Is DGXX a buy after surging +200% in one month?

- By Stephen McBride, Chief Analyst at RiskHedge

Have you seen crypto miner DGXX stock recently?

Digi Power X shot up +200% in the last month.

Does that mean DGXX is a buy?

You should know the important story behind DGXX…

Because it’s throwing off profitable opportunities left and right.

Digi Power X started as a bitcoin miner. It built data centers, bought a bunch of computer chips, and used them to solve complicated math equations in exchange for bitcoin.

When the price of bitcoin declined and AI’s need for data centers soared, DGXX decided to pivot.

This alone isn’t unique. Many bitcoin miners have retooled their data centers to serve AI needs, including Core Scientific (CORZ), HIVE Digital Technologies Ltd. (HIVE), and IREN Ltd. (IREN).

But none of these companies were able to secure a deal like DGXX. Its stock jumped 60% after announcing a 10-year, $1.1 billion deal with AI chip company Cerebras Systems.

Cerebras, if you haven’t heard the name, is one of the few chipmakers that could credibly be called a Nvidia (NVDA) rival. It makes the largest computer chips in the world—dinner plate-sized silicon chips with over 4 trillion transistors, built specifically to run AI models faster than anyone else.

Last November, I visited Cerebras's Silicon Valley data center (bestselling author Matt Ridley came, too). I snapped this picture:

Cerebras is now getting ready to IPO.

Why did Cerebras partner with DGXX, and not the other half-dozen crypto miners turned AI feeders?

Power!

Digi owns its own power infrastructure, including a 60 megawatt natural gas plant in New York. It also owns the substation and the land at its data center site in Alabama, where Cerebras will install its chips.

As you likely know, power is a big bottleneck holding back AI. We simply do not generate nearly enough electricity to meet our AI needs.

It’s why big tech companies like Amazon (AMZN) and Meta Platforms (META) are investing billions in nuclear power. Imagine reading that headline five years ago…

Most other players in this space are power “tenants” rather than power “owners.” While they have data centers, they lease power from a utility and don’t control the underlying infrastructure. So, they’re unable to move as fast as DGXX.

Rewiring a bitcoin miner to house AI chips is a process. AI chips run much hotter, so the cooling infrastructure needs to be massively upgraded.

Also, bitcoin miners can be turned on and off easily. If the price of electricity spikes or the price of bitcoin dips enough to make the mining unprofitable, they can simply flip the “off” switch.

AI data centers, on the other hand, need 99.99% uptime.

Thanks to its vertical integration, DGXX can transform its data centers faster than any other player in the space. Clearly, time is money for Cerebras as it approaches its IPO.

If you’re new to the power pivot thesis, buy some DGXX here. It will go a lot higher.

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Stephen McBride is Chief Analyst at RiskHedge. To get more ideas like this sent straight to your inbox every Monday and Friday, make sure to sign up for The Jolt, a free investment letter focused on profiting from disruption.