The partnership is set to provide a stable, recurring, and high-margin revenue stream for Core Scientific, complementing its current business model.
Renowned Bitcoin mining and hosting services provider Core Scientific has expanded its 12-year contracts in the Artificial Intelligence compute sector with AI hyperscaler CoreWeave. The contracts are expected to bring in an average annual revenue of $290 million and accrue to over $3.5 billion over the contract period.
The diversification into AI hosting comes as bitcoin mining companies seek to expand their revenue streams constricted by April’s BTC halving, where miner rewards decreased by 50%.
Under the terms of the agreements, Core Scientific will provide around 200 megawatts (MW) of infrastructure to support CoreWeave’s high-performance compute (HPC) operations.
This involves modifying multiple existing Core Scientific-owned sites to host CoreWeave’s NVIDIA GPUs. The Nasdaq-listed company expects these modifications to begin early in the second half of 2024, with operations expected to start in the first half of 2025.
The contracts offer CoreWeave options to expand its hosting footprint at additional Core Scientific sites within the next 60 to 90 days. CoreWeave will fund all capital investments required to convert Core Scientific’s existing infrastructure into advanced, application-specific data centers. It will credit around $300 million of these investments against hosting payments, capped at 50% of monthly fees until fully repaid.
A New Revenue Stream
The partnership is set to provide a stable, recurring, and high-margin revenue stream for Core Scientific, complementing its current business model. Once operational, the HPC infrastructure is projected to generate over $3.5 billion in total cumulative revenue during the initial 12-year terms of the contracts. Adam Sullivan, Core Scientific’s CEO, expressed enthusiasm about the contract, stating:
“Our new contracts with CoreWeave position us to transform our hosting business and our earnings power by capturing exciting growth opportunities in AI compute, one of today’s most dynamic technology segments, while also maintaining our strong bitcoin mining franchise.”
This partnership builds on a long-standing relationship between Core Scientific and CoreWeave. From 2019 to 2022, the mining giant hosted thousands of CoreWeave’s GPUs in its data centers. Earlier this year, the companies entered into a contract for HPC hosting at Core Scientific’s new Austin data center, delivering 16 MW of capacity more than 30 days ahead of schedule.
According to the announcement, the mining giant is also in discussions with other potential clients for additional HPC hosting contracts, leveraging its extensive high-power digital infrastructure portfolio.
Core Scientific has shown a remarkable financial turnaround after resuming trading on Nasdaq in January following its bankruptcy and restructuring. It posted a net income of $210.7 million in the first quarter of this year, compared to a net loss of $388,000 in the same period of 2023.
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