Last year, a group of bitcoin miners had a clever idea. Their warehouses were full of power and computers. Why not turn them into AI data centers and ride the hottest trend on Wall Street instead of volatile crypto? It seemed like a perfect escape. It turns out life as an AI data center is just as rocky. One chief executive marveled that they left bitcoin and somehow found a market even more volatile.
The numbers show the whiplash. A fund tracking bitcoin miners and digital-power companies surged 72% in 2025 on the AI rally. This year it's down about 30%. It holds the new AI-cloud names along with miners making the switch, which left it especially exposed to the recent AI selloff. The names at the center of it, squeezed by heavy debt and rising borrowing costs, fell hardest. CoreWeave, once the poster child for the pivot, is down 32% this year.
The debt is the danger
Elon Musk put the risk bluntly. Debt markets, he warned, have effectively shut out any company without real revenue outside AI data centers. The 200-plus "neoclouds," he wrote, will see "guppy-level death and consolidation." Some make it through, but not many. The miners that fully converted gave up something too: the daily flow of newly mined bitcoin that once helped fund their expansion. To raise cash for the build-out, publicly listed miners sold a record 48,900 bitcoin in the first half of the year, and an analyst expects more selling ahead.
The pattern is as old as markets. A business rushes from one hot thing to a hotter one, takes on debt to do it, and discovers the new thing swings even harder than the old one.
Our read
This is an Investments and Risk story, module IN04, about the cost of chasing. These companies did exactly what individual investors do. They saw the hottest sector, abandoned what they knew, and borrowed to get in. The result wasn't safety. It was more volatility and a pile of debt right as the market turned and lenders got picky. Chasing the hot thing usually means arriving in time to buy its biggest swings.
You don't have to own a single one of these stocks for the lesson to apply. The urge to pile into whatever ran up last year is the most expensive instinct most investors have. The antidote is boring and it works: decide your mix of stocks, bonds and cash in advance, and rebalance to it on a schedule instead of chasing. Rebalancing forces you to trim what's hot and add what's cold, the opposite of what these miners did. Here's the check this week. Look at whether any single hot theme, AI, crypto, one soaring stock, has grown to a bigger share of your portfolio than you'd have chosen on purpose. If it has, that's the market chasing for you, and the fix is to trim it back to your target on a calm day. We hold CoreWeave in exactly one satellite sleeve, sized small for this reason. This week we trimmed it to 10% from 16% ahead of its report. If you want help setting rebalancing targets so you're never the one chasing, that's fifteen minutes.