According to a report from The Block, Core Scientific, a mining company, will provide GPU hosting services to artificial intelligence service provider CoreWeave. This news has led to a significant increase in the overall market value of 14 Bitcoin mining companies in the past month.
AI GPU hosting attracts interest from mining investors
Taking over HPC projects to promote diversification of mining businesses
Optimistic about IREN, puzzled by RIOT
Analysts from JPMorgan, Reginald Smith and Charles Pearce, wrote that Core Scientific, one of the largest publicly traded cryptocurrency mining companies in the United States, announced earlier this month that it would provide GPU hosting services to CoreWeave. This news has led to an increase in the market value of 14 Bitcoin mining companies.
Specifically, the overall market value increased by approximately $4 billion, a growth of 22%, indicating the current market investors’ high interest and affirmation of Bitcoin miners expanding their business to data centers for computing purposes.
Core Scientific CEO Adam Sullivan stated at the time:
“The new agreement we signed with CoreWeave allows us to transform our core business and profitability, seize the growth opportunities in highly dynamic technological areas such as AI computing, while maintaining our strong Bitcoin mining business.”
Previously, Core Scientific implemented a restructuring plan earlier this year and relisted on NASDAQ.
Analysts also emphasized that due to the mining companies’ well-established computing infrastructure, many mining companies are considered potential hosts for AI GPUs and data centers, which undoubtedly increases their attractiveness to investors.
At the same time, this has also driven mining companies to gradually shift towards the HPC field to meet the growing market demand, creating a positive cycle.
As mentioned in Core Scientific’s announcement in June:
“With the ongoing demand for HPC projects surpassing supply, our expanding partnership with CoreWeave has created a path for Core Scientific to diversify our business model and balance our investment portfolio, including Bitcoin mining and cloud computing services. Therefore, we are able to maximize cash flow while reducing risks and still participate in the potential upside of Bitcoin.”
Analysts indicated that mining companies can seize emerging market opportunities by expanding their business into HPC projects. However, there are still other challenges:
With the growth of AI and other HPC demands, companies with low-cost electricity and complete infrastructure will have a favorable position in future competition.
Finally, analysts also expressed optimism about mining company Iris Energy (IREN), stating that the company has an advantageous market position in Bitcoin mining and AI cloud computing due to its abundant and renewable energy-based power capacity. On the other hand, they criticized another mining company, Riot Platforms (RIOT), for not showing enough enthusiasm towards the growing HPC demands and opportunities, despite having ample power capacity.
Previously, both of these mining companies were mentioned in JPMorgan’s April research report as being favored and rated as “buy” companies.
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