Compass Point analysts Michael Donovan and Ed Engel have published a report proposing a new valuation framework: companies converting former bitcoin mining sites into AI data centers should be priced like landlords collecting rental income, not like miners whose earnings swing with crypto prices. The report argues the market is underestimating the value of signed long-term AI leases.
The model: contract rent minus construction cost equals hidden value
The framework calculates the present value of future rental income from signed contracts, deducts the remaining cost to build each facility, and compares that figure with the company's enterprise value. When the contract value already matches or exceeds the current market cap, it implies investors are assigning zero value to unleased AI capacity—capacity that could generate material recurring rent once completed, according to the analysts.
Applied Digital, TeraWulf, Cipher Mining: contract value ignored
Compass Point says Applied Digital (APLD), TeraWulf (WULF) and Cipher Mining (CIFR) show the biggest disconnect between contracted business and current valuations. In each case, the market appears to be assigning little if any value to already signed AI leases, let alone future leasing potential. The analysts believe that once these facilities come online and start producing rental income, valuation catch-up could be significant.
Core Scientific is priced in; Riot bets on future pipeline
Core Scientific (CORZ) stands out for a different reason: its existing contracts are already largely reflected in the stock price. Further upside will likely depend on signing new customers. Riot Platforms (RIOT), meanwhile, is valued more on future potential than current lease income. Investors are paying a premium for its Corsicana campus and broader AI development pipeline, despite its relatively limited contracted AI capacity today, the report notes.
Next two years: from deal announcements to project delivery
The report argues the next two years will be a turning point for the sector as companies shift from announcing AI infrastructure deals to actually delivering projects. As facilities are completed, tenants move in and rent payments begin, investors will have a much clearer picture of the recurring cash flow these assets can generate. Companies that execute successfully could see their valuations realign with those of other income-producing infrastructure assets.