Bitcoin Miners at a Crossroads: Canaan Doubles Down on BTC While Core Scientific Pivots to AI

The cryptocurrency mining sector is facing a significant strategic divergence, exemplified by the contrasting paths of two major industry players. Canaan Inc. (CAN), a pioneering manufacturer of Bitcoin mining rigs, announced its decision to shutter its artificial intelligence (AI) chip division to refocus entirely on its core crypto operations. This move stands in stark opposition to the path taken by Bitcoin miner Core Scientific (CORZ), which is reportedly in advanced acquisition talks with AI cloud computing giant CoreWeave. The market's reaction has been swift and telling: Canaan's stock continued its downward trend, while Core Scientific's shares surged, presenting traders with a clear dichotomy between a pure-play crypto bet and a diversified AI infrastructure play.

Canaan's Contrarian Bet on a Crypto-Centric Future

Canaan's decision to wind down its AI semiconductor business marks the end of a multi-year effort to diversify its revenue streams. According to a company statement on Monday, the AI unit generated a mere $900,000 in revenue in 2024 against total revenues of $88.8 million, yet it accounted for a staggering 15% of the company's operating expenses. CEO Nangeng Zhang stated that “doubling down on our core strengths in crypto infrastructure and bitcoin mining is the most strategic path forward.” For traders, this move simplifies Canaan into a high-beta play on the price of Bitcoin and the overall health of the mining industry. The stock's performance reflects the market's skepticism, with CAN shares falling over 71% year-to-date. However, this positions Canaan as a potential high-reward investment if the crypto market recovers and the “American Made” Bitcoin narrative gains traction, an upside potential noted by Benchmark analyst Mark Palmer regarding the expansion of self-mining operations in the United States. The stock's recent price action around $0.63 per share serves as a critical support level to watch.

Core Scientific's AI Pivot Ignites Investor Optimism and a Soaring Valuation

In a dramatic contrast, Core Scientific's potential pivot towards AI has been met with significant enthusiasm from investors. Following a report that CoreWeave had renewed its acquisition interest, CORZ shares skyrocketed 33% to close above $16. The bullish sentiment was amplified by a research note from Cantor Fitzgerald, which suggested a potential buyout valuation of over $30 per share. This lofty target is underpinned by tangible assets and long-term cash flows. Analysts at Cantor valued the company's 12-year, $3.5 billion infrastructure lease with CoreWeave at approximately $24 per share, based on a conservative 15x profit multiple. They added another $11.70 per share for the replacement value of Core Scientific's existing 570MW of power infrastructure. This detailed valuation provides traders with clear upside targets and demonstrates the market's willingness to reward miners who successfully leverage their infrastructure for the high-demand AI sector. The move creates a new potential support zone near the pre-jump levels, with traders now eyeing resistance at the psychological $20 mark and the ultimate target of $30.

The Great Debate: AI Stability vs. Bitcoin's Volatility

The divergent strategies of Canaan and Core Scientific highlight a central debate within the industry: is the stable, long-term cash flow from AI a better use of infrastructure than the volatile, cyclical revenue from Bitcoin mining? A May report from Rittenhouse Research argued this point, suggesting that the most successful crypto firms are pivoting to become AI infrastructure providers. The firm noted that the infrastructure used to mine digital gold might be more profitably used to process AI algorithms, which generate predictable revenue streams not subject to Bitcoin's price swings or the quadrennial halving events that slash mining rewards. The difficulty in achieving consistent efficiency gains from new mining hardware further complicates the long-term profitability of pure-play mining. However, not every pivot away from BTC is a guaranteed success. Bit Digital's move to dump its Bitcoin rigs in favor of Ethereum staking was met with a 15% drop in its stock price during a recent session, serving as a cautionary tale. Core Scientific's potential success seems to lie in its hybrid approach, retaining its mining operations while leasing a significant portion of its capacity to a high-growth AI partner, creating a blueprint that other miners may soon follow.