Crypto Currents: Core Scientific announces exercise of option by CoreWeave

As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.

CORE SCIENTIFIC ANNOUNCES EXERCISE OF OPTION BY COREWEAVE: Core Scientific (CORZ) announced Tuesday that CoreWeave has exercised its final option to contract for additional infrastructure pursuant to the terms provided as part of the previously announced 200 megawatt hosting contract for high performance computing entered into with CoreWeave on June 3. Under the terms of the option exercise, Core Scientific will modify infrastructure at one of its sites to deliver approximately 120 incremental MW of critical IT load to host CoreWeave’s NVIDIA Graphics Processing Units. Site modifications associated with the latest option exercise are expected to begin in 2H25, with operational status anticipated in 2H26. This new 12-year HPC hosting contract will further expand Core Scientific’s exposure to contracted, multi-year, dollar-denominated revenue. The new contract with CoreWeave is expected to add approximately $2B in projected additional cumulative revenue over the hosting contract’s 12-year term to the $6.7B in projected cumulative revenue associated with previously announced contracts with CoreWeave, for a total of $8.7B.

“In May, we communicated our plans to contract approximately 500 megawatts of critical IT load to host high-performance computing. With today’s announcement, we have delivered on that commitment,” said Adam Sullivan, Core Scientific CEO. “There is significant demand for infrastructure to support next generation compute workloads. Our contracts with CoreWeave represent the foundation for Core Scientific’s evolution into a leading data center business ideally positioned to meet that demand.”

Following the report, Canaccord raised the firm’s price target on Core Scientific to $17 from $16 and kept a Buy rating on the shares. The firm said as expected, Core Scientific announced that CoreWeave has gone ahead and exercised its option to procure its remaining 118MW of data center power designated for AI hosting. They also believe in the potential for the company to announce new HPC/ AI hosting partners in the coming months.

Meanwhile, Compass Point raised the firm’s price target on Core Scientific to $20 from $18 and kept a Buy rating on the shares. After the company announced that CoreWeave exercised its remaining option, as expected, the firm is updating its valuation to reflect the full 500MW of run-rate HPC EBITDA.

ANALYST INITIATES COVERAGE OF CRYPTO FIRMS: B. Riley initiated coverage of Bit Digital (BTBT) on Thursday with a Buy rating and $6 price target. Bit Digital has undergone a major transformation over the past year with the expansion of its GPU business and the recent acquisition of Enovum Data Centers, the analyst said. The firm believes the transition to a high performance computing-centric company should yield a valuation more aligned with traditional data center companies. It believes Bit Digital’s current valuation does not fully reflect the company’s pivot toward more stable revenue and that the shares have a “meaningful runway as management executes its growth plans.”

B. Riley also initiated coverage of Coinbase (COIN) on Wednesday with a Neutral rating and $185 price target. Coinbase is the industry leader and a trusted platform for institutions and individuals to invest and transact in the growing digital currency economy, the analyst said. The firm views Coinbase as a unique company in the capital markets sector, being both a first mover in the shift to digital assets and a well-capitalized scale operator. However, it expects the shares to remain range-bound until the election is decided and regulatory clarity is provided or until better idiosyncratic catalysts emerge that provide visibility into more consistent profit growth. It cites valuation for the Neutral rating.

MICROSTRATEGY PRICE TARGET RAISE: BTIG raised the firm’s price target on MicroStrategy (MSTR) on Monday to $240 from $180 and kept a Buy rating on the shares. The implied bitcoin premium within the stock’s valuation is near an all-time high, though the market is also rewarding the company for its capital raises since Q2 earnings, which were in part used to remove existing high interest-rate debt that some investors were concerned about in regard to interest coverage, the analyst said. MicroStrategy continues to be the premier vehicle for bitcoin exposure via the public equity market, and the more bitcoin it can acquire only helps valuation, the firm added.

MICROSOFT ADDS BITCOIN ASSESSMENT TO MEETING BALLOT: Microsoft (MSFT) has placed an “assessment in investing in bitcoin” on the voting ballot ahead of its 2024 annual shareholder meeting in early December, The Block’s MK Manoylov reported Thursday, citing an SEC filing. The voting item appears to have been proposed by conservative think tank The National Center for Public Policy Research and Microsoft’s board is recommending shareholders vote against the proposal. In the filing, Microsoft noted the board deems the proposal “unnecessary” as the firm’s management “already carefully considers this topic.”

NORTHERN DATA EXPLORES CRYPTO MINING UNIT SALE: Northern Data (NDTAF) announced Monday it is exploring a potential sale of its crypto mining business to free up funds for an expansion of its artificial intelligence operations. The company said, “The Management Board of Northern Data resolved to begin negotiations with interested parties regarding a possible divestment of its cryptomining business Peak Mining. The company hereby continues its strategic direction to focus on its AI Solutions business. Whether a divestment of Peak Mining will take place cannot yet be predicted and depends, among other things, on the current dynamic market environment for cryptocurrencies.”

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital, Coinbase, Core Scientific, Greenidge Generation (GREE), Mara Holdings (MARA), MicroStrategy, Riot Platforms (RIOT), Stronghold Digital Mining (SDIG) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin dropped about 1% this week to $67,759 in U.S. dollars, according to CoinDesk.