Reusing Capacity: Why Data Center Agreements Continue to Heat Up Wall Street

Despite the pessimism surrounding artificial intelligence and concerns about inflated valuations, the energy infrastructure business continues to move at a rapid pace. Old facilities, abandoned industrial warehouses, and underutilized spaces are being repurposed and transformed into high-performance computing hubs. The reason is simple: those who have energy and physical space have discovered a gold mine.

“The M&A activity remains active because the operational reality is clear: there are tenants willing to pay well,” explains Joe Nardini, head of investment banking at B. Riley Securities. This dynamic keeps the business thriving regardless of the market sentiment cycle in technology.

Old Facilities Being Repurposed for AI and Bitcoin Infrastructure

The transformation of obsolete structures into data centers is the highlight of this market phase. One case Nardini witnessed involved a facility over 160 years old, where infrastructure quality matters less than access to energy. This type of conversion, reusing underused spaces, has attracted attention from both miners and AI developers.

In another notable example, a private client is repurposing old office blocks to build sequential modules of 30 megawatts each, seeking financing for further expansion. The demand is so intense that in some cases, tenants have offered to pay rent in advance even before the completion of construction — a sign of how desirable capacity remains scarce in the market.

The halving of Bitcoin rewards has squeezed the margins of traditional miners, accelerating their transition to hosting AI hardware and high-performance computing. This strategic pivot has allowed mining companies to achieve higher valuations and access capital under more favorable conditions.

Rising Transactions: Valuation Dynamics and Megawatt Demand

The amounts paid for energy capacity reveal the market’s heat. Depending on the quality of the location and the viability of the energy, the price per megawatt can fluctuate dramatically. In competitive negotiations with top-tier infrastructure, valuations exceeding $400,000 per megawatt are common, with potential to reach $450,000 or even $500,000 to $550,000 in premium situations.

In less desirable locations or with logistical issues, prices drop to a range of $100,000 to $250,000 per megawatt, attracting buyers who prioritize energy access above other considerations.

The buyer universe has expanded significantly beyond Bitcoin miners. Hyperscalers (large tech companies like Amazon), AI developers, and infrastructure manufacturers are competing aggressively for the same capacity. Nardini witnessed a negotiation process involving a privately owned asset that attracted about 25 potential buyers requesting confidentiality agreements — an indicator of fierce demand.

The recent transaction between Hut 8 and Fluidstack exemplifies this trend: a 15-year contract worth $7 billion for 245 megawatts of capacity at its River Bend campus boosted the miner’s shares by up to 20%. At the same time, companies like CoreWeave, despite dropping more than 50% since their peak in June, continue to attract quality tenants paying robust rates.

2026 Outlook: When Lower Rates Reignite the Risk Market

Looking ahead, the scenario remains favorable for risk assets if rates fall. Nardini characterizes this as a potential “active risk environment,” where infrastructure businesses tend to thrive.

The logic he presents to executives is straightforward: do clients have demand? Yes. Do they have tenants? Yes. Are they quality tenants? Yes. Can they secure good rates? Yes. Therefore, demand persists — and this is reflected in valuations maintained at attractive levels.

With Bitcoin trading around $78.81K in early 2026, and high-performance computing in full expansion, the pressure for megawatts remains intense. Developers who have built capacity are seeing multiple solid-credit tenants competing for their spaces at competitive rates.

Nardini’s caveat is simple and pragmatic: only worry when developers can’t rent out their capacity or fail to reach the necessary price. “So far,” he concludes, “that’s not happening. The business structure remains intact, and the demand for data center capacity for energy, AI, and high-performance computing remains unwavering in 2026.”