The CoinShares Bitcoin Mining ETF (WGMI ) is one of the premier ETFs for investors seeking a broad basket of cryptocurrency miners. It’s tapping into the artificial intelligence (AI) infrastructure craze, a potential boon for investors at a time when Wall Street is increasingly bullish on companies committing to the crypto mining-to-AI transition.
The actively managed WGMI rallied Thursday, extending its one-month gain to north of 29% after Jefferies waxed bullish on several of the ETF’s largest holdings as the investment bank initiated coverage of Cipher Digital (CIFR), TeraWulf (WULF), Hut 8 (HUT), Riot (RIOT) and Core Scientific (CORZ). Jefferies placed “buy” ratings on a quartet of those names while placing a “neutral” grade on RIOT.
“One of the largest bottlenecks is interconnected power, which is where these developers have a head start, as they are repurposing power sourced for BTC mining to pivot toward AI data center development,” observed analyst Jonathan Petersen.
WGMI Holdings Making the Right Moves
There was a time when bitcoin mining, the original core competency of many WGMI holdings, was a lucrative business. However, price volatility, rising energy costs and increased mining difficulty have combined to make a sole focus on mining the largest digital currency a less attractive business model.
Fortunately for shareholders, some WGMI member firms presciently evolved their business models to participate in the AI boom. Initially, that evolution started as a diversifier to crypto mining, but it has since rapidly evolved to result in some WGMI member firms becoming pure play, or close to it, AI equities. Importantly, these corporations have the expertise and skills needed to bring credibility to their respective AI transitions.
“These companies are converting large power footprints (originally secured for BTC mining) into AI data center capacity. While neoclouds like CRWV were early partners, many have since signed deals with IG [Investment Grade]-rated hyperscalers or secured parent guarantees. We see material upside on leasing and development execution. Buy: CIFR, HUT, & WULF; Hold: RIOT,” adds Petersen.
There are some indications that WGMI’s AI-related upside may still be in its early innings, including the massive power and computing demands of hyperscalers.
“The analysts said that these companies have access to the scarcest input in today’s AI data center market: deliverable power. AI data centers are materially more power-dense than legacy cloud infrastructure, and as hyperscalers race to train and deploy models, time to delivery has become the binding constraint,” according to Seeking Alpha.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
