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Author: Admin | 2025-04-27
Exacerbate negative FCF through significant capital expenditures for growth.Despite these challenges, FCF yield remains a useful tool for evaluating miners from a sustainability standpoint, rather than a pure growth-at-all-costs perspective. Miners pivoting towards AI, such as Core Scientific (CORZ), have demonstrated a positive FCF yield in Q2, effectively reversing the trends outlined earlier. These “Mullet Miners” (AI driving the business, with mining in the background) reduce revenue volatility and improve profitability, enabling increased capex without diluting shareholders. Mullet miners might also have access to a wider range of capital due to a more predictable and stable source of revenue coming from AI, enabling them to have greater operational flexibility compared to pure-play miners. This is evident from Core Scientific’s 516MW deal with Coreweave for 12years, generating ~725m/year in revenue (totalling ~8.7bn over the course of the deal), with estimated 75% EBITDA margins.Meanwhile, companies like Argo and Stronghold have been forced to slim down to meet debt obligations, resulting in positive FCFs but limiting their ability to fund growth. In Argo’s case, shareholder equity turned negative in Q2, meaning they now have more liabilities than assets. Despite this, their net debt was higher than their equity, pushing enterprise value up and improving FCF yield.Since December 2023, there have been a plethora of infrastructure deals. Some construction build-outs and other turn-key acquisitions. The latter is more profitable. Riot’s weighted average cost per MW is $881k/MW (Corsicana build-out for immersion machines), compared to Marathon’s $450k/MW (two cash acquisitions for mostly air-cooled machines) and Cleanspark’s $330k/MW (two cash acquisitions for air-cooled machines) and Bitfarm’s acquisition of Stronghold for US$175m EV. The most cost-effective growth comes from acquiring already-built sites from struggling counterparties rather than building themselves.On the AI hosting side, it appears that each MW costs ~$1.5m from Core Scientific and TeraWulf disclosures. Core Scientific has partnered with Coreweave, which will build the infrastructure but credit against their hosting revenue. In the case of TeraWulf, it reflects their 30% equity contribution for construction of CB-1, a liquid-cooled, redundant, and high-power density 20 MW HPC/AI infrastructure expected to be substantially complete by year-end. The building
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