Market sentiment is mixed on Tuesday, as traders brace for the release of the Consumer Price Index (CPI) on Wednesday and the upcoming presidential debate. With negative breadth and limited buying interest, it’s a wait-and-see environment for many market participants.
In this quiet market, I’m staying on the sidelines for now but focusing on research — particularly on a promising name in two of the hottest sectors today: Bitcoin mining and artificial intelligence (AI).
Bitcoin Mining Meets AI: A High-Power Synergy
Bitcoin mining and AI development share a critical commonality: both require massive amounts of computing power, supported by sophisticated software and hardware infrastructure. However, Bitcoin mining’s profitability can be highly volatile, tied closely to the fluctuating value of Bitcoin itself. In downcycles, this can make it a challenging business model.
Core Scientific Inc. (CORZ) is tackling this issue head-on by diversifying its revenue streams. Rather than relying solely on Bitcoin mining, the company leases its High-Performance Computing (HPC) capacity to businesses that require additional computational power. This dual approach may allow Core Scientific to hedge against the inherent volatility of cryptocurrencies.
The Growing Demand for High-Performance Computing
The demand for HPC is surging, driven by the rapid development of AI and the exponential growth of data centers. On Oracle’s (ORCL) recent earnings call, Chairman Larry Ellison revealed that the company currently operates 162 data centers, with the potential to expand to 1,000 to 2,000 more. This points to a vast and growing need for HPC infrastructure.
Within the Bitcoin mining sector, other players are also exploring leasing HPC capacity. However, Core Scientific stands out due to its strategic partnership with CoreWeave, a privately held cloud provider specializing in GPU-accelerated workloads. CoreWeave, which collaborates with Nvidia (NVDA) for GPUs, utilizes Core Scientific’s facilities for its HPC needs.
Current estimates suggest that CoreWeave has committed to leasing approximately $6.7 billion in HPC capacity from Core Scientific over the next 12 years, with options to expand further. This substantial commitment underscores Core Scientific’s leadership position within the Bitcoin mining sector’s pivot towards HPC services.
Wall Street’s Perspective: Optimism Around Core Scientific
Analysts are taking note of Core Scientific’s strategy. The company is projected to earn $0.43 per share in 2025, reflecting a forward P/E ratio of around 23x. Among the eight analysts covering the stock, price targets range from $13 to $20, with an average target of $16.13 — representing a potential upside of approximately 62% from current levels.
Recently, Needham initiated coverage on Core Scientific with a “Buy” rating and a $16 price target. The firm described CORZ as a “first mover” among Bitcoin miners in the rapidly growing market for high-performance computing data center capacity. Needham highlighted Core Scientific’s early market entry with a 100MW-plus site, its partnership with CoreWeave, and the favorable terms of the deal as key differentiators. The firm forecasts that the HPC segment could generate $500 million in annual revenue by 2026, with $400 million in gross profit.
Trading Strategy: Watching for a Breakout
From a technical standpoint, CORZ is currently trading within a range but demonstrating strong relative strength compared to its Bitcoin mining peers. I’m closely monitoring for a breakout above the $11 level, where I plan to execute aggressive trades.
Key Takeaways for Traders and Investors:
- Dual Revenue Streams: Core Scientific’s strategy of leasing HPC capacity alongside Bitcoin mining operations offers a hedge against cryptocurrency market volatility.
- Growing HPC Demand: The rapid expansion of data centers and AI development suggests a rising demand for HPC services, positioning CORZ well in this market.
- Strong Analyst Support: With multiple analysts expressing optimism and a potential upside of 62%, CORZ could present an attractive opportunity for growth-oriented investors.
- Technical Setup: Watch for a breakout above $11 to signal a potential momentum trade.
