The evolving landscape of high-performance computing (HPC) is reshaping how investors view traditional bitcoin mining companies, as evidenced by the recent downgrade of Core Scientific, Inc. (NASDAQ:CORZ)
Needham analyst John Todaro downgraded Core Scientific from Buy to Hold. The analyst has not given a price forecast following the downgrade compared to his earlier forecast of $18.
Todaro highlights that the company’s investment case rests largely on the expanding opportunity in high-performance computing and AI infrastructure.
He notes that among bitcoin miners, Core Scientific stands out as an early mover in what's expected to become a rapidly growing, high-demand space for data center capacity.
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With the increasing need for computing power to support AI, Bitcoin miners are seen as well-positioned to meet this demand, especially given current constraints on rack space and power.
Todaro notes that CoreWeave, Inc. (NASDAQ:CRWV) announced all-stock acquisition of Core Scientific, expected to close in the fourth quarter of 2025, led to a 22% drop in Core Scientific shares—likely due to the stock-only nature of the deal, a lower-than-anticipated valuation, and limited arbitrage potential given CoreWeave’s borrowing constraints.
As a result, Todaro downgrades Core Scientific, aligning with his CoreWeave downgrade.
He sees the merger as strategically beneficial, adding 150-200MW of IT capacity for CoreWeave, and considers a competing offer from a major hyperscaler unlikely due to existing tenant ties.
While there’s a chance that Core Scientific shareholders could vote against the deal, insider and board support—representing approximately 14% of shares—makes approval more likely.
Apart from this, Core Scientific has made notable progress in HPC, including a recent multi-year agreement with CoreWeave.
The company now holds contracts for roughly 385 megawatts of HPC co-location capacity, representing over $500 million in potential annual revenue.
Todaro estimates Core Scientific will have 271 megawatts operational by the end of calendar year 2025 and 383 megawatts by the end of 2026, positioning it as one of the first, if not the first, bitcoin miners to bring a 100+ megawatt HPC facility online.
Furthermore, Core Scientific’s site portfolio is viewed as particularly suited for HPC due to proximity to metro areas and the presence of pre-installed fiber.
These attributes, Todaro adds, reduce the capital costs associated with converting bitcoin mining infrastructure to HPC, especially when compared to competitors operating in West Texas. Given Core Scientific's head start in the HPC space, its cost advantages, and the strong CoreWeave deal, he believes the stock warrants a 15x EV/EBITDA multiple on discounted 2026 projections.
Price Action: CRWV shares are trading lower by 5.19% to $145.17 at last check Thursday.
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