Core Scientific seals $100M deal with CoreWeave as miners diversify cash streams
Bitcoin miner Core Scientific seeks to diversify its revenue streams ahead of the upcoming halving. The company inked a deal with artificial intelligence startup CoreWeave to provide data center services, with potential revenue of more than $100 million.
Core Scientific is leasing a tier 3 data center in Austin, Texas, that formerly housed Hewlett Packard to host CoreWeave’s infrastructure. Under the terms of the contract, the miner will deliver up to 16 MW of capacity at its new Austin data center, expanding its business to include high-performance computing (HPC).
CoreWeave is an AI cloud computing company backed by Wall Street’s major financial firms, including Jane Street, J.P. Morgan Asset Management, and Fidelity. The startup offers infrastructure for compute-intensive use cases, such as machine learning. At the end of December 2023, the company was valued at $7 billion.
“Our new data center in Austin will support CoreWeave’s near-term requirements while also expanding and diversifying Core Scientific’s hosting customer portfolio across two categories of high value compute: bitcoin mining and specialized GPU cloud compute,” said Core Scientific CEO Adam Sullivan in a statement.
Related: What the Bitcoin halving means for the network’s energy consumption concerns
Core Scientific’s expansion of service offerings comes just a few weeks ahead of the Bitcoin halving event, which will slash BTC’s block reward revenue in half. The 2024 halving for Bitcoin, which follows the previous ones in 2020, 2016, and 2012, will see the block reward for miners decrease from the current 6.25 BTC per block to 3.125 BTC per block. The purpose of the halving is to control Bitcoin’s inflation, reducing the supply of new coins over time.
While miners will see a considerable reduction in revenue, costs associated with the activity are likely to increase. According to an analysis from CoinShares, electricity costs per Bitcoin pre- and post-halving represent about 68% and 71% of miners’ total cost structure, respectively. The average cost of production post-halving for crypto miners is projected to be $37,856.
In 2023, Core Scientific became the largest publicly listed crypto mining company in North America after mining 19,274 Bitcoin (BTC) worth $812 million. The miner recently emerged from bankruptcy under Chapter 11 in the United States after a 13-month restructuring process to resolve $400 million in debt caused by declining BTC prices, rising energy costs, and debt tied to the bankrupt Celsius Network.
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