Bitcoin Miner Core Scientific Expands AI Infrastructure Deal with CoreWeave

TLDR

Core Scientific announced an expanded deal with CoreWeave worth $6.7 billion over 12 years.
The company will provide an additional 112 megawatts of computing infrastructure to CoreWeave.
Core Scientific’s shares rose by 18% following the announcement.
The deal represents a shift from bitcoin mining to AI infrastructure for Core Scientific.
CoreWeave will finance the modifications to Core Scientific’s infrastructure.

Core Scientific, a major player in the bitcoin mining industry, has announced a significant expansion of its partnership with CoreWeave, an AI-focused cloud provider.

The deal, valued at $6.7 billion over 12 years, marks a pivotal shift in Core Scientific’s business strategy from cryptocurrency mining to artificial intelligence infrastructure.

Under the new agreement, Core Scientific will expand its high-performance computing (HPC) infrastructure by 112 megawatts (MW) to a total of 382 MW. This additional capacity will be used to host CoreWeave’s NVIDIA graphics processing units (GPUs), which are crucial for AI and machine learning applications.

The expanded deal is expected to generate an additional $2 billion in revenue over 12 years, on top of the $4.7 billion anticipated from existing agreements. This brings the total potential revenue from the CoreWeave partnership to $6.7 billion, starting in the first half of 2026.

Core Scientific’s CEO, Adam Sullivan, stated,

“We have now contracted with CoreWeave for a total of 382 megawatts of HPC infrastructure, reflecting the strong demand for high-power data center infrastructure and the unique ability of our team to deliver it.”

The announcement had an immediate impact on Core Scientific’s stock price, which surged by approximately 18% following the news. As of the latest report, the company’s shares were trading at $9.74.

CoreWeave will finance all capital investments required to transform Core Scientific’s existing infrastructure into state-of-the-art, application-specific data centers tailored for dense HPC. The modifications are scheduled to begin in the latter half of 2024, with operations expected to commence in early 2026.

This expansion comes at a time when many bitcoin mining firms are retrofitting their existing facilities to serve AI clients. The shift is driven by decreased profitability in crypto mining, particularly following the recent bitcoin halving event.

Core Scientific’s move reflects a broader trend in the industry, as companies leverage their existing infrastructure and power contracts to meet the growing demand for AI computing resources.

The transition from bitcoin mining to AI infrastructure is not without challenges. As Needham analysts pointed out in a May report, much of the existing mining infrastructure would need significant modifications to accommodate HPC requirements.

Despite these challenges, Core Scientific’s Sullivan remains optimistic about the company’s future. He highlighted the planned integration of Block’s new 3-nanometer ASIC chip for next year and the thriving HPC business as key factors in the company’s growth strategy.

This deal represents a turnaround for Core Scientific. In January 2024, the company was emerging from bankruptcy and facing challenges from angry lenders. Since its return to the stock market that month, Core Scientific’s share price has risen by 140%, largely driven by its aggressive push into the AI business.

The company also continues its bitcoin mining operations. In July, Core Scientific mined 411 BTC from its fleet of owned miners, operating around 172,000 BTC miners with a total hash rate of 20.1 EH/s.