Core Scientific, one of the largest Bitcoin mining companies in the United States, is betting

Core Scientific, one of the largest Bitcoin mining companies in the United States, is betting on artificial intelligence (AI) amid challenges associated with the recent Bitcoin halving.

Core Scientific took to X on June 3 to announce a $3.5 billion deal with AI cloud provider CoreWeave. As part of the contract, Core Scientific will provide an additional 200 MW of infrastructure to house CoreWeave’s high-performance computing (HPC) operations.

The deal is expected to generate cumulative total revenues for Core Scientific of more than $3.5 billion over the initial 12-year contract term, the announcement said. The estimated average annual revenue from these contracts is expected to be approximately $290 million.

Core Scientific leases 18% of its total infrastructure

The infrastructure provided to CoreWeave represents a significant portion of Core Scientific’s resources, representing approximately 18% of its total operational infrastructure.

In addition to the operational infrastructure of 745 MW. Core Scientific has 372 MW of partially built infrastructure in its two data centers in Texas as of April 2024.

The latest contract is not the first agreement between Core Scientific and CoreWeave. In March 2024, Core Scientific agreed to provide up to 16 MW of data center infrastructure to support AI and high-performance computing operations in another multi-year contract with CoreWeave.

CoreWeave raised $7.5 billion debt facility in May 2024

CoreWeave, formerly known as Atlantic Crypto, was founded in 2017 by Michael Intrator, Brian Venturo and Brannen McBee. The company said none of its founders had experience in the cloud industry before launching CoreWeave; Instead, they came from a background specializing in energy futures trading.

In May 2024, CoreWeave raised a $7.5 billion credit facility from Blackstone, Magnetar and Coatue. According to the Wall Street Journal, this increase would value the company at $19 billion.

Brannen McBee (left) and Michael Intrator, founders of CoreWeave. Source: Wall Street Journal

Core Scientific’s increased bets on cloud AI infrastructure come amid pressures from the fourth Bitcoin (BTC) halving, which reduced Bitcoin mining rewards from 6.25 BTC per block to 3.125 BTC on April 20, 2024.

Since the halving did not lead to a significant rise in the price of Bitcoin immediately afterward, mining companies looked for additional sources of revenue to run their operations.

about: Total impact halved: Bitfarms cryptocurrency mining revenue fell 42% in May

“Our expanded relationship with CoreWeave paves the way for Core Scientific to diversify our business model and balance our portfolio between Bitcoin mining and alternative IT hosting, allowing us to maximize cash flow and minimize risk while “Maintaining significant exposure to Bitcoin’s upside potential,” Core Scientific said CEO Adam Sullivan.

The news came several months after it emerged from bankruptcy in January 2024, concluding a 13-month restructuring process.

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