A recent analysis by Compass Point suggests that the valuation metrics for Bitcoin mining companies are undergoing a significant transformation, with long-term artificial intelligence (AI) data center contracts now serving as the primary driver, rather than traditional cryptocurrency mining operations. Analysts Michael Donovan and Ed Engel contend that the market is currently underestimating the value of signed AI infrastructure leases held by companies like Cipher Mining and TeraWulf, leading to their shares trading below their intrinsic contract value.
The shift highlights a strategic pivot within the digital asset mining sector, as companies leverage their existing power infrastructure and land holdings to cater to the booming demand for high-performance computing (HPC) capacity required by AI development. Donovan and Engel have introduced a valuation framework that separates the guaranteed revenue from long-term AI leases from the more volatile earnings tied to Bitcoin mining. They advocate for valuing these companies more akin to real estate landlords generating stable rental income, rather than solely as Bitcoin miners whose profitability fluctuates with cryptocurrency prices.
Cipher Mining, for instance, has made substantial inroads into the AI infrastructure market. In September 2025, the company announced a significant 10-year hosting agreement with Fluidstack, an AI cloud platform, valued at approximately $3 billion. This deal commits Cipher to deliver 168 megawatts (MW) of HPC power by September 2026. Notably, Google has financially backed $1.4 billion of Fluidstack's obligations under this contract and acquired a 5.4% equity stake in Cipher Mining, underscoring the strategic importance of this partnership. Furthermore, Cipher Digital, as it is now sometimes referred to, has secured a 15-year data center campus lease with an investment-grade hyperscale tenant, reportedly Amazon Web Services (AWS), valued at around $5.5 billion. As of early July 2026, Cipher Digital boasts an impressive $11.4 billion in contracted lease revenue across three data centers.
Similarly, TeraWulf Inc. has aggressively pursued AI hosting opportunities. In August 2025, TeraWulf signed 10-year AI hosting agreements with Fluidstack to deliver over 200 MW of IT load at its Lake Mariner data center, representing approximately $3.7 billion in contracted revenue. This agreement also saw Google back $1.8 billion of Fluidstack's lease obligations and receive warrants for an approximately 8% pro forma equity ownership stake in TeraWulf. More recently, in a landmark announcement on July 6, 2026, TeraWulf revealed a 20-year lease agreement with AI company Anthropic for its purpose-built AI infrastructure campus at the Justified Data site in Hawesville, Kentucky. This monumental lease is projected to generate approximately $19 billion in contracted revenue over its initial term. Initial capacity from this Anthropic deal is expected to come online in the second half of 2027, with the campus reaching its full 401 MW capacity by early 2028.
The Compass Point report highlights that despite these multi-billion dollar, long-term contracts, the market is assigning minimal, if any, value to the additional AI capacity that these companies have yet to lease. This suggests a significant disconnect between the companies' enterprise values and their secured future revenue streams. Industry analysts now estimate that AI-related services could account for approximately 70% of public Bitcoin miners' revenue by the end of 2026, a substantial increase from around 30% earlier this year, indicating a rapid reorientation of business models.
This strategic pivot by Bitcoin miners into AI data centers represents a crucial development for the DePIN (Decentralized Physical Infrastructure Networks) sector, showcasing how existing physical infrastructure can be repurposed and scaled for new, high-demand computational workloads. As the demand for AI compute continues to surge, companies like Cipher Mining and TeraWulf, with their established power infrastructure and growing portfolio of AI contracts, are positioning themselves as key players in the evolving digital infrastructure landscape, potentially offering significant long-term value that current market valuations may not yet fully reflect.
Original announcement: TeraWulf Inc.