Core Scientific Reports Decrease in Revenues, Net Losses, and Shares Fall

Shares of Bitcoin mining company Core Scientific fell 4% in after-hours trading after reporting a decrease in yearly revenue in their Q4 earnings, although they did see a decrease in net losses.

Core Scientific’s shares drop by 4% following Q4 2023 report showing a decrease in revenue.

Core Scientific, a leading crypto mining firm, recently released its Q4 2023 results, revealing a decline in year-on-year revenues but a significant reduction in net losses. As a result, its shares dropped 4% in after-hours trading.

Revenue Decrease and Net Loss Reduction

In its earnings release on March 12, Core Scientific disclosed that its total revenue for the previous year was $502.4 million, a decrease of $137.9 million from $640 million in 2022. The decline in revenue was primarily fueled by Core Scientific’s exit from the mining rig sales business and the surge in the global Bitcoin hash rate in 2023.

Despite the drop in revenue, the mining firm reported a positive development in net losses, with just $246.5 million for 2023 compared to a staggering $2.14 billion net loss in 2022. Moreover, the net losses for Q4 2023 amounted to $195.7 million, narrowing from $434.9 million in Q4 2022.

Core Scientific’s Path to Recovery

Core Scientific’s journey to financial recovery has been nothing short of remarkable. After emerging from a bankruptcy crisis and undergoing a 13-month restructuring process to resolve $400 million in debt, the company was relisted on the NASDAQ on January 23. The debt-related issues stemmed from declining Bitcoin prices, escalating energy costs, and debt tied to the bankrupt crypto lender Celsius.

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Despite these challenges, Core Scientific managed to mine a record-breaking 13,762 BTC in 2023, making it the largest amount mined by any publicly traded mining firm in the United States. This achievement demonstrates the company’s resilience and commitment to pushing the boundaries of the crypto mining industry.

Stock Market Reaction and Industry Trends

Following the release of Core Scientific’s Q4 earnings, its shares experienced a 4.6% drop to $3.54. The decline continued in after-hours trading, falling an additional 4% to around $3.40. However, the company remains unfazed by the market’s response, considering the subdued price action observed across publicly traded Bitcoin miners in recent weeks.

Core Scientific’s stock performance is not an isolated incident, as other Bitcoin mining companies have also faced setbacks. Marathon Digital, the largest publicly traded Bitcoin miner, saw its shares fall by 21% in the last month, while rival miner Riot Blockchain experienced a 25% decline within the same period.

Q&A: Investors’ Concerns and the Bitcoin Halving

Q: Why have miner share prices been tumbling?

A: According to Mitchell Askew, head analyst at Blockware Solutions, the recent decrease in miner share prices is likely because investors are cautious about deploying capital into these firms before the upcoming Bitcoin halving. The halving event will halve the rewards paid to miners, potentially impacting their profitability.

Q: Will Bitcoin mining firms be in the red following the halving?

A: Cantor Fitzgerald released a report stating that several Bitcoin mining firms may struggle to remain profitable after the halving. However, at the current Bitcoin price of $72,000, assuming no significant changes in the hash rate and the price holding above $62,000 after the halving scheduled for late April, none of the firms listed in the report would be in a loss-making position.

Core Scientific’s Outlook and Analyst Upgrades

Core Scientific is confident in its prospects heading into the halving. The company has been updating its mining rigs with new Bitmain S21 models and focusing on increasing its hash rate utilization over time. This strategy positions them well for the future.

Several analysts are bullish on Core Scientific, reflecting a broader trend of renewed market appetite for crypto mining companies due to the recent surge in BTC and other cryptocurrencies. Capital market firm HC Wainright upgraded its rating of Core Scientific from “neutral” to “buy” in an investment note on January 25. Additionally, investment banking research firm Compass Point also upgraded its rating from “neutral” to “buy” and set a price target of $8.50 on January 31.

References:

• Core Scientific’s Earnings Release
• Relisting of Core Scientific on NASDAQ
• Blockware Solutions’ Head Analyst on Miner Share Prices
• Cantor Fitzgerald’s Report on Profitability
• HC Wainright’s Rating Upgrade

With Core Scientific’s strategic actions, positive outlook, and endorsements from analysts, the company is well-positioned to navigate the challenges of the crypto mining industry. Shareholders and investors alike can anticipate a promising future for Core Scientific.

CORZ saw a brief after-hours trading drop to just above $3 but quickly recovered. Source: Google Finance

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