How Bitcoin’s Shift to HPC is Boosting Core Scientific (CORZ) and TeraWulf (WULF) Stocks

• The landscape of bitcoin mining is evolving as companies pivot towards high-performance computing (HPC) and artificial intelligence, signaling a significant shift in operational strategies.
• Recent analysis from Needham & Company highlights Core Scientific and TeraWulf as key beneficiaries of this trend, while Iris Energy is given a relatively cautious outlook.
• Analyst John Todaro emphasizes the transformative potential of HPC for miners facing volatile bitcoin revenues, citing the long-term contracts that enhance revenue predictability.

This article explores the latest developments in bitcoin mining, particularly focusing on the strategic shift towards high-performance computing and its implications for industry players.

Strategic Shift towards High-Performance Computing

As bitcoin miners increasingly tap into the advantages of high-performance computing (HPC), the industry landscape is transforming. According to Needham & Company’s analyst John Todaro, a significant opportunity lies ahead for miners who embrace this technology. The HPC infrastructure is seen as essential in alleviating current power capacity constraints, which pose a challenge for AI operations and other emerging technologies. U.S.-based miners collectively boast more than 7GW of power capacity, providing a sizeable foundation for scaling operations.

Core Scientific’s Pioneering HPC Efforts

Core Scientific stands out as a leader in the HPC transition among bitcoin miners, thanks to its extensive contract with CoreWeave. The company has strategically secured around 385MW of co-location capacity dedicated to HPC, translating to an anticipated revenue stream of over $500 million annually. Furthermore, forecasts predict that Core Scientific will have 271MW operational by the end of 2025 and 383MW by the end of 2026, positioning it as a frontrunner in establishing a 100MW HPC site. This operational capacity, combined with the company’s advantageous site locations near metropolitan areas and existing fiber infrastructure, underscores its readiness to capitalize on the booming demand for HPC services.

TeraWulf’s Market Position and Growth Potential

TeraWulf has also emerged as a strong contender in the race towards HPC, with Needham pointing out its promising ability to convert existing data center capacity into HPC resources. The analysis predicts TeraWulf generating around $350 million in HPC revenue by 2026, assuming successful implementation of 226MW of operational capacity. With a projected gross margin of approximately 70%, this would translate into considerable profits, further solidifying TeraWulf’s position as a key player in this evolving market.

Market Perspectives on Iris Energy

Contrasting the optimistic outlook for Core Scientific and TeraWulf, Iris Energy occupies a more cautious space in the HPC narrative. Analysts at Needham have placed a ‘hold’ rating on Iris Energy, noting its lack of substantial HPC engagements in the near term. Currently, Iris is primarily compared to traditional bitcoin miners, with the stock reflecting market conditions consistent with its peers. While Iris Energy has demonstrated operational efficiency and expectations for lower bitcoin mining breakeven costs through 2025 and 2026, the absence of significant HPC initiatives may hinder its growth potential relative to competitors embracing this technology.

Market Reactions and Bitcoin Valuations

The stock market response to these developments has been varied. Core Scientific’s shares experienced a 5% uptick, whereas TeraWulf saw an approximate 2% rise. In contrast, Iris Energy’s stock dipped slightly. As bitcoin itself fluctuates, currently priced around $57,504, analysts remain cautiously optimistic about its trajectory. Needham forecasts a potential rally for bitcoin toward the end of 2024 to early 2025, peaking around $80,000 by late 2026, which could further influence miner performance and valuations.

Conclusion

The shift towards high-performance computing is reshaping the bitcoin mining sector, highlighting the importance of adaptability in an evolving marketplace. Core Scientific and TeraWulf are strategically positioned to leverage this transformation, while Iris Energy’s current stagnation raises questions about its future growth in a market driven by innovation. As miners evolve to harness new technologies, their long-term revenue and profit prospects will largely depend on their ability to remain competitive in a rapidly changing industry.