Bitcoin miners drop after Microsoft scraps data centers

Bitcoin (CRYPTO:BTC) mining stocks fell sharply on March 26 after Microsoft reportedly canceled plans to build new data centers in the U.S. and Europe, citing oversupply concerns.

Shares of Bitfarms, CleanSpark, Core Scientific, Hut 8, Marathon Digital, and Riot Platforms declined between 4% and 12%, according to Google Finance data.

The pullback reflects miners’ growing reliance on artificial intelligence (AI) infrastructure revenue following Bitcoin’s April 2024 halving, which reduced mining profitability.

Benchmark analyst Mark Palmer attributed the decline partly to stagnant Bitcoin prices and investor fatigue amid record mining difficulty levels.

“[The pullback] appears to be driven more by stagnation in the price of Bitcoin than any other factor. Mining difficulty remains near record levels,” Palmer said.

Miners have increasingly diversified into AI data-center hosting to offset revenue losses.

Core Scientific, for example, pledged 200 megawatts of capacity to AI firm CoreWeave in June 2024.

VanEck analysts projected a potential $37 billion market cap boost for miners if they heavily invest in AI infrastructure.

However, JPMorgan noted miners face compounding pressures from declining crypto prices and waning AI demand.

Microsoft’s decision to abandon 2 gigawatts of planned data centers—linked to oversupply and scaled-back collaborations with OpenAI—adds uncertainty.

TD Cowen analysts cited Microsoft’s $80 billion data center buildout completion and focus on retrofitting existing facilities as factors slowing future investments.

The tech giant has canceled leases and delayed expansions over the past six months, Bloomberg reported.

While AI diversification offers a lifeline, miners’ near-term prospects hinge on Bitcoin’s price recovery and sustained demand for high-performance computing.

As Palmer noted, stagnation in crypto markets and infrastructure challenges continue to weigh on investor sentiment.

At the time of reporting, the Bitcoin (BTC) price was $87,538.86.