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Core Scientific Signs $3.5 Billion AI Infrastructure Deal with CoreWeave, Shares Surge
Core Scientific, a major bitcoin mining and hosting services provider, announced a $3.5 billion, 12-year AI infrastructure deal with CoreWeave.
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Core Scientific (NASDAQ: CORZ), one of the largest high-powered digital infrastructure providers for bitcoin mining and hosting services in North America, announced a series of 12-year contracts with AI Hyperscaler CoreWeave.
The deal, expected to generate over $3.5 billion in cumulative revenue for Core Scientific during the initial terms, marks a significant milestone in the company’s comeback after emerging from bankruptcy earlier in 2023.
Under the agreement, Core Scientific will deliver approximately 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance compute (HPC) operations, utilizing NVIDIA (NASDAQ: NVDA) GPUs.
The company will modify multiple existing, owned sites to accommodate CoreWeave’s hardware. Site modifications are expected to begin early in the second half of 2024 and achieve operational status in the first half of 2025. CoreWeave will provide about $300 million in capital investments, with options for further capacity expansion.
Transforming Core Scientific’s Hosting Business and Leaning into AI
The estimated average annual revenue from the contracts is expected to be approximately $290 million, with opportunities for two five-year renewal terms each and the option for further expansion. The deal is set to transform Core Scientific’s hosting business and earnings power while maintaining its bitcoin mining capacity and growth potential. The company has nearly 500 MW of HPC power available for alternative compute workloads.
Core Scientific and CoreWeave have a history of collaboration. From 2019 to 2022, Core Scientific hosted thousands of CoreWeave’s GPUs in its data centers. In March 2024, the two companies entered a contract for HPC hosting at Core Scientific’s new Austin data center.
CORZ Stock Price Surges on Deal Announcement and Buyout Offer
Following the AI deal announcement, CORZ stock surged as much as 40% in pre-market trading on June 4, 2024. CoreWeave reportedly offered to buy Core Scientific for $5.75 per share, a 55% premium to the miners’ three-month average weighted share price as of May 31, valuing the company at just over $1 billion.
Heading into June 4, 2024, CORZ stock had risen 44% over the last month and 34% in the last three months. As of 11:46 AM EDT on June 4, 2024, CORZ stock was trading at $6.67, up 36.86% from the previous close.
Do you think Core Scientific will continue to lean further into its AI hosting business? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
