In a significant development in the tech and cryptocurrency sectors, CoreWeave has announced its acquisition of Core Scientific, a move that highlights the growing intersection between Bitcoin mining and artificial intelligence (AI) computing. This acquisition not only marks a pivotal shift for Core Scientific but also positions CoreWeave at the forefront of the expanding demand for high-performance computing (HPC) capabilities.
CoreWeave's deal is set to eliminate over $10 billion in cumulative future lease overhead associated with existing contractual sites over the next 12 years. This strategic move is designed to enhance operational efficiency and reduce costs significantly. According to CoreWeave, the acquisition values Core Scientific at approximately $20.40 per share, representing a notable premium of around 66% to the stock's closing price prior to reports of the deal negotiations in late June.
As part of the agreement, Core Scientific stockholders will receive 0.1235 newly issued CoreWeave stock for each share they hold, ensuring a smooth transition for investors involved. CoreWeave CEO Michael Intrator stated that this acquisition is a crucial step in their strategy to deploy AI and HPC workloads at scale, which is increasingly important in today’s tech landscape.
The acquisition reflects a broader trend where Bitcoin miners are diversifying their portfolios to include AI infrastructure. As demand for AI workloads skyrockets, these miners are leasing power and data center space to accommodate this growth. Bernstein analyst Gautam Chhugani noted that this deal sets a precedent for other Bitcoin miners contemplating a pivot to AI, emphasizing that power remains the biggest constraint for expanding AI data centers.
CoreWeave will gain full control over Core Scientific's substantial power resources, including a contracted capacity of 1.3 GW and an extensive future pipeline. This acquisition is particularly strategic, as it positions CoreWeave to meet the surging demand for AI services powered by high-performance computing.
Founded in 2017 as an Ethereum-focused crypto miner, CoreWeave made a significant pivot towards AI a few years later. The company ceased its mining operations following Ethereum's 2022 upgrade, known as The Merge, which drastically reduced mining rewards. Since then, CoreWeave has experienced remarkable growth, with revenues increasing more than eight-fold last year, as noted in their IPO prospectus.
This acquisition also signifies a turnaround for Core Scientific, which faced significant challenges, including a bankruptcy filing in late 2022 due to falling Bitcoin prices and escalating energy costs. Emerging from bankruptcy in early 2024, Core Scientific, like many other Bitcoin miners, is now leveraging the AI boom to fuel its growth.
Initially, Core Scientific received an unsolicited, non-binding takeover offer from CoreWeave in June 2024. Although the company initially rejected the offer, citing significant undervaluation, subsequent negotiations led to the establishment of a series of 12-year contracts. These agreements included provisions for Core Scientific to provide approximately 200 MW of infrastructure to power CoreWeave’s HPC services.
CoreWeave, which specializes in providing access to data centers and Nvidia-powered AI chips, currently holds a market value of about $79 billion, according to LSEG data. In this transaction, Goldman Sachs is serving as the financial adviser for CoreWeave, while Moelis and PJT Partners are advising Core Scientific. The deal is anticipated to close in the fourth quarter of the year, with the final terms expected to be finalized at that time.
This acquisition not only reshapes the landscape of both the cryptocurrency and AI sectors but also underscores the growing importance of strategic partnerships in navigating the evolving technological landscape.
