Bull Case for Galaxy Digital (GLXY) is AI Data Center Hindi BTC Mining: Research Firm
When the CEO of Galaxy Digital (GLXY) Mike Novogratz Buy Argos’ Helios Data Center in late 2022At the depths of the winter of the post-ftx crypto, the company thought they were bailing a desperate Bitcoin miner (BTC) on the brink of losses.
However, it was before Chatgpt became the main. Novogratz and Co. Has no idea that this data center will be a strategic possession as the growing artificial intelligence (AI) industry’s Clapurs for more data center space, thanks to the explosive growth of large language models (LLMs).
As analysts from Rittenhouse Research outlined in a new noteGalaxy’s Lucky Find, which motivates the company’s move outside of BTC mining, may now be the most common -useful crypto pivot, as they make the case that infrastructure used in digital gold mine is better used to process AI algorithms, and companies move away from BTC AI infrastructure is set to be the next growth stocks.
Analysts from the Rittenhouse argue that AI data centers represent a significantly more useful business model than BTC mining as they form a stable, long-term cash flow with minimal continued capital expenditure, compared to the volatility and intensity of Bitcoin mining capital.
BTC mining revenues naturally decrease by approximately 50% every four years due to Scheduled halvinings. Effectively, playing for a miner is a lasting bull on the price of BTC and the ability for semiconductor fabs and designers to build chips that continue to be better, and, for an investor, that is many variables.
In contrast, AI data centers such as the Galaxy Helios facility earn a consistent, high margin income through long-term, triple net leases to Hyperscaler tenants (a large scale cloud computing provider), without the need for continuous investment in mining equipment.
“The Galaxy stumbles at Helios by virtue of good luck,” Rittenhouse wrote in their note. While competitors such as riot platforms and cipher mining have been publicly tried to “re -writing history,” retroactively suggesting their business is always wider than BTC mining, analysts say, “In fact, these miners have zero aspiring to do anything besides the BTC mine until the chatgpt is launched.”
A broader industry shift?
The Galaxy move reflects a wider trend as BTC miners attempt to pivot towards AI and Cloud Computing.
However, analysts emphasize the significant advantage of Galaxy, which derived from its superior balance sheet ($ 1.8 billion of net cash and investment), successful implementation records, and credibility established by coreweave rent.
While some have raised Coreweave’s creditwortiness concerns, causing the Galaxy to share a significant discount, Rittenhouse analysts say that these fears are significant overblown, featuring the extraordinary revenue of the coreweave from the long-term contracts that provide 96% of its profits institution.
Analysts emphasize that the coreweave debt is carefully outlined by delayed term loans, which are used specifically to supply infrastructure that is directly linked to secure customer agreements, which noticeably reduces default risk.
Rittenhouse also mentioned that the Galaxy had completely gone to AI, and now there is no exposure to mining.
“The Galaxy has completely emerged in all Bitcoin mining activities to focus only AI Data Center ambitions, sending a positive signal to the Hyperscaler’s potential tenants,” the analysts wrote.
As Rittenhouse writes, CEO of CIPHER MINING Tyler Page recently identified deadly face -to -face miners as approaching AI’s main customers.
“It has not been lost to us that if we are talking to a counterpart with a $ 1 trillion market cap … A drawback for Bitcoin miners has said the major counterparts, ‘Wow, that is a great obligation for you to backstop for an important investment for us,'” Page said in the company’s Q1 2025 revenue call.
Galaxy has no problem. With this helios deal in the area and Novogratz’s company that is completely out of mining, Galaxy’s accidental pivot can be the best strategic crypto transition over the years – if Rittenhouse’s thesis is correct.
