Companies like CoreWeave use large amounts of debt to finance their expensive AI chips. The increase in interest costs has raised concerns about these companies’ creditworthiness and long-term lease payments. Shares of energy capacity providers like Hut 8 and Core Scientific were also affected by the same sell-off.
VanEck, however, points out that the risks of the two business models are not entirely the same. Companies transitioning from Bitcoin mining to data center infrastructure are offering their existing electricity connections, land, and energy contracts to AI companies. According to the firm, the biggest physical obstacle to AI computing capacity may be finding sufficient electricity connections rather than the demand for chips.
The extended time required for new connections to the power grid could create a scarcity premium for the energy capacity that miners already control. VanEck also emphasized that despite credit concerns, large data center lease agreements that had already been signed were not canceled.
According to the firm, the cash flow potential from long-term contracts does not fully align with the current valuations of the shares. However, this assessment is VanEck’s investment view and does not necessarily mean that prices will recover.
Payment difficulties among AI clients, delayed project completion, high debt costs, and energy regulations continue to pose significant risks for mining companies.
*This is not investment advice.