By the end of 2025, AI data centers become a 'hot deal'... The power battle among hyperscalers

Despite widespread concerns about an AI bubble burst, Wall Street’s M&A market remains hot. This is driven by the ongoing power race among hyperscalers, Bitcoin miners, and AI developers to secure electricity. According to Joe Nardini, head of investment banking at B. Riley Securities, these companies are fiercely competing for megawatts even at the end of December. In an interview with CoinDesk, he stated, “M&A negotiations are still ongoing because people still need power.”

Why Power Shortages Exist: Megawatt Competition Among Bitcoin Miners and Hyperscalers

Since Bitcoin’s halving, mining profitability has deteriorated, prompting mining companies to change their survival strategies. To escape low-margin conditions, they have begun converting existing mining facilities into GPU-based high-performance computing (HPC) data centers. This strategic shift has opened new opportunities for mining-related firms, with some mining stocks soaring significantly this year.

Nardini assessed that Bitcoin miners’ power demand remains “massive,” but demand in AI and HPC sectors is “even greater.” Data centers centered on GPUs continue to attract multiple high-credit tenants. Notably, companies that have restructured their business models to HPC have received higher valuation multiples and enjoy the advantage of raising cheaper capital.

This strong demand is not just about numbers. Buyers, including hyperscalers, are willing to pay a substantial premium for assets with quality power and suitable locations. In one example Nardini witnessed, valuations exceeded $400,000 per megawatt, and depending on final negotiations, could reach up to $450,000. In the past, transactions at $500,000 to $550,000 per megawatt have also occurred.

$400,000–$550,000 per Megawatt… The Reality of Data Center Deals Capturing Wall Street’s Attention

The data center transaction market shows a layered structure. Assets in less desirable locations or with lower market preference fetch bids as low as $100,000–$250,000 per megawatt. However, these assets still attract buyers because of the core value of power.

As of late December, Hut 8’s contract with Fluidstack exemplifies this bullish market. After signing a 15-year, $7 billion lease for 245 megawatts of IT capacity at the River Bend campus, Hut 8’s stock surged up to 20% in a week. Nardini commented, “Despite recent market adjustments, these companies have demonstrated the ability to raise capital at higher valuation multiples.”

Deal sizes can be staggering. When a private seller listed a similar asset type, about 25 potential buyers requested non-disclosure agreements (NDAs). These included Bitcoin miners, hyperscalers, and AI firms. Such high demand is forcing asset owners to consider new strategic options.

Hyperscalers and AI Companies Target Even Old Industrial Facilities

The key question facing existing data center owners is: will they sell to large tech firms or AI developers, or try to become developers themselves?

The answer is evolving rapidly. Companies holding outdated or decommissioned industrial facilities are exploring ways to leverage power to enter the AI/HPC and cryptocurrency ecosystems. Nardini cited a private equity firm converting an old office building into a modular power capacity, “building 30-megawatt units at a time.” This firm is currently seeking additional funding to expand.

The urgency of demand is also reflected in deal structures. Nardini revealed that in at least one negotiation, the tenant was willing to prepay rent before the facility was even completed. This underscores how scarce quality power capacity is as an asset.

Interest Rate Cuts in 2026… Industry Remains Bullish

Looking ahead to 2026, Nardini predicts that if interest rates are cut, a favorable environment for risk assets could emerge. The so-called ‘risk-on’ environment could lead to increased M&A activity.

His optimism is not just wishful thinking. Actual market conditions support his outlook. “Data center developers are seeing strong demand from tenants for ‘good terms,’ and high-credit tenants like hyperscalers continue to come in,” he explained.

Even in a bearish market, if one client does not select a particular site, “someone else will,” illustrating that demand far exceeds supply.

Conclusion: Business Fundamentals Remain Solid

Nardini’s assessment is clear: the real concern is when developers cannot lease their data centers or obtain the desired prices. Currently, he sees no signs of that happening.

His conclusion is: “Demand for power and AI HPC data center capacity continues to grow. Developers with data center capacity are securing solid demand from multiple high-credit tenants, and the core economics of the business remain robust.”

What Nardini emphasizes most is the strong demand from buyers—including hyperscalers and AI companies—and the favorable valuations sellers are receiving for their assets. This forms the basis of his strong confidence.

With BTC trading around $78.77K, the appeal of power-based data center assets remains undiminished. Nardini’s statement that “AI deals are still actively happening” best captures the current market reality.