Hot Inflation Print Sinks Bitcoin Miners and AI Data Center Stocks as Rate-Hike Fears Return

A hotter-than-expected inflation report hit two of PRISM MarketView’s most closely watched groups on Wednesday. Every constituent of the PRISM Crypto Mining Index traded lower, with an average decline of nearly 10%. In the PRISM AI Datacenter & Infrastructure Index, 21 of 23 names fell, by about 7% on average. Bitcoin slipped toward $81,900 after the data. Meanwhile, traders sharply raised the odds of a Federal Reserve rate hike. Higher borrowing costs threaten the debt-funded AI build-outs that have powered these stocks all year.

Key Points

• September CPI rose 3.7% from a year earlier, above the 3.6% forecast. Core CPI rose 0.3% for the month, above the 0.2% forecast.
• Futures traders now see a 44% chance the Fed hikes rates at its October 27–28 meeting. A week ago, they saw almost no chance.
• Bitcoin fell below $82,000 after the report and is about 34% below its all-time high.
• All 16 PRISM Crypto Mining Index constituents declined. Bitdeer, Cipher, TeraWulf, Core Scientific and IREN each fell more than 11%.
• In the AI Datacenter & Infrastructure Index, Backblaze led the decline with a drop of about 20%. Hut 8, Fermi and Applied Digital each fell more than 10%.

Inflation Surprise Resets the Rate Outlook

The Labor Department’s September report showed headline prices up 0.6% for the month, in line with forecasts and the biggest monthly gain since May. Year-over-year inflation, however, rose to 3.7% from 3.4% in August. Core inflation also beat estimates. As a result, traders now put a 44% chance on a Fed rate hike at the October 27–28 meeting. They also put the odds of two hikes by year-end at 44%, up from 13% a week ago.

Bitcoin reacted quickly. It had briefly touched $84,000 overnight, then fell about $1,000 within minutes of the release and slid below $82,000 by mid-morning.

Miners Take the Hardest Hit

Bitcoin miners felt it most, since they face both a lower bitcoin price and higher financing costs. In the PRISM Crypto Mining Index, Bitdeer (BTDR) fell about 13.5%. Cipher (CIFR) dropped roughly 12.5%. Core Scientific (CORZ), TeraWulf (WULF), IREN (IREN) and CleanSpark (CLSK) each lost more than 11%. Furthermore, Riot Platforms (RIOT), MARA Holdings (MARA) and Galaxy Digital (GLXY) fell between 9% and 11%.

Cipher also faced its own pressure. Its slide extended a two-day decline that began when the company priced $850 million in zero-coupon convertible notes to fund its Barber Lake data center expansion. In addition, Cipher plans to swap part of an existing convertible issue for about 40.7 million new shares. That swap has fed concerns about dilution.

The sell-off also erased some recent gains. IREN rallied last week on reports that it had landed Anthropic as an AI cloud customer. Even so, it gave back more than 11% on Wednesday.

AI Infrastructure Isn’t Spared

The pressure spread well beyond bitcoin. In the PRISM AI Datacenter & Infrastructure Index, cloud storage provider Backblaze (BLZE) fell about 20%, the index’s steepest drop. Hut 8 (HUT) lost roughly 13.5%. It has now fallen in both of the last two sell-offs as it shifts from mining toward energy infrastructure and AI data centers. Fermi (FRMI) slid about 12%, only a day after a 20% rally. Applied Digital (APLD) dropped nearly 11%.

The reason is simple. AI data center developers depend on outside capital to build power-hungry campuses. Higher interest rates raise their borrowing costs and reduce today’s value of the long-term lease income they expect to earn. Therefore, any sign that the Fed may tighten again hits these stocks harder than the broader market, which fell only modestly.

What Comes Next

The fundamentals behind both indexes haven’t changed in a single session. Hyperscaler leases, AI lab customers and new capacity still support the long-term case. In the near term, however, investors will focus on the Fed’s October 27–28 decision and whether bitcoin can break back above $84,000. Earnings also loom. Hut 8, for example, reports third-quarter results on November 4. Until then, rate expectations are likely to drive these stocks more than company news.