The Bull Case for Galaxy Digital Is AI Data Centers Not Bitcoin Mining, Research Firm Says
This, however, was before ChatGPT had become mainstream. Novogratz and co. had no idea that this data center would be a strategic asset as the growing Artificial Intelligence (AI) industry clamours for more data center space, thanks to the explosive growth of Large Language Models (LLMs).
As analysts from Rittenhouse Research outlined in a new note, Galaxy's lucky find, which instigated the company's move out of BTC mining altogether, might now be crypto's most lucrative pivot, as they make the case that the infrastructure used to mine digital gold is better used to process AI algorithms, and firms that shift away from BTC mining towards AI infrastructure are set to be the next growth stocks.
Analysts from Rittenhouse argue that AI data centers represent a significantly more lucrative business model than BTC mining because they generate stable, long-term cash flows with minimal ongoing capital expenditures, contrasting sharply with the volatility and capital intensity of bitcoin mining.
BTC mining revenues inherently decline by approximately 50% every four years due to the scheduled halvinings. Effectively, the play for a miner is being a long-term bull on BTC's price and the ability for semiconductor fabs and designers to develop chips that are perpetually more efficient, and, for an investor, that's a lot of variables.
In contrast, AI data centers like Galaxy's Helios facility earn consistent, high-margin revenue through long-term, triple net leases to hyperscaler tenants (a large-scale cloud computing provider), without needing continuous investment in mining equipment.
'Galaxy stumbled upon Helios by virtue of good luck,' Rittenhouse wrote in their note. While competitors such as Riot Platforms and Cipher Mining have publicly tried to "rewrite history," retroactively suggesting their business was always broader than BTC mining, analysts say, 'in reality, these miners had zero intentions to do anything besides mine BTC until ChatGPT was launched.'
Galaxy's transition reflects a broader trend as BTC miners attempt to pivot toward AI and cloud computing.
Yet, analysts underscore Galaxy's significant advantage, stemming from its superior balance sheet ($1.8 billion of net cash and investments), successful execution record, and credibility established through the CoreWeave lease.
While some have raised concerns over CoreWeave's creditworthiness, causing Galaxy's shares to trade at a significant discount, Rittenhouse analysts say these fears are significantly overblown, highlighting CoreWeave's exceptional revenue stability from long-term contracts accounting for 96% of its revenues and its strong institutional backing.
The analysts emphasize that CoreWeave's debt is carefully structured through delayed draw term loans, utilized specifically to finance infrastructure directly linked to secured customer agreements, dramatically reducing default risk.
Rittenhouse also notes that Galaxy has gone fully in on AI, and now doesn't have any exposure to mining.
"Galaxy has completely exited all bitcoin mining activities to focus solely on its AI data center ambitions, which sends a positive signal to potential hyperscaler tenants," analysts wrote.
As Rittenhouse writes, Cipher Mining's CEO Tyler Page recently acknowledged the uphill battle miners face when approaching major AI customers.
"It's not lost on us that if we're talking to a counterparty with a $1 trillion market cap... One drawback for bitcoin miners is that major counterparties say, 'wow, that's a big obligation for you guys to backstop for such an important investment for us,'" Page said on the company's Q1 2025 earnings call.
Galaxy doesn't have that problem. With this Helios deal in place and Novogratz's company totally out of mining, Galaxy's accidental pivot might just turn out to be crypto's best strategic move in years – if Rittenhouse's thesis is correct.
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For example, in our tariff tracker, we're watching companies such as Lenovo. Lenovo is notable among the big laptop manufacturers for being a Chinese company, which makes it especially susceptible to Trump's tariffs. With so many good deals already pouring in, if you see something you like between now and Labor Day, we recommend buying it because it may cost you a lot less than in the future.
Business Insider
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Audiences may also be wary: A recent survey of 5,000 people across the US, UK, Europe, and Australia by Baringa, a management consulting firm, found that 53% of US consumers would feel uncomfortable watching content touched by AI. Despite some startups' cautious approach, the usage of AI raises legal and existential questions about what stories get told, who gets to tell them, and how audiences will connect with the next era of entertainment. Still, there's been a wave of experimentation, like using AI to predict the likelihood of a script's box-office fate and filmmakers treating it as a tool for rote parts of script writing. Startups are using AI to transform the screenwriting process Some companies see AI as a way to place safer bets on risky projects. a Swiss startup, uses predictive AI to analyze screenplays and forecast their commercial potential. Studios can upload anything from a synopsis to a finished cut, and the system maps plot, genre shifts, emotional arcs, casting, and audience and financial predictions. Once the screenplay is uploaded, the AI compares its elements to a database of 400,000 films, featuring data on the successes, failures, and narrative components of past Hollywood and indie films. The AI also runs simulated focus groups with "digital twins" that represent real consumers. Largo then generates detailed insights on genre trends, audience demographics, and revenue forecasts. Studios can later use these insights to decide which projects to greenlight and to guide rewrites. If a story's emotional arc reads as "too flat," for example, that feedback can be relayed to writers. According to the company, producers using its software have a green-lighting rate of three times higher than average. The company also said simulated focus groups are 10 times faster and cheaper than traditional ones, giving smaller studios access to testing once reserved for big-budget productions. "The goal is not just to increase commercial value, but to use the feedback to increase creative value as well," Sami Arpa, the CEO and cofounder of told Business Insider. Filmmakers are experimenting with AI as a creative collaborator Filmmaker Nik Kleverov used ChatGPT on " Memory Maker," a sci-fi short he directed for AI film studio Wonder Studios. He used the chatbot to check story originality, brainstorm plot twists, and expand the project's fictional universe. But Kleverov rejects letting AI draft full scripts, calling the "regurgitated" results "stale" and "trite." At the same time, he sees it as a way to explore big, budget-impacting ideas without costly risk. "As far as original creativity, the human mind is unparalleled," Kleverov told Business Insider. "Humans always need to lead those stories." For some creators, AI can spark inspiration in unexpected ways. Rahul Gautama, EY's media and entertainment consulting leader in the Americas, recalls an animator client who tested prompt-based image generation and received a "hallucinated" image that inspired a new narrative direction. It's an example of how AI-image generators — even if they don't work as intended — can inspire fresh ideas. "Script visualization is an exciting space," Gautama told Business Insider. "Providing writers an opportunity to 'see' their ideas before filming can offer valuable creative provocation." AI creates new forms of storytelling — but with limits Some filmmakers are using AI to reimagine how stories are told. Steven Ilous, the founder and CEO of an entertainment technology startup, works with clients like Netflix and Porsche to make "Smart Content" that blends narrative with audience engagement. In " Lollipop Racing," a 10-episode series with "The Fast and the Furious" writer David Ayer as executive producer, viewers can participate in a parallel race. proprietary AI creates digital avatars of the viewer, which are woven back into the show — sometimes even using their own voices. While the main plot remains human-written, algorithm delivers dynamic, personalized content, like bonus scenes based on audience choices. Ilous imagines AI enabling "never-ending" shows or fan-built universes. However, despite its potential, he keeps its use limited to interactive experiences to protect the artistic integrity of writers. "I don't think there's enough clarity yet on how AI can be used ethically from a writing perspective," Ilous said. Not all experiments go well. Robert J. Locke, the executive producer at August Sun Productions, tried an AI coverage service for script feedback and found it "useless." AI, he argued, "will always fall short" because it doesn't have personal experiences to draw from to convey emotional depth. "Screenplays have to touch people's hearts," Locke said. "AI just can't do that." AI in screenwriting raises legal and creative concerns Using AI in writing introduces thorny copyright issues. US law requires human authorship for copyright protection, meaning a fully AI-written screenplay without meaningful human modification can't be copyrighted, said Matthew Asbell, an intellectual property attorney. AI-assisted scripts, however, can be protected if the human author shapes the creative expression. Even with legal protection, though, overuse could erode audience trust. "The risks of AI-generated content are real and significant," Gautama said, adding that in a long-running series, dropping in an AI-written episode could undermine continuity and character authenticity. Arpa acknowledged the risk of "content inflation" — formulaic output from over-reliance on AI — but said talent will still stand out. "If you just use these tools like a magic wand, you'll get something average, and that average won't be satisfactory," Arpa said. For now, most filmmakers don't see AI as a replacement for human writers. Studios may embrace it to speed up development and cut costs. But the consensus is that the best stories still require human judgment, lived experience, and emotional depth. The challenge will be integrating AI in ways that preserve those qualities. "Time will tell if we are willing and able to develop an emotional connection with these stories," Gautama said.
