When Galaxy Digital (GLXY) CEO Mike Novogratz bought Argos’ Helios data center in late 2022, at the depths of the post-FTX crypto winter, the company thought they were bailing out a desperate bitcoin (BTC) miner on the brink of bankruptcy.

This, however, was before ChatGPT had become mainstream. Novogratz and co. had no idea that this data center would be a strategic asset as the growing Artificial Intelligence (AI) industry clamours for more data center space, thanks to the explosive growth of Large Language Models (LLMs).

As analysts from Rittenhouse Research outlined in a new note, Galaxy’s lucky find, which instigated the company’s move out of BTC mining altogether, might now be crypto’s most lucrative pivot, as they make the case that the infrastructure used to mine digital gold is better used to process AI algorithms, and firms that shift away from BTC mining towards AI infrastructure are set to be the next growth stocks.

Analysts from Rittenhouse argue that AI data centers represent a significantly more lucrative business model than BTC mining because they generate stable, long-term cash flows with minimal ongoing capital expenditures, contrasting sharply with the volatility and capital intensity of bitcoin mining.

BTC mining revenues inherently decline by approximately 50% every four years due to the scheduled halvinings. Effectively, the play for a miner is being a long-term bull on BTC’s price and the ability for semiconductor fabs and designers to develop chips that are perpetually more efficient, and, for an investor, that’s a lot of variables.

In contrast, AI data centers like Galaxy’s Helios facility earn consistent, high-margin revenue through long-term, triple net leases to hyperscaler tenants (a large-scale cloud computing provider), without needing continuous investment in mining equipment.

“Galaxy stumbled upon Helios by virtue of good luck,” Rittenhouse wrote in their note. While competitors such as Riot Platforms and Cipher Mining have publicly tried to «rewrite history,» retroactively suggesting their business was always broader than BTC mining, analysts say, “in reality, these miners had zero intentions to do anything besides mine BTC until ChatGPT was launched.”

A broader industry shift?

Galaxy’s transition reflects a broader trend as BTC miners attempt to pivot toward AI and cloud computing.

Yet, analysts underscore Galaxy’s significant advantage, stemming from its superior balance sheet ($1.8 billion of net cash and investments), successful execution record, and credibility established through the CoreWeave lease.

While some have raised concerns over CoreWeave’s creditworthiness, causing Galaxy’s shares to trade at a significant discount, Rittenhouse analysts say these fears are significantly overblown, highlighting CoreWeave’s exceptional revenue stability from long-term contracts accounting for 96% of its revenues and its strong institutional backing.

The analysts emphasize that CoreWeave’s debt is carefully structured through delayed draw term loans, utilized specifically to finance infrastructure directly linked to secured customer agreements, dramatically reducing default risk.

Rittenhouse also notes that Galaxy has gone fully in on AI, and now doesn’t have any exposure to mining.

«Galaxy has completely exited all bitcoin mining activities to focus solely on its AI data center ambitions, which sends a positive signal to potential hyperscaler tenants,» analysts wrote.

As Rittenhouse writes, Cipher Mining’s CEO Tyler Page recently acknowledged the uphill battle miners face when approaching major AI customers.

«It’s not lost on us that if we’re talking to a counterparty with a $1 trillion market cap… One drawback for bitcoin miners is that major counterparties say, ‘wow, that’s a big obligation for you guys to backstop for such an important investment for us,’» Page said on the company’s Q1 2025 earnings call.

Galaxy doesn’t have that problem. With this Helios deal in place and Novogratz’s company totally out of mining, Galaxy’s accidental pivot might just turn out to be crypto’s best strategic move in years – if Rittenhouse’s thesis is correct.

Binance and Kraken, two of the world’s largest cryptocurrency exchanges, were recently targeted in a wave of social engineering attacks similar to the one that led to a major data breach at Coinbase.

Hackers approached customer support agents with bribery offers and detailed instructions for contacting attackers through Telegram, Bloomberg reports citing people familiar with the matter. Both exchanges managed to block the attempts without losing any customer data.

The exchanges faced tactics mirroring those used against Coinbase (COIN), which earlier this week revealed it expects to pay $180 million to $400 million in remediation costs and customer reimbursements after attackers gained access to their personal information.

That breach led to a $20 million ransom demand after the attackers managed to bribe Coinbase’s overseas employees/contractors to get customer information. The exchange has fired the staff involved and has contacted law enforcement.

At Binance, internal systems including artificial intelligence bots helped detect bribery-related messages, shutting down conversations before they escalated. Policies that limit access to customer data unless users initiate contact also helped mitigate risk.

Coinbase’s reportedly started seeing unusual activity in January, and last December, rival exchanges had begun warning the company about unusual activity targeting its largest clients.

Bitcoin’s BTC price chart is echoing a bullish pattern that foreshadowed the late 2024 price surge from $70,000 to $100,000 amid mounting concerns over the sustainability of the U.S. debt.

The leading cryptocurrency by market value appears on track to confirm a «golden cross» in the coming days, according to charting platform TradingView. The pattern occurs when the 50-day simple moving average (SMA) of prices crosses above the 200-day SMA to suggest that the short-term trend is outperforming the broader trend, with the potential to evolve into a major bull run.

The moving average-based golden cross has a mixed record of predicting price trends. The impending one, however, is worth noting because it’s about to occur weeks after its ominous-sounding opposite, the death cross, trapped bears on the wrong side of the market.

A similar pattern unfolded from August through September 2024, setting the stage for a convincing move above $70,000 in early November. Prices eventually set a record high above $109K in January this year.

The chart on the left shows that BTC bottomed out at around $50,000 in early August last year as the 50-day SMA moved below the 200-day SMA to confirm the death cross.

In other words, the death cross was a bear trap, much like the one in early April this year. Prices turned higher in subsequent weeks, eventually beginning a new uptrend after the appearance of the golden cross in late October 2024.

The bullish sequence is being repeated since early April, and prices could begin the next leg higher following the confirmation of the golden cross in the coming days.

Past performance does not guarantee future results, and technical patterns do not always deliver as expected. That said, macro factors seem aligned with the bullish technical setup.

Moody’s amplifies U.S. debt concerns

On Friday, credit rating agency Moody’s downgraded the U.S. sovereign credit rating from the highest ”Aaa” to ”Aa1”, citing concerns over the increasing national debt, which has now reached $36 trillion.

The bond market has been pricing fiscal concerns for some time. Last week, CoinDesk detailed how persistent elevated Treasury yields reflected expectations for continued fiscal splurge and sovereign risk premium, both bullish for bitcoin.

Read: BTC Boom Likely as Bond Yields Surge