Top crypto stocks like Galaxy Digital (GLXY), Terawulf (WULF), and IREN (IREN) are soaring this year and beating the crypto market by far amid a pivot towards the booming artificial intelligence (AI) industry.
WULF, GLXY, and IREN Stocks Have Soared
WULF stock price was trading at $14 on Friday, up by 575% from its lowest level this year, giving it a market capitalization of over $5.68 billion.
Similarly, GLXY stock price was trading at $37.78, up by 350% from the YTD low, while IREN stock has jumped by over 1,000%, giving it a valuation of over $16 billion.
As a result, the Grayscale Bitcoin Miners ETF (MNRS) and the Valkyrie Bitcoin Miners ETF (WGMI) stocks have more than 120% this year, while the Bitcoin price has jumped by just 15%.
These stocks are soaring despite their low earnings and the soaring Bitcoin mining difficulty. Data shows that Bitcoin’s mining difficulty has jumped to a record high, while the hash rate has spiked to 12 billion TH/s.
Bitcoin’s mining difficulty will likely continue rising in the coming years because of halving. Halving is a situation where the block reward for mining a coin is cut in half.
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Pivot to AI Colocation Services
These stocks have jumped because of their pivot to the booming artificial intelligence industry. They are doing this by using their large data centers to offer co-location services.
Most notably, these companies are copying other firms that have pivoted from Bitcoin mining to AI colocation services. CoreWeave, which was one of the first companies to do so and is now backed by Nvidia, has achieved a market cap of $70 billion.
Most notably, Core Scientific, a Bitcoin miner that almost went bankrupt recently, was recently acquired by CoreWeave in a $9 billion deal.
These companies expect their AI growth to accelerate in the coming months. Galaxy Digital has secured CoreWeave as a client and will start making money mid-next year.
IREN, on the other hand, recently raised $1 billion through a convertible notes offering to boost its AI business. It recently doubled its GPUs to 23k and expects to make $500 million in ARR in 2026.
These companies have also surged as colocation companies received large orders from hyperscalers.
For example, Nebius recently announced a $19 billion order from Microsoft, while CoreWeave has received orders from OpenAI, Meta Platforms, and even Nvidia.
As such, with AI spending set to rise, analysts expect that demand for colocation companies soaring.
Still, the risk is that the collocation industry is capital-intensive, with CoreWeave capital expenditure expected to be over $25 billion this year. This means that the companies will likely raise money and dilute existing investors.
The other risk is that these companies are highly overvalued and overbought. As a result, there is a possibility that they will pull back a bit in the coming weeks or months.
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