Activist hedge fund Sachem Head Capital Management sees nearly 140% upside in Ionic Digital as the former bitcoin miner shifts into AI data centre infrastructure, according to a report by Reuters.

Sachem Head founder Scott Ferguson told the 13D Monitor Active-Passive Investor Summit in New York that Ionic's shares could rise to $151 from around $63, supported by growing demand for data centre capacity and the company's expansion into infrastructure leasing.

Ionic, which emerged from the bankruptcy restructuring of crypto lender Celsius Network, began trading on Nasdaq in July. The company is repositioning its operations to capitalise on rising demand for computing infrastructure.

Sachem Head owns approximately 9.9% of Ionic, having participated alongside Oaktree Capital Management and Attestor Capital in a $400m private placement in June. Ferguson said the hedge fund planned to disclose its ownership in a regulatory filing on Wednesday.

Ionic has secured a 10-year triple-net lease, with an option to extend for another decade, with London-based AI infrastructure provider Nscale at its facility in Ward County, Texas. Microsoft is the end customer for the site, according to Ferguson.

The hedge fund believes further development at Ward County and additional facilities in Midland, Texas, could drive significant appreciation in Ionic's valuation.

Ferguson expressed confidence in Ionic's management but indicated that Sachem Head could take a more active role in the company's strategic direction.

“We think management is pretty good,” he said, while leaving open the possibility of greater shareholder engagement.

The investment reflects Sachem Head's conviction in Ionic's transition from cryptocurrency mining to AI infrastructure leasing, as demand for computing capacity creates new opportunities for digital infrastructure operators.