Bitcoin Mining Stocks Plunge 4% to 12% as Microsoft Halts AI Data Center Plans

Bitcoin mining stocks experienced a decline following the news that Microsoft had abandoned plans to invest in new artificial intelligence data centers in the US and Europe. The decision was reportedly due to concerns over a potential oversupply of computing capacity for AI models. This development has significant implications for the cryptocurrency mining industry, which has increasingly relied on AI-related business to supplement revenues affected by the Bitcoin network's April 2024 halving.

Several major crypto mining companies, including Bitfarms, CleanSpark, Core Scientific, Hut 8, Marathon Digital, and Riot, saw their stock prices drop by 4% to 12% in response to the news. This downturn underscores the growing dependence of cryptocurrency miners on AI data-center hosting as a means to diversify revenue streams and repurpose existing infrastructure for high-performance computing tasks.

In recent months, several mining companies have made strategic moves to capitalize on the AI sector. For instance, Core Scientific committed 200 megawatts of hardware capacity to support CoreWeave’s artificial intelligence workloads in June 2024. Additionally, asset manager VanEck suggested that Bitcoin mining stocks could see a significant boost in market capitalization if they heavily invest in supporting AI, potentially adding around $37 billion to their collective market value.

However, the mining industry has faced challenges this year due to declining crypto prices, which have exacerbated financial pressures already intensified by the April halving. The potential reduction in demand for AI data centers, as indicated by Microsoft's decision, could further strain these businesses. Analysts at TD Cowen reported that Microsoft had canceled plans to build several new data centers, citing an oversupply of computing capacity and a decision to forgo some collaborations with OpenAI, the maker of ChatGPT.

Over the past six months, Microsoft has also canceled various data center leases and delayed plans to onboard more capacity. The company is expected to slow its data center investments further in the second half of 2025 as it completes $80 billion in planned buildouts and focuses on equipping existing centers with new hardware and equipment. This shift in strategy by a major tech player like Microsoft could have ripple effects across the AI and cryptocurrency mining sectors, potentially leading to a reassessment of investment strategies and business models within the industry.