TL;DR
- Core Scientific, a company specialized in Bitcoin mining, has signed a $3.5 billion agreement with CoreWeave to invest in the field of AI and HPC.
- The agreement involves providing 200 MW of infrastructure for CoreWeave’s operations.
- CoreWeave will initially finance $300 million for infrastructure improvements, to be recovered through hosting fees.
Core Scientific, one of the largest owners of digital infrastructure and Bitcoin mining in North America, has announced a multi-billion dollar agreement with CoreWeave, a Nvidia-backed cloud service provider. The agreement, valued at $3.5 billion and spanning 12 years, marks Core Scientific’s entry into the field of artificial intelligence (AI) and high-performance computing (HPC).
The partnership entails the mining company providing approximately 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance computing operations. This infrastructure will be adapted to accommodate CoreWeave’s Nvidia graphics processing units (GPUs), with modifications expected to begin in the second half of 2024.
Per the financial terms of the agreement, CoreWeave will handle all initial capital investments, including a $300 million starting financing allocated for infrastructure improvements. The invested capital will be recuperated through hosting fees, providing financial relief and reducing risk exposure for both parties.
Core Scientific Emerges from Bankruptcy Alongside Bitcoin
Adam Sullivan, CEO of Core Scientific, maintains that this agreement represents an opportunity to diversify the company’s business model and balance its portfolio between Bitcoin mining and alternative computing hosting. This is expected to maximize cash flow, minimize risk, and maintain significant exposure to Bitcoin’s potential upside.
Moreover, Core Scientific anticipates a significant increase in revenue, with estimated annual revenues revolving around $290 million from the signed contracts. Additionally, the agreement is expected to contribute to increasing the company’s shareholder value, which has grown by 40% year-to-date.
It is worth noting that Core Scientific has managed to emerge from bankruptcy caused by the collapse of the Bitcoin market in 2022. Under Sullivan’s leadership, the company has restructured its debt and shifted towards more sustainable and profitable business areas.
