Core Scientific, a leading provider of high-powered digital infrastructure for bitcoin mining and hosting services in North America, recently entered into a series of 12-year contracts with AI Hyperscaler CoreWeave. This landmark deal is projected to result in over $3.5 billion in revenue for Core Scientific in its initial terms, highlighting the company's resurgence following bankruptcy in early 2023.

In the agreement, Core Scientific will provide approximately 200 megawatts of infrastructure to support CoreWeave's high-performance computing operations, leveraging NVIDIA GPUs. The company will adapt its existing sites to accommodate CoreWeave's hardware, with modifications set to commence in the latter half of 2024 and operationalize by mid-2025. CoreWeave plans to invest around $300 million initially, with options for further expansion.

The anticipated annual revenue from the contracts is estimated at about $290 million, with opportunities for renewal and expansion. This collaboration is poised to transform Core Scientific's hosting business and financial capabilities while bolstering its bitcoin mining capabilities. The company already possesses nearly 500 MW of high-performance computing power for diverse computational workloads.

Notably, Core Scientific and CoreWeave have a history of partnership, with Core Scientific previously hosting CoreWeave's GPUs from 2019 to 2022. Their recent agreement for HPC hosting in Austin signifies a continued collaboration.

Following the announcement of the AI deal, Core Scientific's stock price soared by up to 40% in pre-market trading on June 4, 2024. Additionally, CoreWeave expressed interest in acquiring Core Scientific at $5.75 per share, a significant premium over the miner's average share price. By June 4, 2024, CORZ stock had surged by 44% over the past month, reaching $6.67 by midday.

The future trajectory of Core Scientific's focus on its AI hosting business remains a topic of interest. The company's strategic moves in this space, coupled with the recent developments, suggest a promising outlook for its growth and expansion.

Disclaimer: The author has no holdings in the securities mentioned in this article.