and momentum expanding with price, then we could be in a more direct path higher. Instead of a large diagonal pattern, it would be a standard 5 wave pattern. Wave 1 of 3 would push toward $35 – $69.
Please note, while the pattern below allows for these counts, we still only have 3 waves up off the 2022 low. So, until we see either the green count get confirmed, or a 3-wave correction, risk remains high. Any drop below $4.20 will be the first warning. If we see a 5-wave drop break below this level, the risk will increase that something more bearish might be in play.
Applied Digital (APLD)
Green – APLD is tracing a very large 3 wave pattern, which best fits as a diagonal pattern. If we can see a breakout on heavy volume and expanding momentum over $17.25, it will confirm this count, which should see a continuation towards $23 – $29.
Blue – We fail to breakout over $17.25 and instead drop back into the $14.50 – $12.50 range. We’ll then break through the $11.35 region and head toward $9 in a larger 2nd wave.
Riot Digital (RIOT)
Blue – We are completing the B wave in a larger 2nd wave. We will fail under $14.10 – $15.35 and see a sharp, 5-wave drop back to $9 – $8. This will hold, as we set up for a larger 3rd wave breakout to new highs.
Green – We completed the 2nd wave, and it was shallow. We’ll see a strong breakout over $14.10 – $15.35 on expanding volume and momentum. the 3rd wave target is $27 – $31.
Both counts must hold $7.56 on any weakness, or they will get invalidated.
Iren Limited (IREN)
Green – Note how the most recent push higher is happening on less volume and momentum. This is the 5th wave, which can continue as high as $35. Once complete, this will end a large 3rd wave within a diagonal pattern. The target for the 4th wave is around $8. We should then see a large 5th wave to new highs.
Red – We only have 3 waves up off the 2022 low. This is not ideal, and until we see a 3 wave retrace, it is a risk that should not be ignored. If this is all we get, then we should see a large 5 wave drop develop that takes us through $8 and then $2.80. We would then be on our way to new all-time lows.
While both counts have IREN in a 5th wave, if we can see volume and momentum expand with price over $35, then something more bullish may be going on. If we see this then we will adjust accordingly.
Conclusion
Bitcoin miners are not able to solve the long-term power deficit that the industry is coming head-to-head with, but in the 12 to 36 month window, miners are uniquely positioned to meet hyperscale and neocloud power needs. AI hosting deals provide highly-visible, high-margin revenue over the next decade and beyond, a major operational shift for miners once reliant on volatile Bitcoin prices for growth.
The catch is that miners cannot finance these AI data center builds themselves, as they have thin balance sheets and larger debt loads. Instead, they are reliant on their backers such as CoreWeave, and in TeraWulf’s case, Fluidstack and Google, to front the cash for the projects and provide the necessary compute.
While risk does stem from the fact that CoreWeave is the sole backer for a majority of these AI hosting deals, limiting opportunities for revenue diversification and minimizing concentration risk, AI presents much stronger, higher-margin forward growth opportunities.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
In late 2022, Bitcoin fell into the $16,000 range amid the fallout from the FTX scandal. At the time, credible institutional buy calls were nowhere to be found, as Wall Street largely stayed on the sidelines.
Fast forward to today—Bitcoin now trades more than 600% above its 2022 lows, and a flood of institutional optimism has now entered the news cycle. Analysts and money managers are now calling for another doubling in price before year-end.
Market sentiment has always been a potent force. History shows that the most enthusiastic bullish narratives tend to emerge when prices are stretched, while more cautious takes often surface near market bottoms ,and this cycle is no different.
Throughout Bitcoin’s history, the I/O Fund has continued to distinguish itself with timely, accurate Bitcoin analysis dating back to 2019. While others chased the 2021 frenzy with $200,000 to $500,000 price targets, we remained disciplined—scaling back crypto exposure by half to secure profits. Later, when Bitcoin revisited the $16,000 region, we issued a Strong Buy Alert to our free subscribers, which was subsequently picked up by Tier 1 media.
Our track record is not the product of hype but of a systematic framework—one built on technical analysis, on-chain metrics, and a close watch on global liquidity conditions. Today, this very process is flashing warning signs, which has us, once again, going against the popular narratives, as we have begun the process of taking gains in Bitcoin and reducing risk.
Because of the warnings that our system is picking up on, the I/O Fund partnered with WealthUmbrellato release a free one-hour webinar outlining these risks as well as what we want to see to confirm a potential path higher from here. The presentation details the forces that move Bitcoin, along with the risk management techniques that enabled us to sidestep the 2021 top and re-enter near the 2022 low.
Below are a few highlights from the presentation:
In the below clip, Knox Ridley highlights the unique nature of Bitcoin’s price movements and how the I/O Fund manages risk in a market where narrative-based investing does not work. Since Bitcoin lacks traditional fundamentals, we rely on an original process designed specifically for crypto — one that has allowed us to repeatedly identify both tops and bottoms.
Though classic fundamental analysis does not apply to Bitcoin, there is a unique set of data points that can be analyzed to help determine the health of Bitcoins’ trend. This type of analysis is called on-chain analysis, which is explained in the below Clip, by Vincent Duchaine of WealthUmbrella.
Sign up below to Access the full video, which will offer:
Interactive charting of Bitcoin.
The price levels that must hold to confirm another leg higher in Bitcoin.
What our game plan is and how far Bitcoin will drop if this level breaks.
What on-chain analysis is telling us about the health of Bitcoin.
The probable price target that WealthUmbrella is projecting before seeing a cyclical top.
If you are a crypto investor who would like know our plans for participating in any remaining upside Bitcoin has to offer, and how we plan to further minimize the downside, we encourage you to attend one of our weekly webinars. Every Thursday at 4:30 EST, portfolio manager, Knox Ridley, goes through various broad market charts, as well as discusses our game plan on various stocks and crypto currencies that we currently own or want to own. Learn more here
Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own BTC at the time of writing and may own stocks pictured in the charts.
