Bitcoin mining industry transforms into AI, investors pay more attention
Bitcoin recently surpassed the $70,000 mark, reigniting enthusiasm for the cryptocurrency. At the same time, the mining industry is also welcoming new investment opportunities, especially those mining companies that are transforming into the artificial intelligence (AI) industry. After experiencing weakness due to the Bitcoin "halving" event in mid-2024, companies such as Core Scientific (NASDAQ: CORZ) and Iris Energy (NASDAQ: IREN) are repositioning themselves to target the high-growth AI market. These two stocks leverage their extensive infrastructure to tap into the high-performance computing industry, making them strong investment options for the convergence of Bitcoin mining and AI.
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Core Scientific: Strategic transformation and collaboration with AI giants
Core Scientific, with a market value of $3.7 billion and an enterprise value of $4.22 billion, is at the forefront of this transformation. The company has regained investor interest, especially from institutional investors holding 55% of its shares. The key to Core Scientific's shift towards AI lies in a 12-year partnership agreement with AI supercomputer operator CoreWeave, expected to generate up to $3.5 billion in revenue. Through this agreement, CoreWeave's high-performance computing total contracting capacity at Core Scientific's five sites reaches 382 megawatts, solidifying Core Scientific's position in the expanding AI-driven computing industry.
Jefferies analysts point out that if this collaboration is successfully launched, it may attract other large tech companies, ensuring Core Scientific becomes an important player in the AI industry. To further strengthen its financial position, Core Scientific announced plans to issue $400 million in convertible senior notes due in 2029, with an option to issue an additional $60 million.
These notes will accumulate interest every six months, providing holders with flexibility for conversion or redemption. The raised funds will be strategically used to repay $267 million in high-interest debt, reducing the company's interest rate from 12.5% to a manageable 3%. This move not only strengthens Core Scientific's balance sheet but also increases its cash reserves, providing flexibility for the company to expand its high-performance computing capabilities and pursue future acquisitions and capital investments.
Core Scientific's strategic transformation towards AI applications provides attractive growth opportunities for investors looking to enter the AI and mining industries. As of the time of this writing, the company's stock price was $12.65.
Source: Google Finance Core Scientific stock price trend chart
Iris Energy: Investing in high-performance GPUs to explore new revenue
Iris Energy, with a market value of $2 billion and an enterprise value of $1.59 billion, is strategically expanding capabilities into the AI industry, introducing a new layer of value to its revenue sources and enhancing its growth potential. According to StockAnalysis data, institutional investors hold 44% of Iris Energy's shares, supporting the company's ambitions in AI. The company generated $3.1 million in revenue from its AI cloud services in fiscal year 2024, demonstrating initial success in this emerging industry.
Recently, Iris Energy invested $43.9 million to purchase 1,080 NVIDIA H200 GPUs, increasing its total number of high-performance GPUs to 1,896. This significant investment is expected to generate $32 million in annual hardware profit, diversifying the company's revenue sources beyond traditional Bitcoin mining.
Iris Energy's plans also include exploring AI data center opportunities at its 1.4 gigawatt site in West Texas, with Morgan Stanley managing the search for potential partners. The company reported an EBITDA of $19.6 million, showing significant improvement from a loss of $123.2 million the previous year. Bitcoin mining revenue reached a record $184.1 million, thanks to operational efficiency that maintained the all-in mining cost per Bitcoin at $31,000. As of the time of this writing, the company's stock price was $8.96.
Source: Google Finance Iris Energy stock price trend chart
Opportunities to invest in the fusion of AI and mining
With Bitcoin stabilizing above $70,000 and demand for AI expected to grow, Core Scientific and Iris Energy are strategically positioning themselves to benefit from the fusion of AI and Bitcoin mining. For investors seeking diversified options, these stocks represent a strong choice in a rapidly evolving market.
Further reading
Two mining companies control 59% of the computing power. With concerns about the centralization of BTC, what are the next steps?
Don't be foolish in the coin circle! Institutions are not investing in Bitcoin, but all for AI computing power in mining companies?
Bitcoin mining giants are moving continuously! A review of Marathon's four major layouts—will they lead the market?
[Disclaimer] The market has risks, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this carries responsibility.
