Following Nvidia’s impressive third-quarter results and its better-than-expected guidance, shares of Bitcoin mining companies rose in extended trading on Wednesday. The GPU maker beat Q3 revenue expectations with a $57 billion figure and a Q4 revenue forecast of $63.7 billion to $66.3 billion, way above the analyst estimates of $61.98 billion. Nvidia CFO Colette Kress also mentioned that the lifespan of GPUs is getting longer, which is a positive factor for the entire AI and computing ecosystem in the long run.
The company’s stellar performance was instrumental in pushing its share price up 5% and in boosting sentiment towards other crypto-related equities.
The earnings report of the world’s largest company by market cap had a positive impact on the whole crypto sector. The price of Bitcoin started to go upwards from just under $89,000 at the beginning of the day to around $91,000 at the time of publication.
Long trading activities in the stock market witnessed abrupt rebounds in the shares of Bitcoin miners that had started the day in negative territory.
Among the various Bitcoin miners, Cipher Mining was the most aggressive in its share price, which rose by more than 13%, while IREN shares increased by approximately 10%. Some other miners, namely, Bitfarms, TeraWulf, and CleanSpark, were also trading at higher levels, and MARA, the biggest miner in terms of market cap, was up by a modest 4%. The improvement mirrored a comeback of investors’ trust in the sector following a series of scares related to the economy and the declining Bitcoin price, which had been putting the entire mining industry at risk.
In line with the rapid advancements in artificial intelligence, the demand for data center capacity has skyrocketed. Consequently, several Bitcoin miners have decided to diversify into AI and high-performance computing infrastructure.
Earlier this month, IREN inked a $9.7 billion AI cloud deal with Microsoft, thereby sending a strong signal of a major pivot towards enterprise infrastructure. Cipher Mining in a similar vein, declared a $5.5 billion AI hosting partnership with Amazon Web Services, thus consolidating the sector’s strategy to combine mining with AI-powered revenue streams. Nevertheless, the transition has caused a stir with respect to the questioning of financing risks.
VanEck’s head of digital asset research, Matthew Sigel, commented that miners like IREN who are taking on debt to buy GPUs, are still vulnerable to interest rate risks and GPU supply-demand challenges. In his view, the recent sell-off can be characterized as a “double whammy” triggered by the decline in Bitcoin prices and the widening of credit spreads associated with high capital expenditures.
JPMorgan analysts have also noted that the orientations of Bitcoin mining stocks have become less correlated with Bitcoin’s spot price. Since July, mining company valuations have increased significantly while Bitcoin has remained relatively stable.
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