Apparently not satisfied to report that it had mined over 5,700 Bitcoin (BTC 0.21%) units in 2021 and more than 2,000 in the first two months of 2022, Core Scientific (CORZ) told the market it had mined a record-setting 1,143 Bitcoins in March, according to the latest company update.
That's a lot of bitcoins
The company reports that it now holds 8,497 Bitcoins produced from operations (as opposed to purchases of Bitcoin like Microstrategy's (MSTR 1.10%), for example). If we take March's production and annualize it over the remaining nine months of 2022, that means the company should have about 18,600 BTC by year end, which at today's BTC price of about $40,000 equals roughly $744 million worth of Bitcoin.
To be clear, the amount mined each month will fluctuate based on how hard it is to mine coins and other factors, and the price of Bitcoin itself will change over the course of the year. But this gives us an idea of how much of the cryptocurrency Core Scientific could hold by the end of 2022. The company increased its production from 35 Bitcoins a day in February to 36.9 a day at the end of March. Starting this week, Core will begin posting daily production totals on its website, which will bolster investor information and transparency.
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Core vs. the field
Producing 1,143 Bitcoins in March sounds impressive, so let's add some context. Marathon Digital (MARA 10.77%) and Riot Blockchain (RIOT 5.43%) produced 436 and 511 Bitcoins in March, respectively. In other words, Core comfortably produced more Bitcoin than its two biggest peers combined. But with a market cap of $2.6 billion compared to $2.45 billion for Marathon and $2 billion for Riot, the market is assigning only slightly more value to Core than to either one.
How is Core doing this?
Core Scientific is producing these impressive results by deploying a huge amount of Bitcoin miners. According to the company, it currently boasts a fleet of 80,000 Bitcoin miners producing a hash rate of 8.3 EH/s (exahashes per second). (Hash rate is a measure of the total computational power being used to mine Bitcoin and process transactions on its network.) For comparison, Marathon Digital had a hash rate of 4 in March and Riot Blockchain maintained a hash rate of 4.3. Core had almost the same hash rate as its top two competitors combined.
As Bitcoin's coin count rises, mining will require more computational power to produce each Bitcoin as increasingly large-scale, institutional miners dominate. So having a large fleet of miners will be a big advantage, especially with supply chain challenges making it difficult to amass new miners. Core spreads this fleet of miners out across data centers in Georgia, Kentucky, North Carolina, and North Dakota, with facilities in Texas and Oklahoma under development, mitigating the damage that would be caused by a single site's going offline.
What else is Core up to?
In addition to mining Bitcoin for itself, Core also generates revenue by hosting miners and providing infrastructure, technology and operating support for customers and clients that make up 7.9 EH/s.
Core also developed its own software, called Minder, that increases mining efficiency by monitoring its miners and alerting the company to any downtime or underperformance.
Lastly, Core also has a research and development team exploring monetizing other opportunities in the crypto space, like staking proof-of-stake cryptocurrencies.
Is Core a buy?
With a massive fleet of miners that is lapping the field in terms of Bitcoin production, Core Scientific looks like the industry leader. I view Core Scientific as a "buy" with further upside if the price of Bitcoin rises substantially or if the company keeps scaling up and increases its production even further.
