Core Scientific, a prominent player in the crypto mining sector, is making significant strides into the realm of artificial intelligence (AI) through a landmark 12-year agreement with CoreWeave, a cloud services provider specializing in AI applications.
Announced on June 3, the Texas-based Core Scientific revealed its strategic collaboration with CoreWeave, a former crypto mining entity now focused on AI cloud services. The agreement entails a series of long-term contracts aimed at facilitating CoreWeave’s NVIDIA GPU operations for AI training, with Core Scientific committing approximately 200 megawatts of infrastructure to support this endeavor. Scheduled infrastructure enhancements are slated to commence in the latter half of 2024, with full operational capacity expected by the first half of 2025. Forecasts anticipate the deal to yield revenue surpassing $3.5 billion.
Core Scientific’s CEO, Adam Sullivan, articulated the significance of this partnership, 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.
The agreement also outlines a unique financial arrangement wherein approximately $300 million of capital investments in infrastructure will be offset against hosting payments, capped at 50% of monthly fees until fully recouped. Moreover, provisions within the agreements allow for potential expansion, positioning Core Scientific as a formidable contender to emerge as one of the largest data center operators in the United States.
Established in 2017 by Mike Levitt and Darin Feinstein, Core Scientific experienced rapid ascension within the crypto mining landscape, securing over $50 million in equity funding. However, the volatile nature of the crypto market precipitated financial challenges, culminating in the firm’s near bankruptcy in late 2022, amidst a series of industry-wide insolvencies. Notably, in early 2024, Core Scientific successfully navigated bankruptcy proceedings, marking a pivotal turning point in its trajectory.
As Core Scientific embarks on this transformative venture into AI infrastructure provision, it underscores the evolving dynamics within the crypto mining sector, with diversification strategies aimed at capitalizing on emerging technology trends.
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