Expanding its Reach in High-Performance Computing, Core Scientific Secures 500 MW Contract with CoreWeave.
Core Scientific (CORZ), a leader in digital infrastructure and Bitcoin mining, has rapidly achieved its high-performance computing (HPC) hosting target. Within a span of just four months, CoreWeave exercised its final option to add 120 MW of infrastructure, bringing the companies’ total contracted capacity to 500 MW. This strategic move underscores Core Scientific’s commitment to diversify its operations, and position itself as a dominant player in the high-value compute sector alongside its core business in Bitcoin mining.
CoreWeave Partnership Marks New Revenue Model
Earlier this year, Core Scientific signed a multi-year contract with CoreWeave to supply up to 16 MW of data center capacity in a newly leased tier-3 facility in Austin, Texas. This facility, specifically designed to meet the demands of GPU-intensive artificial intelligence (AI) and HPC workloads, is projected to generate more than $100 million in revenue. This expansion demonstrates Core Scientific’s strategic pivot beyond Bitcoin mining into specialized GPU hosting for AI applications, signaling its ambition to capture emerging opportunities in next-generation computing.
The June announcement of the CoreWeave partnership outlined a roadmap for expanding Core Scientific’s data center footprint, beginning with hosting CoreWeave’s Nvidia GPUs. Now, with the latest 120 MW capacity addition, Core Scientific will modify one of its sites to accommodate the growing infrastructure demands. This commitment is part of a 12-year hosting contract with CoreWeave, projected to add approximately $2 billion in revenue, bringing the overall contract value with CoreWeave to $8.7 billion.
Infrastructure Expansion and Timeline
To meet the infrastructure requirements of the latest addition to the CoreWeave contract, Core Scientific will begin site modifications in late 2025, with an operational target by the second half of 2026. Once complete, this site will support CoreWeave’s expanded needs, enabling it to manage GPU-based HPC and AI workloads effectively.
Core Scientific CEO Adam Sullivan emphasized that reaching the 500 MW HPC target solidifies Core Scientific’s position as a leader in next-generation compute infrastructure. “This development marks our commitment to scaling high-value compute and serving demand from sectors beyond cryptocurrency mining,” Sullivan noted. “Our infrastructure expansion allows us to support AI and HPC needs, positioning Core Scientific as a front-runner in both traditional and specialized compute markets.”
Financial Framework and Repayment Model
CoreWeave’s commitment extends beyond merely contracting capacity. To facilitate the necessary data center refurbishments for HPC, CoreWeave will provide funding of up to $1.5 million per MW, potentially totaling $750 million. This financial support will enable Core Scientific to accelerate the build-out without significantly impacting its capital resources. The funding will be repaid over time, with Core Scientific dedicating up to 50% of monthly hosting fees towards repayment until the capital is fully reimbursed.
Under this arrangement, Core Scientific anticipates a significant financial uplift, with total projected revenues of $8.7 billion over the initial contract period. Once CoreWeave’s initial funding is repaid, Core Scientific estimates an annual net profit of $550 million, equating to approximately $1.5 million in daily profit from this contract alone. The hosting model includes a pass-through for power and utility costs, to CoreWeave, reducing operational risks for Core Scientific.
Long-Term Vision for Expansion and Diversification
In addition to the CoreWeave partnership, Core Scientific is exploring further expansion opportunities across its data center network. By 2026, Core Scientific plans to allocate a full 500 MW to HPC operations, alongside 200 MW dedicated to new hosting opportunities and another 500 MW to continue supporting its core Bitcoin mining business. The diversified infrastructure base strengthens Core Scientific’s ability to attract high-value compute clients while ensuring its position as a cost-efficient Bitcoin miner.
The CoreWeave deal exemplifies Core Scientific’s intent to diversify its revenue streams and develop a balanced business model across two high-demand segments, Bitcoin mining and HPC.
CoreWeave Acquisition Proposal and Strategic Rejection
In an interesting development, CoreWeave, on the same day as the initial 200 MW agreement, made an unsolicited offer of $1 billion to acquire Core Scientific. However, Core Scientific declined the proposal, stating that it “significantly undervalued” the business, particularly in light of its extensive growth potential and strong market position in the HPC and digital infrastructure sectors. This decision underscored Core Scientific’s confidence in its strategic direction and the substantial value it expects to realize from its diversified hosting portfolio.
Key Financials and Earnings Projections
With significant anticipated revenues and controlled expenses, Core Scientific expects its diversification strategy to deliver strong financial returns. Operating expenses, including facility management, repairs, maintenance, labor, and insurance, are projected at around 20% of total revenue, positioning the contract as highly profitable.
From year four, once CoreWeave’s capital funding has been fully repaid, Core Scientific’s hosting contract is expected to yield an annual profit of $550 million. By structuring utility costs as direct pass-throughs to CoreWeave, Core Scientific further mitigates financial risk, ensuring stable and predictable returns.
Core Scientific and Block partner on Advanced Bitcoin Mining Technology with 15 EH/s Agreement
Core Scientific continues to remain focused on its core business of Bitcoin mining, emphasized further, by the announcement, on July 10, 2024, of a major partnership with Block Inc, in which Core Scientific will deploy Block’s advanced 3 nanometer ASIC mining chips, developed by the Proto team, adding 15 EH/s to Core Scientific’s mining capacity.
This agreement, one of the largest of its kind, enables scalable, efficient, and sustainable mining solutions tailored for high-performance infrastructure. The Proto platform offers an innovative, modular approach that enhances space utilization and integrates seamlessly with Core Scientific’s facilities, promoting longevity and operational resilience in Bitcoin mining.
Conclusion
The CoreWeave partnership solidifies Core Scientific’s transition into a multi-faceted digital infrastructure provider, expanding its market presence and establishing a profitable foothold in the AI and HPC sectors. The achievement of the 500 MW hosting target not only underscores Core Scientific’s strategic foresight but also positions it as a leader in the evolving landscape of high-value computing. With plans for additional infrastructure, Core Scientific remains poised to capitalize on future growth opportunities, maximizing revenue and maintaining operational excellence.
