Bitcoin miner Core Scientific signs 12-year deal to deliver 200MW for machine learning

As an analyst with a background in technology and finance, I’m keeping a close eye on the latest developments in the crypto mining industry, particularly when it comes to companies diversifying their portfolios beyond traditional Bitcoin mining. Core Scientific’s recent move to partner with CoreWeave for AI training is an intriguing play that could pay off big for the Texas-based firm.

Core Scientific, a company specializing in cryptocurrency mining, has entered into a 12-year agreement with cloud service provider CoreWeave. Under the terms of this partnership, Core Scientific will grant access to its computing resources for the purpose of training artificial intelligence models on behalf of CoreWeave’s clients.

Bitcoin miners are expanding their investments by delving into sectors linked to artificial intelligence (AI). Notably, Core Scientific, a prominent player in the crypto mining industry, is strengthening its commitment to machine learning.

In a press announcement on the 3rd of June, the Lone Star State corporation disclosed that they had entered into a number of twelve-year agreements with CoreWeave, a business that has pivoted from crypto mining to offering cloud solutions tailored for artificial intelligence.

Under the terms of the arrangement, Core Scientific is set to deliver around 200 megawatts of infrastructure to facilitate CoreWeave’s AI training using NVIDIA GPUs. The necessary adjustments to the infrastructure are planned to commence in the second half of 2024, with completion and full functionality anticipated by the first half of 2025. According to Core Scientific’s estimates, this agreement is expected to generate more than $3.5 billion in earnings.

As an analyst, I would rephrase it as follows: “With the signing of new contracts with CoreWeave, I believe we are poised to revolutionize our hosting business and significantly boost our earnings potential. This transformation comes from tapping into the exhilarating growth prospects of AI compute, a cutting-edge technology sector that is rapidly gaining traction. Simultaneously, we will continue to nurture our successful bitcoin mining operation.”
Core Scientific CEO Adam Sullivan

Core Scientific announced that approximately $300 million of its capital investments in infrastructure can be applied towards reducing hosting payments, with a maximum cap set at 50% of monthly fees until the full amount is repaid. Furthermore, these contracts provide opportunities for future growth, potentially positioning Core Scientific as one of the biggest data center operators in the US.

Established in 2017 by Mike Levitt and Darin Feinstein, Core Scientific became a major player in the crypto mining sector, securing more than $50 million in investment from backers. Yet, the unpredictable crypto market caused financial instability, threatening bankruptcy for the company in late 2022 following the collapse of firms like FTX, Celsius Network, and Three Arrows Capital. By early 2024, Core Scientific had navigated through the bankruptcy process.

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2024-06-04 10:57