June 5, 2024
Core Scientific AI partnership

Core Scientific Partners with CoreWeave in $3.5 Billion AI Deal

Core Scientific Expands AI Partnership Amid Bitcoin Halving Challenges

Core Scientific, a leading Bitcoin mining company in the United States, is shifting towards artificial intelligence (AI) to tackle challenges posed by the latest Bitcoin (BTC) halving. On June 3rd, the company announced a $3.5 billion partnership with AI cloud provider CoreWeave via X. Under this agreement, Core Scientific will provide an additional 200 megawatts (MW) of infrastructure to support CoreWeave’s high-performance computing (HPC) operations.

Significant Revenue Boost Expected

This partnership with CoreWeave is anticipated to generate over $3.5 billion in cumulative revenue for Core Scientific over the initial 12-year contract term. The average annual revenue is projected to be around $290 million, offering a substantial financial boost as the Bitcoin mining industry faces evolving profitability challenges.

Core Scientific Allocates Major Infrastructure Share

Core Scientific will dedicate about 18% of its total operating infrastructure to support CoreWeave’s operations. This includes 745 MW of operational infrastructure and an additional 372 MW of partially built infrastructure at its two Texas data centers as of April 2024. This deal continues a growing relationship between the two companies, following a previous multi-year contract in March 2024, where Core Scientific agreed to provide up to 16 MW of data center infrastructure for AI and HPC operations.

CoreWeave’s Rapid Growth and Funding

Founded in 2017 by Michael Intrator, Brian Venturo, and Brannin McBee, CoreWeave has experienced rapid growth despite its founders’ lack of prior cloud sector experience. In May 2024, CoreWeave secured a $7.5 billion debt facility from investors including Blackstone, Magnetar, and Coatue, valuing the company at $19 billion. This significant funding reflects strong confidence in CoreWeave’s potential and the broader AI cloud market.

Strategic Diversification

The AI partnership between Core Scientific and CoreWeave comes as Bitcoin mining companies face pressure from the latest halving, which significantly reduced miner rewards. This strategic move allows Core Scientific to diversify its business model, balancing Bitcoin mining with alternative compute hosting. “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, positioning us to maximize cash flow and minimize risk while maintaining our significant exposure to Bitcoin’s upside potential,” stated Core Scientific CEO Adam Sullivan. This announcement follows Core Scientific’s emergence from a 13-month restructuring process, completed in January 2024, highlighting the company’s resilience and forward-looking strategy.

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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