KBW takes a more cautious stance on the crypto mining sector. The Wall Street investment bank downgraded Bitfarms (BITF), Bitdeer (BTDR) and HIVE Digital (HIVE) from outperform.
In a series of notes to investors published on Monday, the bank signaled that while the industry’s pivot towards high-performance computing (HPC) and AI hosting is compelling, the road to monetization is fraught with execution risks and long lead times.
Faced with a record low margin environment after the 2024 halving, bitcoin miners are rebranding as digital infrastructure providers to capture some of the AI gold rush. By converting hot shells, facilities already equipped with high-density power and cooling, into AI-ready data centers, these firms hope to trade volatile mining rewards for stable, long-term corporate contracts.
But the transition is not a simple turning point; HPC’s massive capital requirements and strict uptime standards force a divide between those who can successfully retool and those who have stranded assets.
Bitfarms: The long wait for Sharon
Analyst Stephen Glagola downgraded Bitfarms to market perform, noting that while CEO Ben Gagnon has a solid vision, the market has already priced in the potential of its 120 megawatt (MW) Sharon, Pennsylvania, site.
Despite raising Bitfarms’ price target to $3.00 from $2.50, the analyst doesn’t expect a formal lease to materialize until the second half of 2026. He also expressed skepticism about Bitfarms’ potential AI cloud entry in Washington, highlighting concerns over rising leverage.
Shares were unchanged in early trading.
Bitdeer: scale vs. uncertainty
Bitdeer’s downgrade was accompanied by a significant price target cut, falling to $14 from $26.50. While KBW acknowledged that Bitdeer is on track to become a leading public miner by 2026 through its vertically integrated Sealminer technology, it warned that the company’s increasing focus on cloud AI adds layers of uncertainty.
The analyst cited the company’s current small scale, concentrated shareholder control and “related party exposure” as key reasons for stepping aside.
The stock was marginally higher at $13.91.
HIVE: Lacks a “durable edge”
HIVE Digital saw its price target cut to $3.50 from $11.00 as Glagola questioned the sustainability of its AI cloud strategy. The analyst noted that HIVE’s reliance on partner channels and equipment financing leaves it “suboptimally positioned” compared to pure data center competitors.
In addition, KBW marked HIVE’s negative pre-tax ROIC, suggesting that the company is scaling its mining hash rate without generating sufficient operating returns in a suppressed hash price environment.
HIVE was 0.3% higher at $3.04 at press time.
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: Early 2026 tailwind for bitcoin miners as hashrate drops, profitability improves: JPMorgan
