RIOT, MARA, IREN, and CORZ Stocks Slide as Bitcoin Miners Turn Neoclouds Face Credit Risks

Top Bitcoin (CRYPTO: BTC) miners pivoting to artificial intelligence (AI) have fallen this month as concerns about the industry grow amid fears of an AI bubble.

Riot Platforms (NASDAQ:RIOT) dropped to $12.53, its lowest level since April and 60% from its highest point this year. Its valuation has dropped from over $10.8 billion to $4.7 billion. 

MARA Holdings (NASDAQ:MARA) fell to $7, its lowest level since February, and 57% from the year-to-date high. Core Scientific (NASDAQ:CORZ) dropped to $13.10 from the year-to-date high of $30. IREN (NASDAQ:IREN) has also been in a strong sell-off.

Other neocloud companies, including CoreWeave, Nebius, IREN, TeraWulf, and Riot Platforms, have also plunged as concerns about the AI industry have intensified. The AI Stock Bubble Index has climbed to an elevated 74.

Neocloud Companies are Facing Credit Risks

These stocks continued their sell-off this month after Gartner (NYSE:IT) warned that neocloud companies will need to announce substantial impairments in late 2030. The report pointed to the large gap between expected revenue and costs. 

There are also elevated credit risks since these companies are relying on debt to fund their AI ambitions. A report released earlier this year by VanEck showed that these Bitcoin mining companies faced a $50 billion funding gap to fund their AI ambitions. The real figure will likely be higher because of the rising memory, GPU, and server costs. 

There are signs of stress in the neocloud industry. CoreWeave (NASDAQ:CRWV), the sector’s biggest company, has seen the yield on its key 2031 bond jump to 15%. Investors have also pushed back against Nvidia-backed firms such as Nscale and Firmus, which have tried to go public. Firmus was forced to withdraw its IPO, while Nscale’s investors are asking it to cut its valuation to about $15 billion.

The neocloud industry is also facing other challenges. A major one is the rising competition, which will likely affect their performance over time. SpaceX has become a big competitor and has already inked major deals with companies like Alphabet, Anthropic, and Reflection AI. 

Meta Platforms, another top client of these neoclouds, is considering entering the industry by leasing its extra computing power.

These risks explain why many investors have shorted the companies. IREN has a short interest of 20.7%, while Core Scientific, Riot Platforms, and MARA Holdings have 20.54%, 12.5%, and 26%, respectively.

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