Citizens JMP Downgrades Core Scientific to Market Perform Following CoreWeave Merger Announcement

Citizens JMP downgraded Core Scientific to Market Perform from Outperform, citing limited upside potential due to the all-stock merger with CoreWeave. The analyst believes a higher bid from another company is unlikely.

High-performance computing (HPC) is reshaping the landscape of traditional bitcoin mining companies, as seen in the recent downgrade of Core Scientific, Inc. (CORZ) by Needham analyst John Todaro. The analyst downgraded Core Scientific from a Buy to Hold rating, citing concerns over the company's acquisition deal with CoreWeave, Inc. (CRWV).

Core Scientific's investment case primarily rests on the expanding opportunities in HPC and AI infrastructure. The company stands out among bitcoin miners as an early mover in this rapidly growing, high-demand space for data center capacity. The increasing need for computing power to support AI has positioned bitcoin miners like Core Scientific well for this demand, given current constraints on rack space and power.

The merger between CoreWeave and Core Scientific, announced in July 2025, has led to a significant drop in Core Scientific's shares. The all-stock deal, expected to close in the fourth quarter of 2025, resulted in a 22% drop in Core Scientific shares. This decline is attributed to the stock-only nature of the deal, a lower-than-anticipated valuation, and limited arbitrage potential due to CoreWeave's borrowing constraints.

Citizens JMP, another analyst firm, has also downgraded Core Scientific to Market Perform from Outperform, citing limited upside potential due to the all-stock merger with CoreWeave. The analyst believes a higher bid from another company is unlikely, aligning with the sentiments expressed by Todaro.

Core Scientific's progress in HPC is notable, with the company securing a multi-year agreement with CoreWeave and holding contracts for roughly 385 megawatts of HPC co-location capacity, representing over $500 million in potential annual revenue. By the end of 2025, Core Scientific is expected to have 271 megawatts operational, and by the end of 2026, it aims to have 383 megawatts operational. This positioning makes Core Scientific one of the first, if not the first, bitcoin miners to bring a 100+ megawatt HPC facility online.

The company's site portfolio is particularly suited for HPC due to its proximity to metro areas and pre-installed fiber, which reduces the capital costs associated with converting bitcoin mining infrastructure to HPC. Given these advantages, Todaro believes the stock warrants a 15x EV/EBITDA multiple on discounted 2026 projections.

Despite the challenges posed by the merger, Core Scientific's strategic position in the HPC market and its strong deal with CoreWeave offer potential upside for investors. However, the uncertainty surrounding the merger and the limited upside potential cited by analysts suggest a cautious approach for investors.

References:
[1] https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/07/46352461/core-scientific-downgraded-over-concerns-on-acquisition-deal
[2] https://finance.yahoo.com/news/coreweave-crwv-nosedives-23-8-190639659.html
[3] https://www.bloomberg.com/news/articles/2025-07-14/coreweave-m-a-deal-jams-up-1-billion-of-core-scientific-bonds