Bitcoin miner’s data center project to be ‘game-changer’

This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.

Core Scientific got a lot of attention in 2024 for its hosting deals with cloud provider CoreWeave.

But Hut 8’s plans to lease data center space to its own — for now unknown — AI hyperscaler may put it in an even stronger position than its rival, one analyst argues.

Various bitcoin miners embarked on revenue diversification efforts last year — particularly after last year’s Bitcoin halving. This included a focus on building out HPC verticals to support AI applications.

CORZ stock shot up roughly 300% in 2024 after emerging from bankruptcy and relisting on the Nasdaq last January.

A Tuesday research note from Benchmark’s Mark Palmer followed the West Feliciana Parish Planning & Zoning Commission reportedly voting to approve Hut 8’s planned data center construction in Louisiana. It now seeks final approval.

Palmer described this project as a likely “game-changer” for the company, noting: “We believe that HUT’s agreement with the unnamed AI hyperscaler could feature better economics on a per [megawatt] basis than CORZ is slated to realize in its deal.”

The reason, he explains, was startup CoreWeave’s inability to offer support needed for CORZ to tap the project finance market. It instead agreed to provide most of the capital required to build the project.

On the other hand, Palmer explains, Hut 8 having the backing of a large, established AI hyperscaler enables it to access the finance market to raise the $2.5 billion it plans to invest in Phase One of the West Feliciana Parish project.

“The upshot is that HUT wouldn’t face the discount to its economics that CORZ had given CoreWeave’s fronting of the capex for its project,” he added.

Hut 8 shares were trading for ~$24.85 at 1:45 pm ET, while CORZ stock was at ~$14.20. Though both were down more than 6% on the day at that time, Hut 8 had the YTD stock price gain edge on Core Scientific, +17% to -1%.

Palmer’s price target for Hut 8 stock is $41. It’s safe to say we’ll be monitoring those shares as the miner’s data center project progresses.