JPMorgan: Miners Taking Over High-Performance Computing Projects Spark Interest Among Mining Investors

According to a report cited by The Block, Core Scientific, a mining company, providing GPU hosting services to artificial intelligence service provider CoreWeave, has led to a significant increase in the overall market value of 14 Bitcoin miners in the past month.

AI GPU Hosting Sparks Interest from Mining Investors

Morgan Stanley analysts Reginald Smith and Charles Pearce wrote that the news of Core Scientific, one of the largest publicly traded cryptocurrency mining companies in the United States, providing GPU hosting for CoreWeave earlier this month has driven a 22% increase in the market value of 14 Bitcoin mining companies.

Specifically, the overall market value increased by approximately $4 billion, showing the high interest and affirmation from current market investors for Bitcoin miners expanding their business to data centers.

Core Scientific's CEO Adam Sullivan stated at the time in a release:

The new agreement we signed with CoreWeave enables us to transition our core business and profitability to capture growth opportunities in the most dynamic technology areas such as AI computing, while maintaining our still robust Bitcoin mining business.

Prior to this, Core Scientific executed a restructuring plan earlier this year and relisted on the NASDAQ.

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Taking on HPC Projects, Driving Diversification of Mining Business

Analysts also emphasized that due to mining companies having advanced computational infrastructure, several mining companies are seen by the outside world as potential hosts for AI GPUs and data centers, undoubtedly increasing their attractiveness to investors.

At the same time, this has driven mining companies to gradually shift towards the HPC field to meet the growing market demand, creating a positive cycle.

As mentioned in a announcement by Core Scientific in June:

With current demand for HPC projects consistently outstripping supply, our expanding partnership with CoreWeave is creating a pathway for Core Scientific to diversify our business model and balance our investment portfolio, including Bitcoin mining and cloud computing services.

They added, "As a result, we are able to maximize cash flow while minimizing risk and maintaining participation in the upside potential of Bitcoin."

Analysts indicated that mining companies can seize new market opportunities by expanding their business to HPC projects, but there are still other challenges:

With the growth in demand for HPC such as AI, companies with low-cost electricity and complete infrastructure will be in a favorable position in future competition.

Positive Outlook on IREN, Criticism for RIOT

Finally, analysts expressed optimism for mining company Iris Energy IREN, stating that the company's facilities, based on renewable energy, are in a competitive market position for Bitcoin mining and AI cloud computing:

We believe IREN is best positioned to meet the surging demand for HPC and AI in the near term, as the company has ample power capacity focusing not only on Bitcoin mining.

On the other hand, they criticized another mining company, Riot Platforms RIOT, for not being proactive enough in the face of the growing demand and opportunities in HPC:

Despite having abundant power capacity, RIOT remains solely focused on Bitcoin mining and appears to have little interest in HPC.

Previously, both of these mining companies were mentioned in Morgan Stanley's April research report as being rated as "hold."

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