With the ongoing decline in cryptocurrency prices, the once highly sought-after Digital Asset Reserve (DAT) business model is rapidly cooling off. In response, a growing number of related companies are pivoting to the artificial intelligence sector, hoping to regain investor interest. However, based on current market performance, this transition has not yet yielded significant results.
After announcing a shift from its Bitcoin reserve business to data center development in May of this year, K Wave Media (KWM.US) shares have fallen by 71%. Similarly, AlphaTON Capital, which held alternative crypto assets, renamed itself to Alpha Compute Corp. (ALP.US) in April and pivoted to AI, only to see its stock drop by 33% overall. According to statistics, at least a dozen DAT companies have begun to lay out AI-related businesses in recent months to cope with the prolonged crypto market downturn.
Toufic Adlouni, Managing Partner at Canadian law firm Renno & Co, noted that the market currently has a strong interest in AI, with more companies seeking to enter a track with higher growth potential. He pointed out that the vast majority of digital asset reserve companies are either seeking to transform or are already in operational distress. DAT companies were once one of the hottest concepts in the capital markets last year. These firms typically buy Bitcoin and other digital assets by issuing stock or using balance sheet financing. During the crypto bull run, their stock price gains even exceeded the performance of the assets they held. However, as the cryptocurrency market experienced a sharp downturn, the share prices of many DAT companies have fallen below their net asset value, and management teams have begun to abandon this business model one after another.
Meanwhile, AI infrastructure construction continues to attract substantial capital inflows. Tech giants like Alphabet (GOOGL.US) and Microsoft (MSFT.US), along with AI companies such as OpenAI and Anthropic, are continuously expanding their data center investments, making the data center supply chain one of the strongest-performing sectors in the US stock market this year. Nearly all of the top ten best-performing stocks in the S&P 500 this year are related to data center construction, including SanDisk (SNDK.US), which has risen over 500%, as well as Dell Technologies (DELL.US), Intel (INTC.US), and Micron Technology (MU.US).
In contrast, as of July 24, Bitcoin has fallen 49% from its October peak, with a 27% decline year-to-date. Ethereum has dropped 38% this year and is down 62% from its all-time high in August 2025. Consequently, DAT concept stocks have suffered a massive blow. Media statistics show that the median decline for US and Canadian digital asset reserve company stocks this year has reached 43%.
Gregory Sichenzia, founding partner at Sichenzia Ross Ference Carmel, remarked that last year, DAT companies were nearly unstoppable, but now this business model has rapidly lost its market appeal. He revealed that his firm was involved in a large number of private financing projects for DAT companies last year but has not handled any such financing deals since October. Instead, the enquiries have shifted to AI-related industry opportunities, such as AI data centers, space exploration, and small nuclear reactors.
The digital asset reserve model was first pioneered by Strategy (MSTR.US) Chairman Michael Saylor in 2020. The company deeply tied its stock price to cryptocurrency prices by continuously buying Bitcoin. Benefiting from Bitcoin's price rise to a peak of around $125,000 in October 2024, Strategy's shares once surged over 3,000% from the end of 2019. However, as Bitcoin's price subsequently fell, Strategy's stock has dropped about 81%, and the company has also begun to gradually reduce its Bitcoin holdings.
It is worth noting that not all companies pivoting to AI are performing poorly. CoreWeave (CRWV.US), which was previously a Bitcoin mining company, successfully transitioned to AI cloud computing services. It now boasts a market capitalization of approximately $40 billion, with its shares up about 80% since its IPO in March 2025. Additionally, Bitcoin miners such as Hut 8 (HUT.US), Iren (IREN.US), and TeraWulf (WULF.US) have regained some investor attention by repurposing their data centers for AI computing power services, leading to some share price recovery.
However, some industry insiders believe the crypto sector has not completely lost its allure. Daniel Forman, a partner at Lowenstein Sandler, stated that investors still maintain interest in other applications of blockchain technology, but market enthusiasm for the digital asset reserve business model has clearly cooled. He said, "As of now, the DAT model as we know it may have come to an end."
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