When Mike Novogratz, CEO of Galaxy Digital (GLXY), purchased Argos' Helios Knowledge Heart in late 2022 on the depths of Crypto winter after FTX, the corporate thought it was rescued a determined Bitcoin (BTC) miner getting ready to chapter.
Nonetheless, this was earlier than ChatGpt grew to become mainstream. Novograts and co. Because of the explosive progress of large-scale language fashions (LLM), this knowledge heart didn't suppose it might develop into a strategic asset because the rising synthetic intelligence (AI) trade is searching for extra knowledge heart house.
As an analyst at Rittenhouse's analysis outlined in a brand new memo, Galaxy's Lacky Discover incited utterly incited the corporate's transfer from BTC mining, however it may now be essentially the most advantageous pivot of cryptography.
Rittenhouse's analysis is a protracted galaxy digital $glxy $brphf
Galaxy's flagship knowledge heart Helios believes it can generate $1.7 billion in EBITDA and $32 billion in inventory worth within the quick time period.
Our full paper could be present in PDF at https://t.co/mz3jww1cyd pic.twitter.com/4jnhn10oyv.
– Rittenhouse Analysis (@rhouseresearch) Could 15, 2025
Rittenhouse analysts argue that AI knowledge facilities symbolize a a lot better enterprise mannequin than BTC mining. It’s because it generates secure long-term money stream with minimal steady capital expenditure, in distinction to the volatility and capital energy of Bitcoin mining.
BTC mining revenues will lower by roughly 50% each 4 years attributable to scheduled halving. In impact, miners' play is the worth of BTC and the power of semiconductor fabs and designers to develop extra environment friendly chips, which is various variables for traders.
In distinction, AI knowledge facilities like Galaxy's Helios services earn constant margin income via long-term triple internet leases to long-term triple internet leases (giant cloud computing suppliers) with out the necessity for ongoing funding in mining tools.
“The Galaxy stumbled upon Helios due to success,” Rittenhouse wrote of their notes. Opponents corresponding to riot platforms and crypto mining try to make “rewrite historical past” public, retrospectively suggesting that their enterprise is all the time wider than BTC mining, however analysts say, “In reality, these miners weren't planning on doing something aside from mining BTC till ChatGPT was launched.”
A wider trade change?
The Galaxy migration displays a broader pattern as BTC miners attempt to pivot in the direction of AI and cloud computing.
Nonetheless, analysts spotlight the good advantages of Galaxy attributable to its wonderful steadiness sheet ($1.8 billion in internet money and funding), profitable execution information, and reliability established via CoreWeave leases.
Whereas some have raised considerations about CoreWeave's creditworthiness and have triggered Galaxy's inventory to commerce at an enormous low cost, Rittenhouse analysts say these fears are closely exaggerated and spotlight CoreWeave's extraordinary income stability.
Analysts emphasize that CoreWeave's obligations are rigorously constructed via lottery facility loans which are particularly used to fund infrastructure straight linked to safe buyer contracts and are particularly utilised to dramatically scale back the chance of default.
Rittenhouse additionally notes that the Galaxy has utterly invaded the AI and isn’t at the moment uncovered to mining.
“Galaxy will utterly terminate all Bitcoin mining actions, focusing solely on AI knowledge heart ambitions and ship constructive alerts to potential hyperscalar tenants,” the analyst wrote.
As Rittenhouse writes, Cipher Mining CEO Tyler Web page lately admitted that Miners are going through once they strategy key AI prospects.
“While you're speaking to counterparties with a market capitalization of $1 trillion, the draw back of Bitcoin Miners is that the most important counterparties say, “Wow, it's an important responsibility for us to backstop for such a crucial funding.”
The Galaxy doesn't have that drawback. With this Helios contract in place and the Novogratz firm is totally out of mining, the Galaxy unintended pivot might develop into Crypto's finest strategic transfer through the years if Rittenhouse's paper is right.
