Two bitcoin mining companies are positioned for significant stock gains, but not because of cryptocurrency’s performance. Morgan Stanley analysts identified TeraWulf and Cipher Mining as stocks with more than 150% upside potential in a February 8 client note, citing their ability to transform existing infrastructure into AI data centers to meet surging demand for computing power.
The bank initiated coverage on both bitcoin mining stocks with unusually high price targets. TeraWulf received a price target implying 159% upside, while Cipher Mining was assigned a 158% potential gain, according to the analysis. Both companies have already experienced substantial growth over the past year, with TeraWulf shares rising 245% and Cipher climbing 183%.
Bitcoin Miners Converting to AI Data Centers
Morgan Stanley’s bullish outlook centers on the companies’ strategic pivot from cryptocurrency mining to AI infrastructure. The transformation addresses a critical shortage in the market, as demand for AI computing power continues to outpace available supply. Current bottlenecks in power infrastructure make bitcoin miners-turned-AI data centers the “most attractive” option for developers seeking to build new facilities, the bank stated.
TeraWulf brings significant experience in building power infrastructure and has already completed multiple bitcoin-to-data center conversion transactions with customers, according to Stephen C. Byrd and his team of analysts. The company has established a viable path to significant annual growth in both power and data center capacity, which Morgan Stanley incorporated into its base and bull case scenarios.
Major Tech Partnerships Signal Market Demand
Cipher Mining has rapidly expanded its AI business footprint through strategic partnerships with technology giants. As of the second quarter of 2025, the company had no AI power hosting contracts, but has since secured 10-year and 15-year agreements with Google and Amazon, respectively. Additionally, Cipher Mining has assembled a team with substantial data center construction experience and entered multiple agreements with data center customers, the analysts noted.
Market metrics demonstrate the strong demand driving these conversions. From June to December 2025, equity value creation per watt for companies like TeraWulf and Cipher Mining surged from approximately $7 to $18, signaling robust appetite for power infrastructure supporting AI operations.
Key Drivers Behind Bitcoin Mining Stock Upside
Morgan Stanley outlined several factors supporting its optimistic projections. The bank expects AI capabilities to continue improving exponentially, with substantial value creation opportunities remaining for both AI enablers and adopters. Furthermore, the persistent imbalance between supply and demand should eventually alleviate power bottlenecks affecting the broader data center industry.
However, the analysts acknowledged significant risks to their outlook. Execution challenges represent a primary concern, as these data center projects are exceptionally large relative to the overall size of the bitcoin mining companies involved. Project delays and cost overruns could necessitate additional equity capital, potentially resulting in unexpected dilution and financing difficulties, the note cautioned.
AI Spending Uncertainty Presents Risks
Another potential headwind involves possible pullbacks in AI capital expenditures by major technology companies. Investors have grown increasingly anxious about AI spending in recent months, seeking evidence that hundreds of billions of dollars in annual investments will generate adequate returns. Nevertheless, Morgan Stanley views recent updates from hyperscalers as suggesting upside rather than downside risk to AI infrastructure spending.
The bank acknowledged that despite current undersupply in the AI infrastructure industry’s power capacity, key AI players could moderate their data center investments for various reasons. Such a development would represent the largest single risk to the bitcoin mining stocks’ transformation thesis.
The success of TeraWulf and Cipher Mining’s conversions will depend on their ability to execute large-scale infrastructure projects while navigating potential shifts in AI spending patterns. Morgan Stanley has not specified a timeline for when the companies might achieve their price targets, though the transformation is already underway with signed customer agreements.
