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Bitcoin Miner Core Scientific Smashes Earnings But Converts Infrastructure for AI

Core Scientific reported a net income of $210.7 million compared to last year's first quarter's $0.4 million net loss but is converting some of its resources to AI due to Bitcoin halving

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Like a phoenix from the flames, Bitcoin mining firm Core Scientific has emerged valiantly from the ashes of bankruptcy.

In its Q1 earnings report, Core Scientific reported a total revenue of $179.3 million, up from $58.6 million one year ago. Net income came in at $210.7 million compared to last year's first quarter's $0.4 million net loss.

The company attributed the increase in net income mainly to gains of $143.8 million from obligations and a reduction in Chapter 11 financing costs.

Crypto mining revenue brought in $150 million, marking an increase of $51.9 million driven by a 134% increase in the price of Bitcoin and a 20% increase in its self-mining hash rate. Hosting revenue contributed $29.3 million.

Mining revenue in excess of costs was reported to be $68.4 million, representing 46% gross margin, compared to $25.4 million and 26% respectively.

The company also cited a 20% increase in their self-mining hash rate, partially offset by the increase in the global hash rate of approximately 73%, which led to a 34% decrease in bitcoin received from self-mining.

“We now believe our infrastructure is well positioned to take advantage of the enormous demand for power and infrastructure required for high-performance computing, and we see this as the next major growth opportunity for our business,” said Core Scientific’s CEO Adam Sullivan during an earnings call.

The firm produced 2,825 self-mined Bitcoin in Q1, which was more than any other publicly listed miner in North America during the period.

Core Scientific is planning to purchase mining equipment at lower prices following Bitcoin halving, which was triggered last month.

“We are waiting to make countercyclical miner purchases to take advantage of improved pricing. After the recent halving, we are already seeing that dynamic take shape, with post-purchase pricing lower than pre-purchase,” Sullivan said.

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However, Bitcoin halving has also inspired Core Scientific to convert part of its infrastructure to power computing operations for AI companies. The firm has deployed a 16-megawatt data centre capacity for AI startup CoreWeave and intends to convert more.

As revenue for miners was halved in April, Core Scientific is now taking advantage of the AI boom.

"We are in regular discussion with our customer in this space and expect to build out this part of our business further over the course of the year,” Core Scientific Sullivan said on the company’s earnings call.

“We aim to become a market leader and provide the digital infrastructure for high-performance computing.”

Core Scientific filed for bankruptcy in December 2022 but received court approval to emerge from said bankruptcy and relist its shares on the Nasdaq on 16 January following a 13-month restructuring process.

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Its earnings report follows similar good news from its industry peers. Just last week, Bitcoin mining firm Riot Platforms reported a company record for net income in Q1 2024. Although it failed to meet analyst's expectations, Riot's net income came in at a record $211.8 million, marking a 1,000% increase from the same time last year.

Bitcoin Miner Riot Platforms Reports Record 1,000% Q1 Net Income Increase
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Core Scientific's stock price increased as much as 7.75% in after-hours trading.