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Bitcoin Miner Core Scientific Secures $3.5 Billion AI Partnership

Jun 4, 2024 at 06:08

Core Scientific, a leading Bitcoin mining company in the United States, has entered into a significant AI partnership with CoreWeave, expected to generate $3.5 billion over the next 12 years by leasing out 18% of its infrastructure.

On June 3, Core Scientific announced a $3.5 billion agreement with AI cloud provider CoreWeave via X. The deal involves Core Scientific providing an additional 200 megawatts (MW) of infrastructure to support CoreWeave’s high-performance computing (HPC) operations.

The collaboration is anticipated to bring in cumulative revenue of over $3.5 billion during the initial 12-year contract period, with an estimated average annual revenue of about $290 million.

Core Scientific Allocates 18% of Its Infrastructure

The infrastructure leased to CoreWeave represents approximately 18% of Core Scientific’s total operating capacity. As of April 2024, Core Scientific operated 745 MW of infrastructure and had an additional 372 MW of partially built infrastructure at its two data centers in Texas.

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This is not the first partnership between Core Scientific and CoreWeave. In March 2024, Core Scientific agreed to provide up to 16 MW of data center infrastructure for AI and HPC operations under a multi-year contract with CoreWeave.

CoreWeave’s Recent Financial Milestone

CoreWeave, originally known as Atlantic Crypto, was founded in 2017 by Michael Intrator, Brian Venturo, and Brannin McBee, who came from energy futures trading backgrounds rather than the cloud sector. In May 2024, CoreWeave secured a $7.5 billion debt facility from Blackstone, Magnetar, and Coatue, valuing the company at $19 billion according to The Wall Street Journal.

Adapting to Bitcoin Halving Challenges

Core Scientific’s focus on AI cloud infrastructure comes in response to the challenges posed by the recent Bitcoin halving, which reduced miner rewards from 6.25 BTC per block to 3.125 BTC on April 20, 2024. With no immediate surge in Bitcoin prices post-halving, mining companies are exploring additional revenue streams to sustain their operations.

Core Scientific CEO Adam Sullivan commented, “Our expanding relationship with CoreWeave creates a pathway for Core Scientific to diversify our business model and balance our portfolio between Bitcoin mining and alternative compute hosting. This positions us to maximize cash flow and minimize risk while maintaining significant exposure to Bitcoin’s upside potential.”

This announcement follows Core Scientific’s emergence from bankruptcy in January 2024, concluding a 13-month restructuring process.

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