March 27, 2024
Core Scientific's $100M CoreWeave Pact for Revenue Varieties
Latest Cryptocurrency News

Core Scientific Inks $100M Deal with CoreWeave

Bitcoin miner Core Scientific aims to diversify revenue before halving, sealing a deal with AI startup CoreWeave for data center services, potentially generating over $100 million. Core Scientific is leasing a tier 3 data center in Austin, Texas, repurposed from Hewlett Packard, to host CoreWeave’s infrastructure. The contract includes delivering up to 16 MW of capacity, marking a shift towards high-performance computing (HPC).

CoreWeave, an AI cloud computing firm valued at $7 billion, is supported by major Wall Street entities, including Jane Street, J.P. Morgan Asset Management, and Fidelity. The new data center in Austin will meet CoreWeave’s immediate needs while broadening Core Scientific’s hosting customer portfolio.

This expansion precedes the Bitcoin halving event, where BTC’s block reward will halve, reducing miner revenues. The 2024 halving will cut the block reward from 6.25 BTC to 3.125 BTC, controlling Bitcoin’s inflation. CoinShares’ analysis indicates electricity costs post-halving will represent about 71% of miners’ total cost structure, with an average production cost projected to be $37,856.

In 2023, Core Scientific became North America’s largest publicly listed crypto mining company, mining 19,274 BTC valued at $812 million. Emerging from Chapter 11 bankruptcy after a 13-month restructuring, the company addressed $400 million in debt linked to falling BTC prices, escalating energy expenses, and debt associated with the bankrupt Celsius Network.

The partnership with CoreWeave highlights Core Scientific’s strategic move into high-performance computing services amid the evolving landscape of cryptocurrency mining. This diversification is crucial as Bitcoin miners face the challenge of reduced block rewards post-halving. The deal ensures immediate revenue for Core Scientific and aligns with the broader industry trend of crypto companies adapting to market dynamics.

As Bitcoin undergoes periodic halving events to manage its inflation, miners globally must navigate the delicate balance between reduced rewards and increasing operational costs. Core Scientific’s proactive approach, leveraging its infrastructure for AI-related services, showcases a forward-thinking strategy to weather the challenges posed by the halving and sustained growth in the rapidly evolving crypto landscape.

Image by Gerd Altmann from Pixabay

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