Crypto Mining Stocks Extend Losses as China’s DeepSeek Stirs US AI Valuation Fears
Crypto mining stocks slumped for a second consecutive session amid growing concerns over inflated valuations in the U.S. AI sector, triggered by the release of Chinese AI firm DeepSeek’s cost-efficient model. Despite a broader market rebound following Monday’s selloff, mining companies failed to recover, underscoring investor anxiety about shifting industry dynamics.
Riot Platforms (RIOT) led declines with a 4.3% drop, while Cleanspark (CLSK) fell nearly 2.5% and MARA Holdings (MARA) edged slightly lower, per Google Finance data. The sector’s weakness contrasted sharply with chipmaker Nvidia (NVDA), which surged 8.8% on Tuesday after plunging 17% the prior day—a swing that erased nearly $600 billion from its market cap at its lowest point.
Analysts linked the mining stocks’ slump to accelerated diversification efforts, as rising Bitcoin mining difficulty and competition push firms to repurpose computing power for AI model training. DeepSeek’s January 27 launch of its V1 model exacerbated fears of a U.S. AI valuation bubble, wiping billions from Meta, OpenAI-linked assets, and other tech giants.
DeepSeek’s Low-Cost Model Disrupts AI Economics
DeepSeek revealed its latest AI model was trained for under $6 million—a fraction of the billions spent by U.S. rivals like Meta and OpenAI. Crucially, the model reportedly utilized affordable alternative chips instead of Nvidia’s premium hardware, challenging assumptions about AI development costs and infrastructure requirements.
Tech Titans Rebound as S&P Nears Record High
Major tech stocks staged a robust recovery on January 28: Apple rose 3.65%, Amazon climbed 1.16%, Meta gained 2.17%, Microsoft added 2.87%, and Alphabet advanced 1.70%. The S&P 500 registered its “third-largest single-day market cap gain in history,” rising 55 points to sit just 1% below its all-time high, according to the Kobessi Letter.
AI Crypto Tokens Extend Freefall
The AI crypto sector plunged 5.11% over 24 hours to a $42.33 billion market cap, per CoinMarketCap. Virtuals Protocol (VIRTUALS) dropped 11.75%, while Venice Token (VVV)—a startup claiming exclusive DeepSeek model access—crashed 20.29%, highlighting deepening investor skepticism toward AI-linked digital assets.