Core Scientific’s Shares Fall 4% on Q4 2023 Revenue Drop

Core Scientific's Shares Fall 4% on Q4 2023 Revenue Drop

Core Scientific’s Shares Fall 4% on Q4 2023 Revenue Drop

Core Scientific reported a drop in revenue for Q4 of 2023, attributed to exiting the mining rig sales industry and an increased BTC hash rate. 

Core Scientific (CORZ), a cryptocurrency mining company, announced a decrease in year-on-year revenues in its results for the fourth quarter of 2023.

Additionally, the company reported a significant reduction in net losses, which resulted in its shares decreasing by 4% in after-hours trading.

Core Scientific Reports Revenue Decline

According to Core Scientific’s earnings statement dated March 12, the company reported that its total revenue for the previous year was $502.4 million, representing a decline of $137.9 million from $640 million in 2022.

The company’s decision to exit the mining rig sales industry and the increase in the global Bitcoin hash rate in 2023 caused the decrease in annual revenue, as reported. Its net revenue for the fourth quarter of 2023 was $141.9 million, a $20.7 million rise from the previous quarter’s total.

The company announced a significant improvement in annual net losses, with just $246.5 million for 2023, a substantial decrease from the $2.14 billion net loss reported for 2022.

The overall amount of net losses in the fourth quarter of 2023 was $195.7 million, which is a decrease from the $434.9 million recorded in the fourth quarter of 2022.

Core Scientific relisted on the NASDAQ on January 23 after emerging from a bankruptcy crisis and a 13 month restructuring procedure to resolve $400 million in debt caused by dropping Bitcoin prices, increased energy costs, and debt connected to the insolvent cryptocurrency lender Celsius.

This occurred after Core Scientific emerged from a crisis and resolved the debt. The company claimed that it mined 13,762 bitcoins the previous year, the most mined by any publicly traded mining company in the United States.

Core Scientific's Shares Fall 4% on Q4 2023 Revenue Drop
Core Scientific mined a total of 13,762 Bitcoin in 2023. Source: Core Scientific

At the end of the trading day on March 12, Core Scientific’s share price was $3.54, representing a decline of roughly 4.6%. This decline continued in trade after the market closed, with the price decreasing by an additional nearly 4% to approximately $3.40, as reported by Google Finance.

Core Scientific's Shares Fall 4% on Q4 2023 Revenue Drop
CORZ saw a brief after-hours trading drop to just above $3 but quickly recovered. Source: Google Finance

According to a spokesman for Core Scientific, the miner was not unduly concerned by the market’s lukewarm reaction to its profits for the fourth quarter.

The spokesperson also noted muted price action in publicly traded Bitcoin miners over the past few weeks. Marathon Digital (MARA), the largest publicly traded Bitcoin miner, has dropped by 21% over the past month, while Riot Blockchain (RIOT), a competitor miner, has fallen by 25% during the same period.

Mitchell Askew, the head analyst at Blockware Solutions, stated that the “most logical” explanation for miners’ plummeting share prices was that investors were becoming more hesitant to invest capital in the companies before the Bitcoin halving, which is an event that reduces the rewards that miners receive by half.

Following the halving of the Bitcoin supply, Cantor Fitzgerald published a research on January 26 that outlined the potential difficulties that various Bitcoin mining companies may have in maintaining a profitable business.

At the time of publication, the price of Bitcoin was approximately $40,000 on the market. If the hash rate remains stable and Bitcoin’s price stays above $62,000 after the late April halving, none of the featured companies in the report will be in the red post-halving, assuming Bitcoin’s current price of $72,000 remains constant.

Core Scientific's Shares Fall 4% on Q4 2023 Revenue Drop
Cantor Fitzgerald calculated the price of Bitcoin required for miner profitability in January. Source: Cantor Fitzgerald

This is assuming that Bitcoin’s current price of $72,000 remains unchanged. A spokesman said for Core Scientific that the company was “well positioned heading into the halving.”

The spokesperson also mentioned that Core Scientific had been updating its mining rigs with new Bitmain S21 models and was concentrating on raising its hash rate usage as time went on.

As a result of the dramatic increase in Bitcoin and other cryptocurrencies over the past several months, several analysts have shifted their positive outlook on Core Scientific, which is reflective of a wider trend of renewed market enthusiasm for cryptocurrency mining companies across the market.

HC Wainright, a business specializing in capital markets, published an investment note on January 25 in which they upgraded their recommendation of CORZ from “neutral” to “buy.”

The investment banking research firm Compass Point also changed their recommendation for CORZ from “neutral” to “buy” on January 31 and established a price objective of $8.50 for the stock, according to data provided by MarketBeat. 

Read Previous

Bitcoin Price Volatility Wipes Out $360M From Traders

Read Next

Digital Chamber CEO Opposes Biden’s 30% BTC Mining Tax