Core Scientific Could Top $30 on CoreWeave Buyout Deal: Cantor Fitzgerald
Core Scientific (CORZ), a cryptocurrency mining company, is experiencing a potential resurgence driven by its strategic pivot towards artificial intelligence (AI) infrastructure. Cantor Fitzgerald, in a recent research note, projects a potential acquisition price of over $30 per share by CoreWeave, a cloud AI compute firm, significantly higher than the current share price of just over $16. This valuation reflects the long-term cash flows from Core Scientific’s 12-year, $3.5 billion infrastructure lease with CoreWeave, providing 200 megawatts of AI capacity. Cantor values this lease stream at $24 per share, using a conservative multiple applied to traditional data center REITs. Further bolstering the valuation is the estimated $11.70 per share replacement value of Core Scientific’s existing 570MW power infrastructure.
This optimistic outlook aligns with a broader industry trend highlighted by Rittenhouse Research, suggesting that successful crypto companies are shifting from Bitcoin mining to AI infrastructure provision. The argument rests on the premise that AI offers stable, long-term cash flows, unlike the volatile nature of Bitcoin mining, which is susceptible to sharp revenue drops due to halvings and Bitcoin’s price fluctuations. The increasing difficulty in designing significantly more efficient mining chips further contributes to the uncertainty surrounding Bitcoin mining’s future profitability.
However, not all transitions away from Bitcoin mining have been successful. Bit Digital’s shift to Ethereum staking resulted in a 15% stock price drop, and Canaan’s attempt to diversify into AI hardware ultimately failed, leading to the closure of its chip unit and a significant stock decline.
Core Scientific’s potential success lies in its ability to leverage its existing infrastructure to capitalize on the burgeoning AI infrastructure market, estimated to be worth over $100 billion. If Cantor’s projections materialize, CoreWeave’s renewed acquisition bid for Core Scientific could significantly differ from its previous offer, potentially establishing a new model for the industry. Neither company has yet publicly commented on the ongoing discussions.
