Core Scientific, one of the largest Bitcoin mining companies in the United States, is making a strategic move towards artificial intelligence (AI) to navigate the challenges brought about by the recent BTC halving. The company recently announced a groundbreaking $3.5 billion deal with AI cloud provider CoreWeave, signaling a significant shift in its business model.
The deal, unveiled on June 3, will see Core Scientific providing an additional 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance computing (HPC) operations. This partnership is expected to generate total cumulative revenue of over $3.5 billion for Core Scientific over the initial 12-year terms of the contracts, with an estimated average annual revenue of approximately $290 million.
The infrastructure provided by Core Scientific to CoreWeave represents a substantial portion of its resources, accounting for about 18% of its total operating infrastructure. In addition to its existing 745 MW of operational infrastructure, Core Scientific also owns 372 MW of partially built infrastructure at its two Texas data centers as of April 2024.
This latest deal is not the first collaboration between Core Scientific and CoreWeave. In March 2024, Core Scientific entered into a multi-year contract to provide up to 16 MW of data center infrastructure to support AI and HPC operations for CoreWeave.
CoreWeave, formerly known as Atlantic Crypto, was founded in 2017 by Michael Intrator, Brian Venturo, and Brannin McBee. Despite lacking prior experience in the cloud sector, the founders brought backgrounds in trading energy futures to the table. In May 2024, CoreWeave secured a significant $7.5 billion debt facility from investors Blackstone, Magnetar, and Coatue, valuing the company at $19 billion.
The move towards AI cloud infrastructure by Core Scientific comes at a crucial time following the fourth Bitcoin halving, which reduced miner rewards from 6.25 BTC per block to 3.125 BTC in April 2024. With the halving failing to trigger a substantial increase in BTC price, mining firms like Core Scientific are exploring alternative revenue streams to sustain their operations.
Core Scientific CEO Adam Sullivan emphasized the importance of diversifying the company’s business model and balancing its portfolio between Bitcoin mining and alternative compute hosting. This strategic shift aims to maximize cash flow, minimize risk, and capitalize on Bitcoin’s potential upside.
The announcement of the Core Scientific-CoreWeave partnership comes on the heels of Core Scientific emerging from bankruptcy in January 2024, marking the end of a 13-month restructuring process. The company’s foray into AI cloud infrastructure signifies a bold step towards adapting to the evolving landscape of cryptocurrency mining and technology.