Bitcoin Miners and High-Performance Computing

As bitcoin miners continue to shift operations to high-performance computing (HPC) and artificial intelligence, equity analysts at Needham & Company have identified two stocks poised for significant benefit.

Analyst Insights

Analyst John Todaro initiated a ‘buy’ rating on the stocks of bitcoin miners Core Scientific (CORZ) and TeraWulf (WULF), while placing a ‘hold’ rating on Iris Energy (IREN).

Power Capacity Bottleneck

Needham highlights that power capacity is a near-term bottleneck for AI infrastructure, as U.S.-based miners collectively have over 7GW of power capacity access. Todaro stated:

“HPC represents a high margin, large + growing revenue opportunity with long-term contracts (10yr+) providing revenue and margin transparency longer term.”

This shift to HPC is particularly advantageous for miners, given the historically volatile revenue streams from bitcoin mining, especially in light of the bitcoin halving events every four years.

Core Scientific

Core Scientific is leading the pack in HPC with a multi-year contract with CoreWeave.
– CORZ has contracts for approximately 385MW of HPC co-location capacity, equating to over $500 million in annualized revenue.
– Anticipated online capacity is 271MW by the end of 2025 and 383MW by the end of 2026, making it potentially the first miner with a 100MW+ HPC site online.
– Its suitability for HPC is enhanced by its location and infrastructure, with lower retrofitting costs compared to competitors.

TeraWulf

TeraWulf is also well-positioned for HPC conversion.
– Estimates suggest WULF will generate $1.55 million in revenue per net useful MW, translating to $350 million in 2026 HPC revenue with a 70% gross margin, equating to $245 million in profits.

Iris Energy

Needham is more neutral on Iris Energy due to its lack of near-term HPC developments. The company is akin to pure-play bitcoin miners and currently trades similarly to its peers.
– The analysts recognize Iris’s bitcoin mining operations for its machine efficiency, which is expected to lower bitcoin mining cash breakeven costs into 2025 and 2026.

Market Performance

• CORZ stock was up 5%, WULF up 2%, and IREN down 0.6%.
• Bitcoin’s price has declined 0.5% over the past 24 hours to $57,504. Needham predicts a bitcoin price rally from late 2024 to early 2025, peaking in 2025 and settling around $80,000 by late 2026.