Core Scientific, a prominent Bitcoin mining and hosting services provider in North America, has recently announced a major partnership with AI Hyperscaler CoreWeave. This partnership, which involves a 12-year contract, is expected to generate more than $3.5 billion in revenue for both companies, signifying a significant milestone.
The agreement signifies a strategic diversification of Core Scientific’s business model, expanding its services beyond Bitcoin mining to include alternative compute hosting. This move is in response to the recent Bitcoin halving, which resulted in a 50% reduction in miner rewards. By diversifying its revenue streams, Core Scientific aims to minimize risk and maximize cash flow while still benefiting from the potential upside of Bitcoin.
The partnership will entail Core Scientific providing 200 megawatts of infrastructure, with CoreWeave financing all necessary capital investments to modify existing sites. It is expected that the modified infrastructure will be operational by the first half of 2025. In exchange, CoreWeave will credit Core Scientific approximately $300 million, which will be deducted from their monthly hosting fees. This unique arrangement highlights the commitment of both companies to driving growth and innovation in the compute hosting sector.
Given the increased pressure faced by the Bitcoin mining industry following the halving, Core Scientific’s pivot towards alternative compute hosting signifies a significant shift in strategy. Adam Sullivan, the CEO of Core Scientific, emphasized the importance of diversification in maintaining a competitive edge. As the industry continues to evolve, partnerships like this one are likely to play an increasingly crucial role in shaping the future of compute hosting.
Tags: BTC