Bitcoin mining companies that have expanded into artificial intelligence infrastructure saw their shares drop by an average of about 35% in October, according to investment manager VanEck. The firm believes the selloff was excessive and that market fears have pushed valuations below what existing business fundamentals would justify.
AI Financing Concerns Trigger Broad Selling
VanEck attributes the decline primarily to growing investor anxiety over the cost of financing AI infrastructure projects. These concerns spread beyond GPU rental businesses to bitcoin miners that supply electricity and facilities for AI workloads. Broader economic uncertainty, including a hotter-than-expected US consumer price index reading for September and worries about the November midterm elections, also weighed on the sector.
However, VanEck argues that investors treated companies with different business models as though they faced identical financial risks. Bitcoin miners transitioning into AI infrastructure do not necessarily carry the same exposure as companies that primarily finance and rent expensive GPU equipment.
Electricity Capacity as a Competitive Edge
A central part of VanEck’s bullish case is the growing scarcity of electricity capacity suitable for large-scale AI computing. Securing new grid connections can take considerable time, creating an infrastructure bottleneck. Bitcoin mining companies may already possess an important advantage because they have spent years developing facilities, securing energy agreements, and establishing connections to power networks.
VanEck argues that available power, rather than demand for computing services, represents the more significant constraint on AI infrastructure expansion.
No Lease Cancellations Reported
The investment manager also noted that no signed lease agreements were cancelled during the October selloff. This suggests that concerns about financing have not yet translated into a widespread breakdown of existing commercial agreements.
Risks Remain
VanEck maintains that the October correction may have created an attractive entry point for investors willing to look beyond short-term market sentiment. The firm’s assessment is based on existing lease agreements, limited electricity capacity, delays in grid connections, and the potential for long-term contracted revenue.
Still, the outlook is not without risks. Companies must secure sufficient financing, complete infrastructure projects, and meet the operational requirements of their AI customers. Whether the sector can recover will largely depend on how successfully these companies convert their existing power infrastructure into sustainable AI-related revenue.
