Core Scientific Inc (NASDAQ:CORZ) is making headlines with its recent announcement of new data center contracts, prompting BTIG to raise its price target for the crypto miner to $15 from $10. These new contracts, including a 200MW high-performance computing (HPC) agreement with CoreWeave and additional 70MW data center contracts, have ignited investor interest and propelled Core Scientific’s stock price up by nearly 90% in recent weeks. This surge in stock price demonstrates the company’s growth potential in the Bitcoin mining sector.
BTIG’s BTC mining basket, consisting of 14 companies, has an aggregate hash rate of approximately 138 EH, representing 23% of the global hash rate. With the hash rate expected to reach 153 EH by 2025, driven by the deployment of new rigs that enhance fleet efficiency, Core Scientific is well-positioned to capitalize on this growth trajectory. Bitcoin’s current price of around $62,000 and the 45% year-to-date increase have boosted miners’ margins, creating a favorable environment for companies like Core Scientific to thrive.
One notable trend highlighted by BTIG is the shift towards fixed-price multi-year contracts in the mining industry. This strategic move has allowed some miners, including CORZ, to decouple from the volatility of Bitcoin prices. Despite a recent 11% drop in Bitcoin prices since early June, Core Scientific and other miners embracing this approach have seen significant stock price gains. Terawulf is up over 100%, while Iris has increased by around 70% during this period, showcasing the effectiveness of this strategy.
As demand for data center services continues to rise, publicly listed BTC miners are increasingly focused on securing power access for their operations. BTIG noted that for every 100MW of power allocated for HPC, there is a reduction of 5-6 EH in the global hash rate. This competition for power access underscores the importance of strategic partnerships and efficient operations in the evolving landscape of crypto mining.
BTIG estimates the value of Core Scientific’s 286MW of fixed HPC contracts at $9-$10 per share, assuming a 15x EBITDA multiple. Furthermore, with a target of 500MW for HPC by 2028, BTIG anticipates an additional $5 per share value. This optimistic outlook justifies the new price target of $15 for Core Scientific, highlighting the company’s promising growth trajectory in the crypto mining sector.
Core Scientific’s strategic partnerships, focus on efficiency, and embrace of fixed-price multi-year contracts position the company for sustained growth in the rapidly evolving world of crypto mining. With a solid foundation in place and a clear path towards expansion, Core Scientific is poised to be a key player in shaping the future of the industry. Investors and industry observers alike will be watching closely as Core Scientific continues to innovate and capitalize on the opportunities presented by the dynamic crypto mining landscape.