Core Scientific signs $3.5 billion AI deal with CoreWeave to diversify beyond Bitcoin mining
Core Scientific has signed a significant 12-year agreement with Nvidia-backed AI hyperscaler CoreWeave to provide approximately 200 MW of infrastructure for high-performance computing (HPC) services. This strategic move is expected to generate total cumulative revenue for Core Scientific of more than $3.5 billion over the initial term of the agreement, with average annual revenue estimated at approximately $290 million.
The deal marks a pivotal shift for Core Scientific, traditionally known for its Bitcoin mining operations, as it diversifies into the fast-growing AI data center space. Core Scientific will modify several existing sites to host CoreWeave’s NVIDIA GPUs, with site modifications expected to begin in the second half of 2024 and operations in the first half of 2025. CoreWeave will fund all capital investments (estimated at $300 million) required for these modifications. , you will be credited towards your hosting payment until it is repaid in full.
Adam Sullivan, CEO of Core Scientific, highlighted the strategic benefits of this partnership, noting that demand for high-power sites continues to outpace supply. He emphasized that Core Scientific’s ability to deliver power faster than greenfield data center projects allows the company to effectively meet customer needs. The partnership with CoreWeave allows Core Scientific to balance its portfolio between Bitcoin mining and alternative compute hosting, maximizing cash flow and minimizing risk while maintaining significant exposure to Bitcoin’s potential upside.
The agreement also includes an option for CoreWeave to expand its hosting footprint with Core Scientific at additional sites over the next 60 to 90 days. This expansion is part of Core Scientific’s broader strategy to leverage its extensive high-power digital infrastructure portfolio, with 1.2 gigawatts of contracted power and nearly 500 MW allocated to HPC workloads.
This transaction builds on the successful history of collaboration between Core Scientific and CoreWeave, which began in 2019. Earlier this year, Core Scientific delivered 16 MW of HPC hosting capacity to CoreWeave ahead of schedule in its new Austin data center. The partnership is expected to strengthen Core Scientific’s earnings power and enhance shareholder value by increasing exposure to contracted dollar-denominated revenue streams.
The announcement comes about five months after Core Scientific was approved by a court to exit bankruptcy. This is an inevitable measure due to financial difficulties caused by falling cryptocurrency prices and rising energy costs. Under Sullivan’s leadership, the company restructured its debt and pivoted toward a more sustainable business direction, including a strategic shift toward AI and HPC hosting.
According to Core Scientific, this diversification is consistent with broader industry trends as other cryptocurrency miners such as Bit Digital, Iris Energy, and Hut 8 also explore AI infrastructure to increase profitability. Advances such as OpenAI’s ChatGPT have increased the demand for AI operations, highlighting the potential for higher returns compared to traditional Bitcoin mining.
As Core Scientific continues to expand its HPC hosting capabilities, we aim to deliver significant, resilient and sustainable value to our stakeholders by leveraging our extensive infrastructure and strategic partnerships to navigate the evolving digital landscape.
