Core Scientific Inks 12-Yr Contract With CoreWeave, CORZ Price Rises

• 1 On June 3, Core Scientific announced a strategic 12-year contract integration with CoreWeave.
• 2 The contract will position Core Scientific as a leading player in the AI data center space and is expected to generate a cumulative revenue of over $3.5 Billion.
• 3 The contract was initiated to provide infrastructure to CoreWeave’s HPC to capture significant AI opportunities.

In a press release on June 3, Core Scientific, the largest owner and operator of high-powered digital infrastructure for Bitcoin mining and hosting services based in North America, signed a 12-year contract with CoreWeave, the AI hyperscaler based in the USA.

Source: Core Scientific X account

Core Scientific announced its deal and integration with CoreWeave.

Adam Sullivan, CEO of Core Scientific, stated that the new contract with CoreWeave will allow them to transform their hosting business and earnings power by capturing growth opportunities in AI. It will also simultaneously maintain its strong Bitcoin mining franchise.

Initially, the 200 MW of HPC infrastructure will be operational, and the project is estimated to generate a cumulative revenue for Core Scientific of over $3.5 Billion during the initial 12-year period of contracts. The average revenue from the project is expected to be approximately $290 Million. It is expected to enhance earnings power and drive shareholder value.

After the press release, CoreScientific also took to their X account to inform their followers about the contract and shared a video highlighting the objectives and benefits of the deal.

Terms of Agreement

As per the terms of the contract, Core Scientific is supposed to deliver approximately 200 megawatts (MW) of power to host CoreWeave’s high-performance compute (HPC) operations. The company will modify its existing sites to host CoreWeave’s NVIDIA GPUs.

The modifications to the site are expected to start in the second half of 2024 and are expected to become operational by the first half of 2025.

The increase in capacity will position Core Scientific to cater to customers’ increasing needs as the current demand for ready, high-power sites outpaces supply. 

Furthermore, the contract provides an option for CoreWeave to expand its hosting footprint with CoreScientific within the next 60-90 days at additional selected sites. The company is still discussing additional HPC hosting contracts with its potential clients to capitalize on its significant pipeline of powered real estate.

Core Scientific is capitalizing on one of the largest high-power digital infrastructure portfolios, and it is continuously expanding to deliver significant, resilient, and sustainable value to its shareholders.

The existing infrastructure of Core Scientific will be modified into cutting-edge, application-specific data centers customized for dense HPC; CoreWeave will do this. 

The agreement will have two renewal opportunities after five years each. It also provides the option for further expansion with additional megawatts at other Core Scientific sites, which will help Core Scientific become one of the largest data center operators in the US.

Objectives and Benefits of the Deal

– The expansion of the relationship between Core Scientific and CoreWeave will allow Core Scientific to diversify and expand its business model. 
– It will also enhance the balance between their Bitcoin mining operations and alternative compute hosting. 
– It will help them maximize cash flows and minimize risks while simultaneously maintaining their significant exposure to the upside potential of Bitcoin.

This agreement is anticipated to complement the current business model with the addition of a stable, recurring, long-term, and high-margin revenue stream. It will increase the company’s exposure to dollar-denominated revenue. 

Price Impact on Core Scientific

In the previous trading session, the market drove an increase of 2.53%, leading to a closing price of $4.870. The news outbreak led to a significant price rise in the pre-market session. At the time of writing, the Core Scientific (CORZ) listed on NASDAQ was trading at $6.880, experiencing a rise of 41.50%.

Coming out of bankruptcy and then making moves to increase revenue has created a positive sentiment around the company after relisting shares on NASDAQ.

Disclaimer

The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or any other advice. Investing in or trading crypto or stock comes with a risk of financial loss.

Ritika Sharma

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.