Core Scientific Inc, a crypto miner, has caught the attention of BTIG, which has increased its price target for the company to $15 from $10. This upgrade is based on the recent data center contracts secured by Core Scientific and the growth potential observed in the Bitcoin mining sector. The firm’s BTC mining basket, consisting of 14 companies, boasts an aggregate hash rate of around 138 EH, representing approximately 23% of the global hash rate. As the hash rate is projected to increase to 153 EH by 2025, driven by the introduction of new rigs that enhance fleet efficiency, Core Scientific is poised for significant growth.
Currently, Bitcoin’s price stands at approximately $62,000, marking a 45% increase year-to-date. This upward trend in prices has been beneficial for miners, leading to improved margins. Despite the global hash rate averaging 582 EH in June, slightly lower than May’s 600 EH, it is still substantially higher than the previous year, posting a 57% increase. Moreover, network difficulty has been steadily climbing, rising by 60% over the past year and 16% year-to-date. These factors have contributed to the positive outlook for Core Scientific and other miners.
Core Scientific recently announced a significant 200MW high-performance computing (HPC) contract with CoreWeave, along with an additional 70MW of data center contracts. These new developments have propelled Core Scientific’s stock price by nearly 90% in recent weeks. The shift towards fixed-price multi-year contracts has allowed some miners, including Core Scientific, to detach from the volatility of Bitcoin prices. This strategy has proven successful, with BTIG highlighting examples of other miners, such as Terawulf and Iris, experiencing substantial growth during this period.
The race for power access has intensified among publicly listed BTC miners due to the growing demand from data center companies. BTIG emphasized the significance of power availability in HPC conversion, noting that for every 100MW of power utilized for HPC, there is a corresponding reduction of 5-6 EH in the global hash rate. Site visits to Riot’s Corsicana facility and Core Scientific’s Denton facility revealed the industrialization of BTC mining, showcasing the expansion and modernization of mining operations.
Looking ahead, BTIG estimates the value of Core Scientific’s 286MW of fixed HPC contracts to be in the range of $9-$10 per share, based on a 15x EBITDA multiple. With a target of reaching 500MW for HPC by 2028, the firm anticipates an additional value of $5 per share, justifying the revised price target of $15. The report also shed light on Bitdeer’s plans for designing mining rigs and repurposing existing facilities for HPC computing, highlighting potential growth opportunities in the sector.
As the Bitcoin mining sector continues to evolve and expand, companies like Core Scientific are well-positioned to capitalize on the growing demand for mining services. With strategic contract acquisitions, a focus on efficiency and innovation, and a solid outlook for future growth, Core Scientific’s trajectory points towards a promising future in the competitive world of cryptocurrency mining.