Morgan Stanley Initiates Coverage: Overweight on Cipher and TeraWulf, Underweight on Marathon
Morgan Stanley initiated coverage of three publicly traded bitcoin miners on Monday, assigning Overweight ratings to Cipher Mining (CIFR) and TeraWulf (WULF) while giving Marathon Digital (MARA) an Underweight rating. Analyst Stephen Byrd and his team set price targets of $38 for Cipher and $37 for TeraWulf. Shares of CIFR rose roughly 134% to $16.50 on Monday, while WULF climbed 13% to $16.20. Marathon shares increased slightly to $8.28, below its $8 target.
The move reflects the bank's view that certain miners are better valued as infrastructure plays rather than pure crypto or bitcoin bets.
Valuation Thesis: Mining Sites as Data Center Assets
Morgan Stanley's thesis centers on the transformation of bitcoin mining sites into data center assets that generate stable, long-term cash flows. Byrd argued that once a miner builds a data center and signs a long-term lease with a creditworthy counterparty, the asset should be valued for stable cash flow rather than bitcoin exposure. He likened these sites to data center REITs such as Equinix (EQIX) and Digital Realty (DLR), which trade at high multiples due to scale and predictable revenue.
Byrd described leased data centers as toll roads that generate predictable cash flows with minimal reliance on bitcoin's price.
Advantages of Cipher and TeraWulf: REIT-like Prospects
Cipher Mining sits at the center of that framework. Byrd described its facilities as suited to what he called a 'REIT endgame,' where leased data centers function like toll roads. Cipher's facilities already have the potential for such a transition, promising stable returns similar to REITs.
TeraWulf also fits the model, with a track record of signing data center agreements and management experience in power infrastructure. The firm plans to expand 250 megawatts of data center capacity per year through 2032, with Morgan Stanley modeling success rates of 50% in a base case and 75% in an optimistic scenario.
Marathon's Struggles: Heavy Reliance on Bitcoin Price
Marathon Digital received a more cautious assessment. Byrd noted the company's hybrid approach, combining bitcoin mining with data center ambitions, limits upside potential from bitcoin-to-data center conversions. Marathon's focus on acquiring bitcoin and issuing convertible notes to fund mining positions makes its value largely dependent on bitcoin prices. Morgan Stanley also highlighted the company's limited history of hosting data centers and the historically low return on invested capital in bitcoin mining as factors in the Underweight rating.
Miners' Pivot: From Mining to AI and High-Performance Computing
The coverage comes amid ongoing debate over whether bitcoin miners should evolve into power and AI. Morgan Stanley's stance is selective: miners with long-term leased data centers may offer higher, more predictable returns, while those focused on mining remain exposed to cryptocurrency volatility.
Bitcoin miners are reallocating money and operational focus away from proof-of-work hashpower toward artificial intelligence and high-performance computing data centers, as shrinking mining margins and halving-driven revenue pressures make traditional operations less lucrative. Major publicly traded miners such as Bitfarms (now rebranded as Keel Infrastructure) and IREN have signaled full or partial exits from legacy mining to host AI workloads and secure long-term contracts with cloud and hyperscaler partners.