Bitcoin mining companies are benefiting from growing demand from artificial intelligence firms that are willing to pay higher premiums for quick access to power infrastructure, particularly for data center development, Morgan Stanley said in a note emailed Tuesday.

The bank said it maintained a positive view of TeraWulf's (WULF) Bitcoin-to-data-center conversion strategy, and that its valuation update was driven by stronger operating margin assumptions and updated loan-to-cost financing data. The company also continues to meet operational milestones, including delivering 60 megawatts of Core42 IT capacity at Lake Mariner, the firm added.

Cipher Mining (CIFR) continues to be viewed as one of the stronger Bitcoin-to-data-center conversion companies, supported by signed leases, visible development progress, and expanding power capacity, Morgan Stanley said, adding that the $2.06 billion Stingray contract was incorporated into the valuation.

While MARA (MARA) continues to make strategic progress through initiatives like the Starwood joint venture and the Long Ridge acquisition, its valuation remains more sensitive to Bitcoin price movements and mining economics than peers such as TeraWulf or Cipher Mining, the bank added.

"We are seeing signs of increasing willingness among key AI players to pay higher 'time to power' premia in the form of increasingly rich economics to Bitcoin companies to utilize their power access to serve [data center] developers," the bank said.

Morgan Stanley raised its price targets for TeraWulf to $42 from $41.50 and Cipher Mining to $42.50 from $40.50, while lowering the price target for MARA to $7 from $8.50.

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