Bitcoin mining company Core Scientific is going public through a SPAC merger with Power & Digital Infrastructure Acquisition Corp. (XPDI). When is the XPDI-Core Scientific merger date and should you buy XPDI stock before the merger?
In addition to mining Bitcoin and a host of other profitable cryptocurrencies, Core also provides infrastructure and hosting services for other crypto companies. XPDI stock jumped more than 1.40 percent on July 21 following the Core Scientific IPO announcement and closed at $9.95.
What is the Power & Digital Infrastructure SPAC?
Power & Digital Infrastructure SPAC went public in February 2021 in a deal that raised $345 million. The SPAC is led by XMS Capital Partners founder Theodore Brombach as chairman and private equity firm EPTP founder Patrick Eilers as CEO. The CFO is James Nygaard Jr., who is another XMS Capital Partners executive.
XPDI and Core Scientific merger date
The boards of both Power & Digital Infrastructure SPAC and Core Scientific have approved the merger deal. The parties aim to complete the transaction in the fourth quarter of 2021. The deal will require the endorsement of a majority of XPDI SPAC shareholders before it can close.
XPDI sponsors and public shareholders will own 9.6 percent of Core Scientific stock when the transaction closes. BlackRock is backing XPDI SPAC in the Core Scientific IPO deal.
Is XPDI stock a good buy before the Core Scientific merger?
You might want to buy XPDI stock before the Core Scientific merger date for several reasons. First, the stock currently trades at a steep discount to peer Bitcoin mining stocks RIOT and MARA.
Core Scientific is growing rapidly. In addition to its expanding Bitcoin holding, its revenue is also rising quickly. It generated revenue of $60 million in 2020 and now anticipates revenue of $493 million in 2021. The revenue is expected to exceed $1.1 billion in 2022.
The company is already making some form of profit. Its adjusted EBITDA was $6 million in 2020 and is forecast to reach $203 million in 2021 and top $570 million in 2022. Core's major advantage is its diverse revenue source. The company makes money from sources like digital asset mining, blockchain hosting services, blockchain hardware sales, and NFTs.
The future looks bright for Core Scientific, particularly on the Bitcoin mining operation. Tesla plans to resume accepting Bitcoin payments. Also, Bitcoin’s endorsement as an official currency in El Salvador bodes well for crypto miners like Core Scientific.
Core Scientific's valuation
The XPDI SPAC deal values Core Scientific at $4.3 billion. Core’s competitors Riot Blockchain (RIOT) and Marathon Digital (MARA) are currently valued at $2.5 billion each. Core is set to receive a cash boost of more than $300 billion to invest in advancing its growth.
Core Scientific versus Riot Blockchain
The Core Scientific IPO is set to expand the selection of Bitcoin mining stocks for investors. Riot Blockchain is Core’s biggest competitor. Core mined 1,683 Bitcoins for its own account in the first half of 2021. In comparison, Riot mined 1,167 Bitcoins during the same period.
Core Scientific expects to end 2021 with 512 megawatts of infrastructure power capacity. On the other hand, Riot’s capacity stands at 300 megawatts.
XPDI SPAC stock, which will convert into Core Scientific stock when the transaction closes, currently trades at $9.95. That represents a 65 percent discount to Riot’s stock price at $29.