Growing Investor Interest in Bitcoin Mining Following Core Scientific’s AI Deal: JPMorgan Report

Investor interest in the bitcoin mining industry is on the rise, spurred by Core Scientific’s recent partnership with CoreWeave, an artificial intelligence (AI) company, according to a JPMorgan report.

Key Players and Opportunities

The report highlights Iris Energy as the top contender to leverage the booming high-performance computing (HPC) and AI market. Bitcoin miners are witnessing increased investor enthusiasm after Core Scientific’s AI agreement with CoreWeave.

Sector-Wide Impact

This surge in interest underscores the alternative uses for mining infrastructure and the strategic importance of power access. Following Core Scientific’s AI deal, the combined market cap of 14 tracked bitcoin miners soared by 22%, or $4 billion. In contrast, bitcoin itself fell by 7%, and the S&P 500 index saw a modest 3% rise. Earlier this month, Core Scientific announced a significant 200-megawatt AI deal with CoreWeave, which has led to a reassessment of the bitcoin mining sector by investors.

Analysts’ Insights

Analysts Reginald Smith and Charles Pearce from JPMorgan noted, “The alternative (and potentially more lucrative) use cases for mining facilities, coupled with the scarcity and value of power access, are becoming evident.” They further stated that the Core Scientific deal “validates and will hasten miners’ diversification into high-performance computing (HPC) programs.”

Company-Specific Insights

Iris Energy, with an overweight rating, stands out as the most equipped to capitalize on this opportunity. The company boasts excess power capacity and has diversified beyond bitcoin mining. Iris Energy was a pioneer in adopting HPC and already operates graphics processing units (GPUs) at its facilities. The firm is known for its efficient construction and delivery of high-quality data centers and has substantial power access.

Cipher Mining, rated neutral, benefits from low power costs and a robust operational history, though its power pipeline is smaller compared to Iris Energy. Riot Platforms, also rated overweight by JPMorgan, remains focused on bitcoin mining and has not ventured into HPC despite having ample power capacity.

Marathon Digital and CleanSpark, rated underweight and neutral respectively, are seen as the most expensive in terms of enterprise to energized power basis, according to the report.

In conclusion, the bitcoin mining sector is experiencing renewed investor interest due to the potential of alternative use cases for mining facilities, particularly in high-performance computing and AI, with Iris Energy leading the charge.