Market whiplash: Why CIOs can't plan for volatility

Hardware and infrastructure cost signals

Rare earth metals are an essential component of IT infrastructure for a number of reasons.

"Rare earth matters because they sit deep inside physical infrastructure, magnets in hard drives, cooling systems, motors and core data center hardware," said Abdul Rafay Gadit, co-founder of ZIGChain. "Recent price actions point to a structural squeeze. Supply bottlenecks and tighter export licensing are already changing vendor behavior."

China controls 70% of global rare earth mining, 85% of refining capacity and 90% of magnet manufacturing. When Beijing implemented stricter licensing, S&P Global flagged rare earth disruption as a key 2026 risk. The rare earth metals' value surge reflects reality, not speculation. Neodymium climbed because supply is genuinely constrained, and demand from AI infrastructure, electric vehicles and data center expansion continues accelerating.

Then there's silver. The metal crashed 31% on Jan. 31, yet it's still up year-to-date. Silver is essential for semiconductors, solar panels powering data centers and electric vehicle components. Unlike rare earths, silver serves dual purposes as both an industrial input and a financial safe haven. That makes its price path even more erratic.

Add bitcoin's crash to this mix and the contradictions multiply. Some costs are rising, some are falling, and both trends create planning headaches. Procurement teams face simultaneous upward and downward pressures on the same equipment orders.

"A slight retrace in BTC mining may make GPU costs more affordable for other workloads by freeing up hardware for AI inference," said Daniel Keller, CEO and co-founder of InFlux Technologies. "However, surges in rare earth metal prices will increase data center operating expenses as vendors source a wider range of materials to offset supply shortages."

Vendor and supply chain risk

Extreme price swings don't just affect component costs. They destabilize the suppliers CIOs depend on.

• Directional pressure on suppliers. When rare earths surge, mining operations benefit, but downstream manufacturers and processors face margin compression. When precious metals crash, refiners and specialty processors holding inventory can face sudden losses. Either scenario creates risk for CIOs.
• Consolidation and bankruptcy risk. Extreme price swings pressure smaller manufacturers and processors with thin margins. Companies that can't absorb volatility may get acquired, shut down or pull back from the market entirely. That leaves fewer suppliers standing and makes the ones that remain more critical to procurement strategies.
• Geographic concentration. When China tightened rare earth export controls in 2025, European automotive suppliers warned of production shutdowns. That same risk hangs over IT hardware supply chains. As volatility forces Western suppliers out of the market or into consolidation, reliance on geopolitically concentrated sources can increase rather than decrease.
• Stability over savings. A vendor's financial stability and supply chain resilience matter more than their current quote. A supplier offering the lowest price today may not survive next quarter's volatility.

Cryptocurrency exposure inside the enterprise

Most enterprises don't hold bitcoin directly, and many CIOs assume they have zero cryptocurrency exposure. That might not necessarily be accurate.

Cryptocurrency dependencies show up in places IT leaders don't always examine closely, including the following:

• Fintech partners that settle transactions in stablecoins.
• Payment platforms with cryptocurrency rails.
• Cloud providers that custody or move digital assets.
• Blockchain pilots that rely on token-based infrastructure.

When bitcoin falls, those hidden dependencies come under stress. Vendors tied to cryptocurrency revenue face pressure. Investment in blockchain innovation slows. Boards and regulators increase scrutiny.

"We should treat crypto exposure as a vendor and workflow issue, not a treasury one," Gadit said. "Indirect exposure often sits with third parties: fintech partners that settle in stablecoins, cloud or payment providers that custody or move digital assets, or pilots that rely on on-chain rails even if the enterprise itself doesn't hold tokens."

A fintech partner facing funding pressure or a cloud provider scaling back blockchain services can disrupt enterprise operations even though the CIO never approved a bitcoin purchase.

While cryptocurrency exposure can reveal risks, it can also offer potential benefits. As cryptocurrency mining becomes less profitable during price crashes, GPU capacity can shift to AI inference and other enterprise workloads.

"Compute constraints create opportunities for repurposed GPU bandwidth, or idle compute, where underutilized processing power is used to run application workloads when a device is idling," Keller said.

Budget planning and capital allocation

Historically, IT budgeting has typically relied on directional trends. Rare earth prices move based on demand forecasts. Commodity metals track industrial production. Cryptocurrency operates in its own cycle. When these markets move in opposite directions simultaneously, traditional forecasting methods become unreliable.

When rare earths surge, silver crashes and bitcoin falls -- all hitting the same hardware budget within weeks -- CIOs face contradictory pressures, including the following:

• Potential short-term cost relief on some components (GPUs freed from cryptocurrency mining, precious metals down).
• Longer-term uncertainty around availability and innovation (rare earth supply constraints, vendor instability).
• Increased pressure from CFOs to "wait and see" rather than commit capital.

Finance teams expect projected costs for hardware refreshes, data center buildouts and infrastructure expansion. Grover said precise forecasting in today's environment is unrealistic, but that doesn't mean budgeting can't be disciplined.

"CIOs and CFOs should shift from point forecasts to risk-informed scenarios, using up-to-date supplier risk intelligence to model possible cost outcomes," he said.

Finance leadership sees commodity price drops and questions why IT wants to lock in orders now. IT leadership sees supply constraints and vendor instability and wants to secure capacity before it disappears. Both perspectives have merit, which makes the budgeting conversation harder rather than easier.

But the challenge isn't just getting the numbers right. It's building budgets that remain viable regardless of the direction markets move next.

"A drop in commodity prices should not be considered solely from a cost-saving perspective," said Peter Reagan, financial market strategist at Birch Gold Group. "CIOs and CFOs must consider budgets with flexibility and scenario planning in mind, recognizing how quickly prices can turn in response to inflation, currency pressures or geopolitical events."

Actions for CIOs

While the current level of volatility is not something that can be predicted, it is a scenario where CIOs can do more than just react. The current volatility requires immediate tactical responses, ongoing monitoring and strategic repositioning.

What CIOs should do now

Consider the following immediate actions:

• Map supply chain dependencies and price exposure. Identify which hardware categories have the highest rare earth content and which vendors operate on thin margins.
• Build vendor financial stress tests. Assess which suppliers could face liquidity pressure if commodity swings continue for another two quarters.
• Document all cryptocurrency touchpoints in your technology stack. Create a dependency map showing where third-party services intersect with cryptocurrency markets.
• Renegotiate procurement contracts with volatility clauses. Build in price adjustment mechanisms, alternative sourcing rights and component substitution approvals before placing orders.

What CIOs should watch

Beyond immediate actions, CIOs should also be tracking several different things, including:

• Export policy changes from Beijing. Chinese rare earth licensing decisions can reshape global supply within weeks.
• Vendor M&A and bankruptcy filings. Consolidation accelerates when commodity volatility stresses margins.
• Central bank policy shifts affecting cryptocurrency liquidity. Monetary tightening can trigger cascade effects through crypto-adjacent service providers.
• AI and EV demand forecasts. Slowdowns in these sectors could ease rare earth constraints faster than procurement teams expect.

Risks to flag for the board

A key part of the CIO role is understanding and managing risk. Consider flagging some of the risks for the board. Risks included are:

• Procurement strategies optimized for stable pricing. Current contracts likely assume predictable commodity costs. That assumption no longer holds.
• Unidentified vendor dependencies on volatile revenue streams. Service providers with cryptocurrency exposure may not disclose it until stress appears.
• Capital plans built on single-point hardware cost forecasts. With rare earths up and precious metals down, point estimates create budget illusions.

Strategic opportunities for disciplined CIOs

While there are risks, there are also potential strategic opportunities to be found, by taking strategic action.

• Lock strategic partnerships while vendors need committed buyers. Suppliers facing uncertainty will negotiate better terms for volume commitments.
• Stockpile components with concentrated supply chains. Critical spare parts may become unavailable before they become expensive.
• Redirect innovation budgets toward resilience capabilities. Volatility exposes which technology bets depend on favorable market conditions vs. operational value.

"The goal is not perfect prediction, but a resilient financial plan that anticipates cost swings and identifies where contingency funds or strategic sourcing alternatives are most needed," Grover said.

Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.