Investment bank Keefe, Bruyette & Woods (KBW) downgraded bitcoin miners Bitfarms (NASDAQ: BITF), Bitdeer (NASDAQ: BTDR), and HIVE Digital (NASDAQ: HIVE), citing execution risks with their respective AI expansions.
Analyst Stephen Glagola downrated each company from “outperform” to “market perform” and noted that each faces uncertain timelines for their expansions to AI/HPC.
KBW cautioned that, while the expansion to AI hosting is a logical evolution for firms facing record-low bitcoin mining margins, the move is capital-intensive and fraught with long lead times.
Bitfarms saw its rating cut to market perform, though KBW raised its price target to $3.00 from $2.50. The bank acknowledged the potential of the miner’s 120-megawatt site in Sharon, Pennsylvania, but stated that a formal leasing agreement is unlikely until the second half of 2026. Glagola also expressed skepticism regarding the company’s entry into the AI cloud market in Washington state.
Bitdeer received a downgrade and a sharp price target reduction to $14.00 from $26.50. KBW noted the company’s vertical integration through its Sealminer ASICs but flagged concerns over the small scale of its current AI operations. The note cited concentrated shareholder control and “related-party exposure” as additional reasons for the cautious stance.
HIVE Digital faced the steepest price target adjustment, dropping to $3.50 from $11.00. The analyst questioned the durability of the company’s AI strategy, noting that its reliance on partner channels and equipment financing leaves it “sub-optimally positioned” compared to pure-play competitors. KBW also pointed to a negative pre-tax return on invested capital as the company expands hashrate in a suppressed revenue environment.
The downgrades come as Bitcoin miners struggle to maintain profitability following the 2024 halving event. Many firms are attempting to convert “warm shells”, facilities with power and cooling but no computing equipment, into enterprise-grade data centers. However, KBW warned that the divide is widening between miners capable of this retrofit and those likely to be left with stranded assets.
Investors have largely priced in the AI transition, but the bank believes the path to monetization will require more patience and potential share dilution than the market anticipates.
