The crypto stock party screeched to a halt Wednesday. Bitcoin miners pivoting to AI infrastructure got hammered hardest, with losses hitting 15% across the board.
Galaxy Digital crashed 15%, erasing every penny gained from Tuesday’s earnings report. Plus, the miners who’d been riding the AI data center wave all year? They’re bleeding red now. Bitfarms, Cipher Mining, Hut 8, and HIVE all dropped 10-15% in early trading.
Bitcoin itself held steady around $108,000. But that’s still a painful drop from Tuesday’s $114,000 peak. The damage spread beyond miners too, hitting every corner of crypto stocks.
The AI Trade Just Broke
These weren’t small dips. These were bloodbaths for companies that had surged hundreds of percent in recent months.
Bitfarms climbed over 400% since September. Now it’s down 40% from peak, trading just above $4. IREN soared 400% year-to-date and 200% since September. Currently sitting near $52 after touching $73 at its high. That’s a 30% haircut from glory days.
The CoinShares Bitcoin Mining ETF (WGMI) dropped 7%. So this wasn’t isolated damage. The entire sector got torched.
Why the sudden reversal? Wall Street turned risk-off hard. The Nasdaq fell 1%, with chipmakers leading declines. Momentum names took beatings across markets, and AI-related stocks led that carnage. Crypto miners with data center dreams followed right along.
Galaxy’s Earnings Boost Vanished Overnight
Galaxy Digital’s 15% plunge stung particularly hard. The company reported earnings Tuesday that initially sparked gains. Then Wednesday erased everything plus more.
Galaxy’s pushing into data center operations alongside its digital asset business. That strategy worked brilliantly during the AI infrastructure rally. Combined market cap for BTC miners and related companies hit $95 billion at peak. It’s dropped to $82 billion now, according to Farside data.
That $13 billion evaporated fast. And Wednesday’s selloff suggests more pain could follow.
Nobody Escaped the Damage
Bakkt Holdings already suffered this week. It surged over 300% earlier in October but has crashed nearly 40% in the past week. Wednesday added another 7.5% to those losses.
Strategy (MSTR), the world’s largest corporate bitcoin holder, slipped 4% below $290. Coinbase, Robinhood, Bullish, and Gemini all posted sharp 5-6% declines.
Even stocks outside the mining sector got crushed. The contagion spread everywhere crypto stocks trade.
What Fueled the Multi-Month Rally
Bitcoin miners spent months convincing investors they’d become AI infrastructure plays. The pitch worked beautifully. Companies secured or announced data center deals for high-performance computing. Stock prices exploded as AI hype peaked.
Bitfarms up 400%. IREN up 400%. The narrative seemed bulletproof. Mine bitcoin when profitable, lease capacity to AI companies when not. Best of both worlds, right?
Markets bought that story hard. Until they didn’t.
The Reality Check Investors Needed
Here’s what Wednesday taught everyone. Momentum trades work until they don’t. These miners rode AI enthusiasm to ridiculous valuations. But they’re still heavily exposed to bitcoin prices, energy costs, and competitive pressures.
The data center pivot makes sense strategically. But execution takes years, not months. Most of these companies haven’t closed major deals yet. They’re trading on hopes and announcements, not revenue.
When broader markets turn risk-off, those hopes evaporate first. High-flying growth stocks with stretched valuations get sold hardest. That’s exactly what happened Wednesday.
B. Riley Stays Bullish Despite Carnage
Interesting timing. B. Riley upgraded Core Scientific to buy from neutral Wednesday, raising its price target to $30. The firm kept TeraWulf as its top pick with a $22 price target.
Their thesis? AI-fueled HPC growth continues regardless of short-term selloffs. Long-term fundamentals remain strong for miners with credible data center strategies.
Maybe they’re right. But investors aren’t thinking long-term today. They’re watching portfolios bleed and hitting sell buttons.
Bitcoin Held Better Than Stocks
At least bitcoin itself showed relative strength. Trading around $108,000 represents a significant drop from $114,000. But compared to crypto stock losses, bitcoin’s 5-6% decline looks almost stable.
That divergence matters. It suggests this wasn’t crypto-specific fear. This was broader risk-off sentiment hitting high-beta names hardest. Crypto stocks fit that description perfectly.
Bitcoin maintains its position near all-time highs. The miners and related stocks? They’re giving back months of gains in hours.
Where This Goes Next
Wednesday’s massacre raises tough questions. Was the AI infrastructure narrative overblown? Or is this just a healthy correction before the rally resumes?
The honest answer? Nobody knows. These miners legitimately pivoted toward AI infrastructure. That wasn’t pure hype. But valuations ran way ahead of fundamentals. Wednesday started correcting that disconnect.
More volatility seems guaranteed. These stocks surged too fast to believe corrections would be gentle. Expect more wild swings both directions as markets figure out what these companies are actually worth.
For now, the AI data center trade looks broken. Whether it’s dead or just resting remains to be seen.