In a recent report, BTIG has revised its price target for crypto miner Core Scientific Inc (NASDAQ:CORZ) from $10 to $15. This decision was based on the company’s new data center contracts and the promising growth potential in the Bitcoin mining sector. The BTIG BTC mining basket, which consists of 14 companies, currently has an aggregate hash rate of approximately 138 EH, representing 23% of the global hash rate. The hash rate is projected to increase to 153 EH by 2025, primarily driven by the introduction of new rigs that enhance fleet efficiency.
Bitcoin’s price is currently hovering around $62,000, reflecting a 45% increase year-to-date. This surge in price has been advantageous for miners, as it has positively impacted their margins. Despite the global hash rate averaging 582 EH in June, slightly down from 600 EH in May, it is still up by 57% when compared to last year. The network difficulty has also been on an upward trajectory, rising by 60% over the past year and 16% year-to-date.
Core Scientific recently made headlines by announcing a significant 200MW high-performance computing (HPC) contract with CoreWeave, followed by an additional 70MW of data center contracts. These new contracts have propelled Core Scientific’s stock price by nearly 90% in recent weeks. BTIG highlighted the strategic shift towards fixed-price multi-year contracts, which has enabled certain miners to detach themselves from the fluctuations in Bitcoin prices. This transition has proven to be beneficial for companies like CORZ, with Terawulf seeing an increase of over 100% and Iris around 70% during this period.
Intensifying Competition Among BTC Miners
The competition for power access has intensified among publicly listed BTC miners due to the growing demand from data center companies. BTIG pointed out that for every 100MW of power allocated for HPC, there is a 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 rapid industrialization of BTC mining. Riot’s Corsicana facility is projected to reach 31 EH by the end of this year and 41 EH by 2025.
Market Value and Future Projections
BTIG estimates the value of Core Scientific’s 286MW of fixed HPC contracts to be in the range of $9-$10 per share, assuming a 15x EBITDA multiple. Comparatively, data center REITs are trading at approximately 20x EBITDA for the year 2025. With a target of achieving 500MW for HPC by 2028, BTIG predicts an additional value of $5 per share, justifying the new price target of $15 for Core Scientific Inc.
Core Scientific Inc appears to be on a promising path towards sustained growth and success in the dynamic world of crypto mining. With strategic partnerships, expansion of data center contracts, and a clear focus on enhancing efficiency, the company is well-positioned to capitalize on the evolving landscape of Bitcoin mining.