Core Scientific's boss makes a case for its stock. Plus, mining stocks and BTC price targets.

Today's newsletter is 818 words, a 3-minute read.

⛏ 1 big thing: Core Scientific sees the light

Illustration: Aïda Amer/Axios

Core Scientific's CEO told us in February that he believes his company's stock is the best buy among publicly traded bitcoin miners — this week, he bought about $200,000 worth of CORZ shares, Brady writes.

The big picture: Bitcoin mining seems simple. The truth is it's a complicated game of chasing cheap electricity, hedging around where prices could change, growing at a competitive pace but not getting ahead of yourself (like Core Scientific did before).

Zoom in: The company emerged from bankruptcy this year (see 2️⃣), after over-leveraging itself during the last run-up in bitcoin (BTC) prices.

  • It now believes it's well-positioned. "Our pathway to growth is much cheaper and with much lower risks than our competitors," CEO Adam Sullivan told us.
  • Part of that is because they have partially completed mining facilities coming out of their restructuring that they are now ready to complete.

Reality check: Sullivan noted that short-term pressure on Core Scientific's stock could be high. A lot of creditors in the bankruptcy received equity and are unlikely to be long-term holders.

  • That creates, as Sullivan put it, an "overhang" that will take a while to work out.

By the numbers: The company recently reported its 2023 results, earning $502.4 million, with a net loss of $246.5 million.

  • It mined 13,762 BTC (over $800 million) for itself last year and more than 5,000 more for hosting clients.

Core Scientific's strategy was described by Sullivan in a couple of ways. First of all, it mines in five U.S. states. This means they need to optimize for different conditions, from freezing cold in North Dakota to burning summers in Texas.

  • That also means they can move their fleet of mining machines around if a big difference in the electricity market arises.

Between the lines: What matters for bitcoin miners isn't bitcoin price so much as hash price. That is the expected value of a given amount of computing power.

  • Hash price depends on the price of electricity, the price of bitcoin and the efficiency of mining machines.
  • Core Scientific has made bespoke software that enables it to shift efficiency if it means lower electrical overhead if needed.

🥑 What they're watching: The Bitcoin halvening, likely around April 20. "You never know what could happen to bitcoin price," Sullivan said. "We're preparing for something worse than a cut in half internally."

📉 2. Charted: Mining stocks

Change in price for select bitcoin mining stocks
Data: Yahoo Finance; Chart: Axios Visuals

That overhang Sullivan told us about appears to be evident here in its first couple of months back on the public markets, Brady writes.

🎯 3. Investors set BTC price targets

Illustration: Shoshana Gordon/Axios

Bitcoin's price action in the lead-up to the coming halvening is evoking déjà vu for some, which should be a source of comfort for 🍊 bulls, Crystal writes.

Why it matters: The halvening is a sort of culling, shaking out the less efficient miners, while bigger operations get bigger by gobbling up smaller shops and/or acquiring the latest rigs.

  • The anticipation of that brings volatility.

By the numbers: The price of BTC has declined about 11% since setting an all-time high in mid-March.

  • Flashback: That pattern tracks with its history, per Benchmark analyst Mark Palmer, and if BTC continues to retrace its steps after the halvening, the rearview mirror shows number eventually going up.

Behind the scenes: Morgan Creek Capital chief Mark Yusko sees bitcoin hitting six digits by the end of this year: "We might get as high as $150-$160[K]," he said last week in an interview with Axios.

  • Axios prodded him for his target 🎯 given his early success in investing for large pension funds in the 2019 cycle.

Between the lines: The halvening "doubles the fair value" of bitcoin, Yusko said.

  • There are a few curveballs in this cycle, spot ETFs and inscriptions.
  • "So perhaps this cycle, instead of going from 50 to 100 in fair value, maybe we only go to 80 because of the transaction costs," he said.

Yusko isn't the only bull. Bernstein raised its year-end target by $10K to $90K, saying the impact of the halvening this time on miners would be mild.

  • Standard Chartered recently updated its BTC forecast to $150K.
  • Binance CEO Richard Teng said it'll top $80K by year-end.

💭 Our thought bubble: 🐻 Bearish estimates are tougher to find. Wonder why.

🏄‍♀️ 4. Catch up quick

Illustration: Natalie Peeples/Axios

👾 A newly issued token on Blast was exploited with more than $4.6 million stolen. (CoinDesk)

🤐 Riot Platforms' reinvestment-zone request for a planned mine in Texas failed to obtain county commissioners' approval, after a community outcry. (DL News)

🕹️ A clicker game on Telegram called Notcoin is getting traction. (Decrypt)

🗽 5. Culture hash: Bitcoin Investor Day!

Photo: Crystal Kim/Axios

Bitcoin Investor Day is having a day. The inaugural event today from Reflexivity Research had me waiting in a line a half block long on New York's 42nd Street.

  • Around me, mostly men — half in suits, half Patagonia.

Inside the room: The start was delayed 30 minutes as organizers brought in more seats to match the crowd.

  • Morgan Stanley? Franklin Templeton? BlackRock? And Core Scientific? They're here.

Coverage to come Monday...

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

Editor's note: The brief item about Riot Platforms has been corrected to reflect that it failed to obtain commissioners' approval for a reinvestment zone. (They did not reject its proposed mine.)

Anyone have their own rig setup? —C & B