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Morgan Stanley Report Highlights Bitcoin Miners as Catalysts for Data Center Growth

Morgan Stanley Report Highlights Bitcoin Miners as Catalysts for Data Center Growth

Apr 21, 2024
Bitcoin Mining

Morgan Stanley Report Highlights Bitcoin Miners as Catalysts for Data Center Growth

According to recent research by financial services firm Morgan Stanley, Bitcoin (BTC) miners might play a crucial role in expediting the establishment of new data centers. The study points out that due to their access to significant energy resources, BTC miners are trading at a notable discount when compared to the intrinsic value of the power they control. This revelation has implications for the growth of data centers, especially in light of grid constraints faced in the US and Europe.

Tech entrepreneur Mike Alfred shared Morgan Stanley's research findings on Twitter, shedding light on several impactful aspects:

  • Grid constraints in the US and Europe pose challenges to data center expansion due to the lengthy grid interconnection process necessary for new facilities.
  • Bitcoin mining sites hold a time advantage for the establishment of new data centers, given their existing large power capacities.
  • A proprietary Crypto-DC conversion model by Morgan Stanley indicates a significant opportunity for value creation by converting Bitcoin mining sites into data centers.
  • Bitcoin miners' power consumption is at around 19.6 gigawatts (GW), and though not all are suitable for conversion, the potential capacity they represent is substantial, especially against the forecasted 16 GW growth in data center capacity by 2025.

Bitcoin analyst Tuur Demeester further expanded on the potential of bitcoin mining's impact on energy economics by comparing the significance of electricity in the modern era to that of petroleum following the invention of the combustion engine.

Morgan Stanley's report includes a chart that showcases the value per Watt (W) of new data center capacity in relation to the "time to power" advantage offered by converting a digital asset mining facility. The values shown are significantly high, ranging from about $5/W for a 2-year advantage to over $12/W for a 5-year advantage. These figures starkly contrast with the current enterprise value of mining stocks, which trade between $1-4/W, with the median of the top 21 publicly traded Bitcoin miners at less than $2 and the top 5 just above $3.

Morgan Stanley's research emphasizes the potential for Bitcoin miners to revolutionize the data center industry by utilizing their established power infrastructure. This can provide a competitive edge in the timely deployment of new data centers, especially in regions where grid limitations are a concern. The prospective conversion of Bitcoin mining sites to data centers positions miners as significant players in the future of the energy and tech industries.

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