Bernstein Initiates Coverage on Core Scientific and IREN With Outperform Ratings, Citing Bitcoin Mining and AI Data Center Strategies

"Bitcoin miners are emerging as attractive partners to build out AI data centers with 'ready power interconnect' and data center operating capabilities," Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in a note to clients late Tuesday.

Analysts at Bernstein have initiated protection on Core Scientific and IREN with an outperform score, highlighting the corporations’ hybrid bitcoin mining and AI knowledge heart methods.

“Bitcoin miners are rising as enticing companions to construct out AI knowledge facilities with ‘prepared energy interconnect’ and knowledge heart working capabilities,” Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in a observe to shoppers late Tuesday.

Core Scientific’s 12-year cope with AI agency CoreWeave final month, projecting $3.5 billion in whole income, and IREN’s Nvidia GPU cope with AI startup Poolside in February have been key catalysts, the analysts mentioned.

In June, JPMorgan mentioned investor curiosity was “surging” for bitcoin miners following Core Scientific’s AI internet hosting deal. IREN additionally raised $413 million to fund its bitcoin mining enlargement earlier this month

The Bernstein analysts have a priceof $17 for Core Scientific, 64% to the upside, and $26 for IREN, 78% to the upside. Core Scientific and IREN shares closed down 7.7% at $9.56 and 12.4% at $12.82, respectively, on Tuesday, in keeping with TradingView.

They motive that Core Scientific, a agency that solely entered out of bankruptcy in January, now leads the bitcoin miner AI knowledge heart co-hosting mannequin, whereas IREN has one of many strongest energy pipelines and knowledge heart operations capabilities.

The analysts beforehand initiated protection on bitcoin miners Riot Platforms, CleanSpark and Marathon in late 2023, primarily based on the premise of a brand new bitcoin bull cycle and rising consolidation within the business post-halving.

Why bitcoin mining services are perfect for AI

“Bitcoin miners get pleasure from a lead within the ‘massive load’ energy interconnect queue vs. approval queue of greater than 4 years for greenfield buildouts, thus saving ‘time to market,’” the Bernstein analysts mentioned, with a pipeline of energy entry projected to double by the tip of 2027.

Bitcoin mining services are additionally “supreme” to retrofit for AI as a consequence of their excessive energy density racks, cooling infrastructure and knowledge heart working capabilities, Chhugani and Sapra added.

Bernstein expects 20% of bitcoin miners’ energy capability to pivot to AI by the tip of 2027, led by bitcoin mining and AI hybrid corporations like Core Scientific, IREN and Hut 8. The analysts additionally venture different massive bitcoin miners to observe as the highest 5 U.S miners proceed consolidating towards 25% of the Bitcoin international hashrate capability, alongside AI monetization.

$200,000 bitcoin priceby the tip of 2025

In June, Chhugani and Sapra raised their pricefor bitcoin to $200,000 from $150,000 by the tip of 2025, pushed by expectations of unpreceded demand through the spot Bitcoin ETFs and bitcoin miner marginal value of manufacturing modeling. Finally, the analystsbitcoin to achieve $500,000 by the tip of 2029 and $1 million by 2033.

Reiterating these targets to shoppers on Tuesday, the Bernstein analysts mentioned the market was at the moment penalizing miners for bitcoin’s volatility, regardless of their expectation of a long-term bitcoin structural uptrend led by rising institutional adoption.

“Bitcoin miners are being undervalued for his or her ‘strategic energy portfolio’ and monetisation possibility into AI knowledge facilities, in a ‘energy’ constrained world,” they wrote. “We consider AI income line supplies a draw back ground to the miners, with bitcoin driving cyclical upside.”

Gautam Chhugani maintains lengthy positions in varied cryptocurrencies.

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