Core Scientific Partners with CoreWeave in a 12-Year Deal for AI Infrastructure in Austin

Core Scientific, Inc. (NASDAQ: CORZ), a prominent bitcoin miner and digital infrastructure operator in North America, has announced a groundbreaking 12-year partnership with CoreWeave, an AI hyperscaler. This collaboration aims to provide high-performance computing infrastructure for artificial intelligence (AI) and machine learning (ML) applications in Austin, Texas.

Under the terms of the agreement, Core Scientific will deliver approximately 200 megawatts (MW) of infrastructure to host CoreWeave's NVIDIA GPUs. The site modifications are expected to commence in the second half of 2024 and achieve operational status in the first half of 2025. CoreWeave will fund all capital investments required to modify Core Scientific's existing infrastructure, estimated at $300 million, which will be credited against hosting payments at no more than 50% of monthly fees until fully repaid.

Adam Sullivan, Core Scientific's Chief Executive Officer, expressed optimism about the partnership's potential. "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," Sullivan said.

Why this matters: This deal marks a significant shift in the technology sector, highlighting the growing importance of AI and ML infrastructure. The partnership is expected to generate substantial revenue and position Core Scientific as a major player in the AI infrastructure market, potentially leading to further investments and innovations in the field.

The agreement provides CoreWeave with options to further expand its hosting footprint with Core Scientific at additional select sites over the next 60 to 90 days. This expansion could potentially position Core Scientific as one of the largest data center operators in the United States. The agreements also include opportunities for two renewal terms of five years each.

Core Scientific's pivot towards AI and ML infrastructure comes at a pivotal time. The company, which emerged from bankruptcy in January 2024, has been diversifying its services since 2019. The demand for AI compute and infrastructure has surged since the launch of OpenAI's ChatGPT in November 2022. This shift is expected to generate over $3.5 billion in cumulative revenue for Core Scientific during the initial 12-year contract terms, with an estimated average annual revenue of approximately $290 million.

The collaboration with CoreWeave is part of Core Scientific's broader strategy to balance its portfolio between bitcoin mining and alternative compute hosting. The company intends to redeploy certain bitcoin mining capacity from designated HPC sites to other dedicated bitcoin mining sites to support business continuity and growth.

Core Scientific has hosted thousands of CoreWeave's GPUs in its data centers from 2019 to 2022. In March 2024, Core Scientific and CoreWeave entered a contract for HPC hosting at Core Scientific's new Austin data center, with Core Scientific delivering 16 MW of capacity more than 30 days ahead of schedule.

The partnership between Core Scientific and CoreWeave highlights the growing importance of AI and ML infrastructure in the technology sector. As companies seek to leverage the power of AI, the demand for specialized infrastructure to support these workloads continues to rise.

Notably, the 12-year deal between Core Scientific and CoreWeave marks a significant expansion for Core Scientific into the AI and machine learning space. The agreement is expected to generate substantial revenue and position Core Scientific as a major player in the AI infrastructure market while maintaining its strong bitcoin mining franchise.

Key Takeaways

• Core Scientific partners with CoreWeave to provide 200MW of AI infrastructure in Austin, Texas.
• 12-year deal worth $3.5 billion in cumulative revenue, with $290 million average annual revenue.
• CoreWeave to fund $300 million in site modifications, credited against hosting fees.
• Partnership marks Core Scientific's expansion into AI infrastructure, while maintaining bitcoin mining business.
• Deal positions Core Scientific as a major player in the AI infrastructure market.