Core Scientific, which currently has the highest hashrate among publicly traded bitcoin miners, just lowered its 2022 outlook, saying it would take a more conservative approach to growing the business due to market volatility.
Announcing disappointing first-quarter results on Thursday, the miner lowered its 2022 hashrate forecast to 30-32 exahash per second (EH/s) from its previous forecast of 40-42 EH/s, and now sees total output of about 1 gigawatt, down from its previous forecast of 1.2 to 1.3 gigawatts (GW).
"We would call this a reasonably conservative approach to growth that ensures we have the money to do what we say we're going to do," CEO Mike Levitt said during the earnings conference call. "We remain very confident in our ability to internally fund our growth to one gigawatt," he added.
Levitt noted that his company could still decide to expand beyond the 1-gigawatt capacity, but would only do so if capital is available on "compelling terms," either from the markets or through upfront financing from its customers.
"Despite a very challenging environment, we are adequately capitalized to meet our 2022 targets, and we have the ability to exceed those targets if it makes sense," Levitt said during the conference call.
Levitt also said the company is not interested in issuing equity in current market conditions and may sell some of its mined coins this year. "We will continue to do everything in our power to maintain a stable, strong financial position and continue to invest in our growth," Levitt said. "We currently hold over 10,000 self-mined bitcoins. However, we have sold digital assets this year and we expect that to continue," he added.
The comments are in line with other companies such as Riot, which has already started selling its self-mined Bitcoins, and Marathon, which recently said it may start doing so.
Investors reacted positively to Core Scientific's new approach, as Core's share price rose in after-hours trading, even after the company lowered its 2022 guidance and missed estimates for revenue and adjusted EBITDA in the first quarter. Both metrics, however, were up multiple times year over year.
M&A Opportunities.
During the conference call, Core's Levitt said customer demand for its colocation services remains strong and that the company is still in a number of conversations. However, he added that customers need to raise capital to fund their orders or Core would not take them on as customers.
The lack of capital has become a bigger problem for the miner, more so than before, given the recent crash of the cryptocurrency market and the increasing risk aversion of investors. Crypto stocks are falling along with broader equity markets as investors hit the sell button on nearly all asset classes amid rising inflation, recession fears and geopolitical turmoil.
"Capital markets are a challenge for many in our industry," Levitt said. "There are a number of people who have commitments that depend on them being able to raise additional capital, and they are finding it difficult to raise that capital," he added.
However, those market dynamics have helped create some potential M&A opportunities because of the company's size and financing, Levitt said. "We believe we are well positioned to continue to grow and take advantage of new opportunities that come our way in this environment," he said, adding, "We are already starting to be presented with opportunities, frankly," although there is "nothing to say today."