Core Scientific, one of the leading Bitcoin mining companies in the United States, is placing its bets on artificial intelligence (AI) in the face of challenges brought about by the recent BTC halving.
On June 3, Core Scientific announced a $3.5 billion deal with AI cloud provider CoreWeave. Under the agreement, Core Scientific will provide an additional 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance computing (HPC) operations.
According to the announcement, this deal is expected to generate a total cumulative revenue of over $3.5 billion for Core Scientific during the initial 12-year term of the contracts. The estimated average annual revenue from these contracts is projected to be around $290 million.
In terms of infrastructure, the resources provided to CoreWeave make up a significant portion of Core Scientific’s total operating infrastructure, accounting for roughly 18%. In addition to its existing 745 MW of operational infrastructure, Core Scientific also owns 372 MW of partially built infrastructure at its Texas data centers as of April 2024.
This latest contract is not the first collaboration between Core Scientific and CoreWeave. In March 2024, Core Scientific agreed to provide up to 16 MW of data center infrastructure to support AI and HPC operations in another multi-year contract with CoreWeave.
CoreWeave, formerly known as Atlantic Crypto, was founded in 2017 by Michael Intrator, Brian Venturo, and Brannin McBee. Interestingly, none of the founders had prior experience in the cloud sector before launching CoreWeave. Instead, they came from backgrounds in trading energy futures. In May 2024, CoreWeave secured a $7.5 billion debt facility from Blackstone, Magnetar, and Coatue, valuing the company at $19 billion.
Core Scientific’s increasing focus on AI cloud infrastructure comes at a time when Bitcoin miners are facing pressure following the fourth BTC halving, which reduced miner rewards from 6.25 BTC per block to 3.125 BTC on April 20, 2024. With no significant increase in BTC price immediately after the halving, mining companies are seeking additional sources of revenue to sustain their operations.
“Our expanding relationship with CoreWeave allows Core Scientific to diversify our business model and balance our portfolio between Bitcoin mining and alternative compute hosting, enabling us to maximize cash flow and minimize risk while still maintaining significant exposure to Bitcoin’s potential for growth,” said Core Scientific CEO Adam Sullivan.
This news comes several months after Core Scientific emerged from bankruptcy in January 2024, completing a 13-month restructuring process.
Image: CoreWeave founders, Brannin McBee (left) and Michael Intrator. Source: WSJ