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

Traditionally focused on bitcoin mining, Core Scientific is now diversifying into the growing AI data center market. They will modify multiple existing sites to host CoreWeave’s NVIDIA GPUs, starting modifications in the second half of 2024 and beginning operations in the first half of 2025. CoreWeave will cover all capital investments for these modifications, estimated at $300 million, which will be credited against hosting payments until repaid.

CEO Adam Sullivan emphasized the strategic advantages of this partnership, highlighting the high demand for power that outpaces supply and Core Scientific’s ability to deliver power faster than new data center projects. This partnership allows Core Scientific to balance between Bitcoin mining and alternative compute hosting, maximizing cash flow and minimizing risk while retaining significant Bitcoin exposure.

CoreWeave also has options to expand its hosting with Core Scientific at additional sites over the next 60 to 90 days. This expansion is part of Core Scientific’s strategy to leverage its 1.2 gigawatts of contracted power, with nearly 500 MW allocated for HPC workloads.

The deal builds on a successful collaboration history between the two companies, dating back to 2019. Earlier this year, Core Scientific delivered 16 MW of HPC hosting capacity to CoreWeave ahead of schedule at its new Austin data center. This partnership is expected to enhance Core Scientific’s earnings and shareholder value by increasing exposure to stable, contracted revenue streams.

This announcement follows Core Scientific's recent exit from bankruptcy, driven by financial challenges from the drop in crypto prices and rising energy costs. Under Sullivan’s leadership, the company has restructured its debt and shifted towards sustainable business avenues, including this strategic move into AI and HPC hosting.

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

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