CoreWeave’s bond yield surged to 15%—a figure that would put it among the junkiest of junk bonds in traditional credit markets. $CRWV fell 5.66% today to 72.38, with 14 million in trading volume. Not huge, but the direction is clear.
What’s interesting is its connection to crypto. CoreWeave is essentially an AI cloud-computing company, and some of its customers are former crypto miners. Computing demand is actually more closely correlated with the price of BTC than many people think. When coin prices are strong, miners are more willing to buy GPUs, and AI companies are more willing to rent computing power, so $CRWV gets a thicker order book.
The problem now is that its 104 billion in backlogged orders sounds impressive, but the market is worried about financing costs. A 15% bond yield means borrowing is extremely expensive; the faster it expands, the faster it burns through cash. This “using high-interest debt to bet on future cash flows” model is fundamentally the same playbook as crypto-mining companies levering up to buy mining rigs during the last bull market.
Even Elon Musk came out and said “yikes,” so sentiment is bound to take a hit.
#AI
What’s interesting is its connection to crypto. CoreWeave is essentially an AI cloud-computing company, and some of its customers are former crypto miners. Computing demand is actually more closely correlated with the price of BTC than many people think. When coin prices are strong, miners are more willing to buy GPUs, and AI companies are more willing to rent computing power, so $CRWV gets a thicker order book.
The problem now is that its 104 billion in backlogged orders sounds impressive, but the market is worried about financing costs. A 15% bond yield means borrowing is extremely expensive; the faster it expands, the faster it burns through cash. This “using high-interest debt to bet on future cash flows” model is fundamentally the same playbook as crypto-mining companies levering up to buy mining rigs during the last bull market.
Even Elon Musk came out and said “yikes,” so sentiment is bound to take a hit.
#AI