BTC Miner Core Scientific Uniquely Positioned to Capture AI Demand, Initiate at Buy: Jefferies

• Jefferies initiated coverage of bitcoin miner Core Scientific with a buy rating and a $19 price target.
• The company is uniquely positioned to capture the recent trend of surging demand from AI companies, the report said.
• The company's mining operations are profitable and becoming more efficient, the report said.

Core Scientific (CORZ) is uniquely well positioned to capture surging artificial intelligence (AI) demand given the company's large available power supply and strong data center development team, Jefferies said in a Monday research report initiating coverage of the bitcoin miner.

The bank assumed coverage of the stock with a buy rating and a $19 price target. The shares were 1.7% higher at $13.60 in early trading.

"We expect that many big tech companies will be closely watching the CoreWeave developments and successful execution will convince decision makers to sign future development leases with CORZ," analysts Jonathan Petersen and Jan Aygul wrote.

Core signed a 12-year AI contract with hyperscaler CoreWeave in June, in a landmark deal for the industry.

The bitcoin miner is expected to diversify its tenant base to other hyperscalers, Jefferies said, noting that management has said it expects to make further announcements by year-end.

While the economics of any future AI deals may not be as favorable as the CoreWeave lease, they are still expected to be very accretive, Jefferies said.

The company's bitcoin mining operations remain profitable and are getting more efficient, the note said.

A material expansion of Core's bitcoin mining business is not expected. Still, over time, it is assumed that the company will reach a stable number of ASIC miners and will continue to refresh that fleet, the report added.

Read more: Bitcoin Miners Are Pivoting to AI to Survive. Core Scientific Entered the Race Years Ago