KBW is taking a more cautious stance towards the crypto mining sector. Wall Street investment banks include BitFarms (BITF), BitDeer (BTDR), hive Digital (hive) From outperformance to market performance.
In a series of notes to investors issued on Monday, the bank suggested that while the industry’s pivot to high-performance computing (HPC) and AI hosting is attractive, the path to profitability comes with execution risks and long lead times.
Facing a record-low margin environment after the 2024 halving, Bitcoin miners are rebranding as digital infrastructure providers to grab a piece of the AI gold rush. By converting Warmshell, already a facility with high-density power and cooling, into an AI-enabled data center, these companies hope to trade volatile mining rewards for stable long-term corporate contracts.
However, this transition is not a simple diversion. HPC’s massive capital requirements and strict uptime standards create a high-stakes divide between those who can successfully complete a retrofit and those who remain left with stranded assets.
Bitfarms: Sharon’s long wait time
Analyst Stephen Glagola downgraded BitFarms’ market performance, noting that while CEO Ben Gagnon has a solid vision, the market has already priced in the potential of a 120-megawatt (MW) site in Sharon, Pennsylvania.
Despite raising BitFarms’ price target to $3.00 from $2.50, the analyst doesn’t expect a formal lease agreement to occur until the second half of 2026. He also expressed skepticism about BitFarms’ potential for AI cloud entry in Washington, highlighting concerns about rising leverage.
The stock price was unchanged in early trading.
Bitdeer: scale and uncertainty
Bitdeer’s downgrade was accompanied by a significant reduction in its price target, dropping from $26.50 to $14. While KBW acknowledged that Bitdeer is on track to become a major public miner by 2026 through its vertically integrated Sealminer technology, it cautioned that the company’s increasing focus on AI cloud further heightens uncertainty.
The analyst cited the business’ current small size, concentrated shareholder control and “related party exposure” as key reasons for moving to the sidelines.
The stock price rose slightly to $13.91.
hive: Lack of “durable edges”
hive Digital lowered its price target from $11.00 to $3.50 as Glagora questioned the sustainability of its AI cloud strategy. Analysts pointed out that: hiveis in a “suboptimal position” compared to its pure data center competitors due to its reliance on partner channels and capital funding.
Additionally, KBW was flagged hive‘s pre-tax ROIC is negative, suggesting that the company is expanding its mining hashrate without generating sufficient operating profit in an environment of suppressed hash prices.
hive At the time of publication, the stock was up 0.3% at $3.04.
Across all three names, the investment bank’s message was consistent. The transition from miner to data center operator is a capital-intensive journey that may require more dilution and patience than investors currently expect.
read more: Lower hashrate and higher profitability will boost Bitcoin miners in early 2026: JP Morgan
