JPMorgan reports a $4 billion surge in market capitalization for bitcoin miners after Core Scientific announced a major partnership with AI hyperscaler Coreweave, despite a decline in bitcoin prices.
Bollywood Fever: Global investment bank JPMorgan has reported a significant surge in investor interest in bitcoin miners, triggered by Core Scientific’s announcement that it will host 200 MW of GPUs for AI hyperscaler Coreweave. The announcement has led to a $4 billion increase in the combined market capitalization of 14 tracked bitcoin miners, despite a decline in bitcoin prices.
Surge in Bitcoin Miners’ Market Cap
In a report released on Monday, JPMorgan noted that the aggregate market capitalization of the 14 bitcoin miners it monitors has risen by 22% ($4 billion) since Core Scientific’s announcement on June 3. This is in stark contrast to the 7% decline in bitcoin prices and a 3% increase in the S&P 500 over the same period.
Factors Driving the Increase
JPMorgan attributes this increase to two primary factors:
- Exploration of Alternative Uses for Mining Facilities: Bitcoin mining facilities are exploring more profitable uses beyond cryptocurrency mining, such as hosting high-performance computing (HPC) operations for AI applications.
- High Value and Scarcity of Power Access: The limited availability and high value of power access for large-scale computing operations are driving investor interest and confidence in the profitability of these ventures.
Key Bitcoin Miners Benefiting from the Surge
The 14 miners tracked by JPMorgan include:
- Marathon Digital Holdings (MARA)
- Riot Platforms (RIOT)
- Cleanspark (CLSK)
- Hut 8 Mining Corp. (HUT)
- Core Scientific (CORZ)
- Argo Blockchain (ARBK)
- Bitfarms (BITF)
- Hive Blockchain Technologies (HIVE)
- Iris Energy (IREN)
- Stronghold Digital Mining (SDIG)
Core Scientific’s Strategic Move
Core Scientific Inc., a major owner and operator of high-powered digital infrastructure for bitcoin mining and hosting services in North America, announced a strategic partnership with Coreweave on June 3. The 12-year contracts involve Core Scientific providing 200 MW of infrastructure to support Coreweave’s HPC operations. The modifications to existing sites will begin in mid-2024 and are expected to be operational by mid-2025, with two optional five-year renewals.
Coreweave will fund the $300 million capital investment required for site modifications, which will be credited against hosting fees. Core Scientific estimates that the project will generate over $3.5 billion in total cumulative revenue during the initial 12-year terms of the contracts.
Implications for the Bitcoin Mining Industry
This surge in market capitalization highlights the growing investor confidence in the adaptability and profitability of bitcoin mining infrastructure. By diversifying their operations to include high-demand services such as HPC for AI applications, bitcoin miners are positioning themselves for sustained growth and profitability, even amidst fluctuating cryptocurrency prices.
Conclusion
The recent partnership between Core Scientific and Coreweave has not only sparked a significant increase in the market value of bitcoin miners but also underscores the evolving landscape of the mining industry. As miners explore new, profitable uses for their facilities, investor interest is likely to continue growing, further solidifying the industry’s position within the broader technological and financial ecosystems.
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