Image credit: Reuters

Disclaimer: This story was originally published on June 3, 2024.

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Bitcoin (BTC) miner Core Scientific signed a series of 12-year contracts with AI cloud computing company CoreWeave, where the project is estimated to generate billions in total revenue, the firm announced on June 3.

The North American mining and hosting services firm will supply 200 megawatts of infrastructure to host CoreWeave’s high-performance computing (HPC) operations, which involve using many powerful computers working together to solve complex problems faster.

CoreWeave is backed by Wall Street’s major financial firms, including Jane Street, J.P. Morgan Asset Management, and Fidelity. It provides infrastructure for compute-intensive use cases, such as machine learning. At the end of December 2023, the company was valued at $7 billion.

Under the agreement, Core Scientific will adapt its existing infrastructure to house CoreWeave’s NVIDIA GPUs, and CoreWeave will finance the necessary modifications. Additionally, Core Scientific will offset a $300 million investment in its infrastructure by gradually deducting this amount from CoreWeave’s hosting fees.

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

Adam Sullivan, CEO of Core Scientific, explained in a statement that expanding their relationship with CoreWeave will diversify the firm’s business model, balancing its portfolio between Bitcoin mining and alternative compute hosting. He said:

“Our new contracts with CoreWeave position us to transform our hosting business and our earnings power by capturing exciting growth opportunities in AI compute.”

Core Scientific projects that the 200 MW HPC infrastructure will net a total cumulative revenue of over $3.5 billion during the initial 12-year terms of the contracts, while the estimated average annual revenue from the contracts is expected to be approximately $290 million.

Core Scientific announced an earlier deal with CoreWeave as it seeks to mix things up for its revenue streams. In March — ahead of the fourth Bitcoin halving — the company announced that it would be leasing a Tier 3 data center in Austin, Texas to host CoreWeave’s infrastructure. The potential revenue of that collaboration is expected to be more than $100 million.

The major Bitcoin event in April, which slashed block rewards by 50%, has prompted several miners to expand their revenue streams. Similar to Core Scientific, Bit Digital and Hut 8 have also diversified into AI.