A severe global power grid scarcity is forcing Wall Street analysts to radically re-evaluate the balance sheets of major cryptocurrency miners. With hyperscalers and AI developers requiring gigawatts of electricity for large language model training, existing crypto mining facilities are being repriced as premium AI physical infrastructure.
At the center of this sector rotation, Galaxy Digital secured authorization from the McGregor, Texas city council on Thursday for “Project Merlin.” The $400 million data center expansion, located near SpaceX facilities, accelerates the company’s aggressive transition from digital asset trading to high-performance computing.
The McGregor expansion follows Galaxy’s recent 15-year hosting agreement with cloud provider CoreWeave. The deal includes $1.4 billion in project financing from CoreWeave and is projected to generate $1 billion in annual recurring revenue for Galaxy once fully operational. This revenue model shifts the firm away from unpredictable cryptocurrency market cycles toward the stable cash flows typical of traditional utility providers.
This multi-billion dollar AI valuation is rooted in a previous crypto market downturn. Galaxy executed a distressed Helios acquisition for $65 million from Argo Blockchain, transforming the West Texas mining site into a 1.6-gigawatt high-performance computing campus.
How Bitdeer and Cipher Digital Are Following the Power Grid Pivot
Galaxy is not the only crypto-native operator pivoting its hardware strategy. Rival firm Bitdeer is currently expanding its 180-megawatt Tydal site in Norway specifically to handle Nvidia-aligned AI workloads. North American and Australian operators, including IREN and Cipher Digital, are similarly using their extensive secured power portfolios to lock in long-term AI cloud contracts.
The structural financial transformation across the sector indicates that Wall Street now views secured energy access, rather than Bitcoin production, as the primary asset for these public companies.