Core Scientific has signed a major 12-year contract with CoreWeave, an AI hyperscaler supported by Nvidia, to provide around 200 megawatts (MW) of infrastructure for high-performance computing (HPC) services. This deal is projected to generate over $3.5 billion in total revenue for Core Scientific during the initial contract term, averaging about $290 million annually.

This agreement signifies a key shift for Core Scientific from its traditional bitcoin mining operations to the expanding AI data center market. The company will retrofit several existing sites to house CoreWeave's NVIDIA GPUs, with these modifications starting in the second half of 2024 and operations beginning in the first half of 2025. CoreWeave will cover the $300 million capital investment needed for these changes, which will be offset against hosting payments until repaid.

Core Scientific’s CEO, Adam Sullivan, emphasized the strategic advantages of this partnership, noting the high demand for power-intensive sites. He pointed out that Core Scientific's ability to provide power faster than new data center projects positions the company to meet customer demands effectively. The partnership with CoreWeave allows Core Scientific to diversify its business between Bitcoin mining and compute hosting, optimizing cash flow and minimizing risk while maintaining significant exposure to Bitcoin's potential benefits.

The agreement also includes options for CoreWeave to expand its hosting presence at additional Core Scientific sites within the next 60 to 90 days. This expansion aligns with Core Scientific's strategy to leverage its extensive high-power digital infrastructure, which includes 1.2 gigawatts of contracted power, with nearly 500 MW allocated for HPC workloads.

This deal builds on a successful partnership between Core Scientific and CoreWeave that began in 2019. Earlier this year, Core Scientific delivered 16 MW of HPC hosting capacity to CoreWeave ahead of schedule at its new Austin data center. The partnership is anticipated to enhance Core Scientific’s earnings and shareholder value by increasing contracted, dollar-denominated revenue streams.

The announcement follows nearly five months after Core Scientific received court approval to exit bankruptcy, a situation caused by financial difficulties from declining crypto prices and rising energy costs. Under Sullivan's leadership, the company has restructured its debt and shifted towards more sustainable business ventures, including this move into AI and HPC hosting.

This diversification aligns with broader industry trends, as other crypto miners like Bit Digital, Iris Energy, and Hut 8 also explore AI infrastructure to enhance profitability. The growing demand for AI operations, spurred by developments like OpenAI's ChatGPT, highlights the potential for higher returns compared to traditional Bitcoin mining alone.

As Core Scientific expands its HPC hosting capabilities, it aims to deliver significant, resilient, and sustainable value for shareholders, leveraging its extensive infrastructure and strategic partnerships to navigate the evolving digital landscape.