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Core Scientific (NASDAQ:CORZ) CEO Adam Sullivan has shared plans to significantly expand the company’s AI data center services, potentially boosting its valuation to $25-$30 billion.
What Happened: In a discussion with analysts from Bernstein, Sullivan emphasized the exponential growth potential through AI data center contracts, The Block on Tuesday reported.
The company aims to secure deals ranging from 500MW to 1GW over the next few years.
Sullivan, who joined Core Scientific in April 2023, highlighted the firm’s successful exit from Chapter 11 bankruptcy in January. The company has since signed a 12-year contract with AI Hyperscaler CoreWeave, worth up to $3.5 billion in revenue.
Core Scientific has already inked three contracts with CoreWeave, converting existing Bitcoin mining facilities into GPU-ready data centers. These agreements include 70MW and 112MW deals, adding to an initial 200MW contract.
Sullivan noted that no other Bitcoin miners are currently competing in the AI services space. He stressed the importance of delivering infrastructure faster than competitors like Digital Reality, Equinix, Switch, and Cyrus One.
Bernstein analyst Gautam Chhugani pointed out the competitive nature of Bitcoin mining. Sullivan responded by focusing on maximizing economic efficiency and maintaining well-performing older machines to generate strong cash flows.
Bernstein currently rates Core Scientific as “outperform,” with a price target of $17, significantly above its $10 market close on Monday.
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Why It Matters: The strategic pivot by Core Scientific to AI data centers is part of a broader trend among Bitcoin miners.
According to a recent report from Bernstein, miners are increasingly adopting a hybrid strategy combining AI data centers with cryptocurrency mining. This “mullet strategy” allows companies to leverage their existing infrastructure and power capacity to meet the growing demand for AI compute power.
Moreover, the shift comes at a time when Bitcoin mining revenues have been under pressure.
In August, revenues from Bitcoin mining dropped to an 11-month low. Miner earnings fell to just over $827 million, marking a 10% decline from July and a 57% drop since the peak in March.
This downturn has forced miners to explore alternative revenue streams, making the AI data center market an attractive option.
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Posted In: CORZ
