Bitcoin may be falling in value, but the stocks of two leading cryptocurrencies could soon more than double, according to Morgan Stanley. The investment firm initiated coverage of Bitcoin miners Cipher Mining and Terrawolf in a note to clients on Sunday, giving the stocks an “overweight” rating. Analysts have a price target of $38 for Cipher, suggesting an upside of 158%, while analysts have a price target of $37 for TeraWulf, suggesting an upside of 159%. “For both companies, this potential for growth from Bitcoin to (data centers) is a key driver of upside for their respective stocks,” said Morgan Stanley analysts led by Stephen Byrd. Systematic shortages in AI computing supplies are driving demand for so-called “Time to Power” solutions, or technologies that minimize deployment and maximize uptime, analysts said. It added that recent capital spending updates from hyperscalers suggest that demand and budgets for compute and power are also increasing. As a result, hyperscalers are likely to pay a higher premium to take advantage of time-to-power solutions that leverage former Bitcoin miners who have converted their mining operations into data centers, analysts noted. Existing data center developers in the U.S. and Europe are already facing significant power access bottlenecks, their memo said. “Even if DC developers secure power access for all major Bitcoin companies in the US and Europe, there will still be a lack of power access in our view,” the analysts said. Bitcoin is in tatters Cipher and TeraWulf are repurposing their Bitcoin mining operations to serve AI players during the crypto market downturn. Bitcoin last traded at $70,385.89, down more than 40% from its all-time high of just over $126,000 in October last year. It has rebounded after falling to around $60,000 late last week, its lowest level in about 16 months. Over the past week, Cipher stock is up about 6%, while TeraWulf is up 21%. During the same period, Bitcoin fell by about 10%. According to Morgan Stanley, these strategies are not foolproof. Analysts said trust issues could hamper efforts to increase data center capacity to accommodate AI clients, while large language models could hit scaling walls. Additionally, he said the process of converting Bitcoin mining warehouses into data centers could result in cost overruns.
