Bitcoin Mining Sector: Investor Interest Surges with Core Scientific’s AI Deal

Bitcoin Mining Sector Attracts Investor Interest

The bitcoin (BTC) mining sector is experiencing a surge in investor interest after Core Scientific’s (CORZ) recent deal with artificial intelligence (AI) company CoreWeave, as highlighted in a research report by JPMorgan (JPM). The total market cap of the 14 miners tracked by the bank has increased by 22%, or $4 billion, since the announcement. This growth contrasts with a 7% drop for bitcoin and a 3% increase for the S&P 500 stock index.

Core Scientific’s AI Deal Triggers Positive Response

Core Scientific’s 200-megawatt AI deal with a cloud computing firm has triggered a re-rating of the bitcoin mining sector. Investors have reacted positively to the announcement, recognizing the alternative and potentially more lucrative uses for mining facilities, as well as the value of power access. The deal validates and is expected to accelerate miners’ diversification into high performance computing (HPC) programs.

This development is seen as a reflection of the changing landscape within the industry, with a focus on innovative applications beyond traditional mining activities. Companies are exploring new revenue streams and strategic partnerships to leverage their infrastructure and resources effectively.

• Overweight-rated Iris Energy (IREN) is well-positioned to capitalize on this opportunity due to its excess power capacity and early adoption of HPC initiatives. The company’s proactive approach and track record in building quality data centers further enhance its competitive advantage.
• Neutral-rated Cipher Mining (IFR) boasts attractive power costs and a solid operational history, although it has a smaller power pipeline compared to Iris Energy. The company’s focus on operational efficiency and cost management contributes to its overall performance in the sector.
• Riot Platforms (RIO), another overweight-rated company according to JPMorgan, remains committed to bitcoin mining activities and has ample power capacity. Despite not actively pursuing HPC ventures, Riot Platforms continues to optimize its mining operations and explore opportunities for growth.
• Underweight-rated Marathon Digital (MARA) and neutral-rated CleanSpark (CLSK) appear relatively pricier in terms of enterprise to energized power basis, according to the report. These companies may face challenges in cost competitiveness and operational efficiency compared to their peers in the sector.