KBW is taking a more cautious stance on the cryptocurrency mining sector. The Wall Street investment bank downgraded Bitfarms (BITF), Bitdeer (BTDR), and HIVE Digital (HIVE) from outperform to market perform.
In a series of investor notes released Monday, the bank signaled that while the industry’s transition to high-performance computing (HPC) and AI hosting is compelling, the path to monetization is fraught with challenges and long lead times.
Facing a record margin environment after the 2024 halving, Bitcoin miners are rebranding themselves as digital infrastructure providers to capture a share of the AI gold rush. By converting hot shells, facilities already equipped with high-density power and cooling, into AI-ready data centers, these companies hope to trade volatile mining rewards for stable, long-term enterprise contracts.
However, the transition is not a simple pivot; HPC’s massive capital requirements and rigorous availability standards create a high-stakes divide between those who can successfully modernize and those who hold stranded assets.
Bitfarms: Sharon’s long wait
Analyst Stephen Glagola downgraded Bitfarms to Market Performer, noting that while CEO Ben Gagnon has a strong vision, the market has already priced in the potential of its 120 megawatt (MW) site in Sharon, Pennsylvania.
Despite raising Bitfarms’ price target from $2.50 to $3.00, the analyst does not expect a formal lease agreement to materialize until the second half of 2026. Additionally, he expressed skepticism about Bitfarms’ potential entry into cloud AI in Washington and highlighted concerns about increasing leverage.
Shares were unchanged at the start of the session.
Bitdeer: scale and uncertainty
Bitdeer’s downgrade was accompanied by a significant drop in the price target from $26.50 to $14. Although KBW acknowledges that Bitdeer is on track to become a leading public miner by 2026 thanks to its vertically integrated Sealminer technology, it cautioned that the company’s growing 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 to step aside.
The stock was slightly higher at $13.91.
HIVE: Lack of a “sustainable advantage”
HIVE Digital had its price target cut from $11.00 to $3.50 as Glagola questions the sustainability of its AI cloud strategy. The analyst noted that HIVE’s reliance on partner channels and equipment financing leaves it “in a suboptimal position” compared to purely data center competitors.
Additionally, KBW reported HIVE’s negative pre-tax ROI, suggesting that the company is increasing its mining hashrate without generating sufficient operating returns in a suppressed hash price environment.
HIVE was up 0.3% at $3.04 at press time.
Whatever the three names, the investment bank’s message was uniform: The transition from miner to data center operator is a capital-intensive journey that may require more dilution and patience than investors currently anticipate.
Learn more: Early 2026, tailwind for Bitcoin miners as hashrate falls and profitability improves: JPMorgan
