Morgan Stanley’s latest research indicates that Bitcoin miners could be the quickest route to establishing new data centers due to their access to substantial power resources. According to their models, BTC miners currently trade at a considerable discount compared to the intrinsic value of the power they secure.
Energy Access: Report’s Key Insights
Renowned tech entrepreneur, Mike Alfred, shared the research on Twitter, highlighting several key points regarding the growth of data centers and the role of bitcoin miners:
- Grid constraints in the US and Europe: The expansion of data centers might face hurdles due to power grid limitations, particularly in the United States and Europe. The primary issue is the time required for grid interconnection, which can hamper the rapid deployment of new facilities.
- Time advantage with bitcoin mining sites: Bitcoin mining facilities possess a significant advantage in terms of time for new data center projects. These sites already have access to substantial power capacities, providing a head start compared to traditional data center setups.
- Opportunity for conversion: Morgan Stanley’s proprietary Crypto-DC conversion model reveals a significant opportunity for value creation through the conversion of Bitcoin mining sites into data centers. This model quantifies the benefits of conversion, highlighting the potential for substantial value creation.
- Power consumption by bitcoin miners: Currently, bitcoin miners utilize approximately 19.6 gigawatts (GW) of power capacity. While only a minority of these miners may be suitable for data center conversion, the potential capacity is still significant, especially when compared to the projected 16 GW growth in data center capacity by 2025.
Bitcoin analyst Tuur Demeester added to the discussion on Twitter, stating, “Electricity is the new petroleum—bitcoin is the new combustion engine.” He states:
“Before the engine, most of petroleum’s potential was locked away. Similarly, before bitcoin, most potentially electrifiable energy was impossible to economize. That’s all changing now.”
Analysis and Implications
The report cites a chart illustrating the value per Watt (W) of capacity for a new data center in relation to various “time to power” benefits obtained from converting a digital asset mining facility into a data center. It states:
“Of notable interest is the substantial nature of these values, ranging from approximately $5/Watt for a 2-year advantage to over $12/Watt for a 5-year advantage. These figures are significantly higher compared to the implied enterprise value of crypto mining stocks as a multiple of their power capacity.
Many of these stocks trade in the $1-4/Watt range, with the median of the top 21 publicly traded Bitcoin miners (excluding those that do not disclose MW) trading at less than $2 and the top 5 trading just above $3.
Morgan Stanley’s research underscores the transformative potential of Bitcoin miners in the data center industry. By leveraging their existing power infrastructure, miners can offer a competitive advantage in deploying new data centers, particularly in regions where grid constraints pose challenges.
The conversion of Bitcoin mining sites into data centers presents a promising opportunity for value creation, further bolstering the role of the digital asset in the broader energy landscape.
