Shares of crypto mining company Core Scientific fell by 18% after reports that Microsoft reduced its commitments to CoreWeave, Core Scientific's partner.
Microsoft's Commitment Reduction
On March 6, Core Scientific's shares dropped by 18% following reports that Microsoft is reducing its commitments to CoreWeave, its partner. According to the report, CoreWeave missed deadlines and had issues delivering materials needed to scale AI models. CoreWeave's IPO filing states that Microsoft is its largest customer, accounting for 35% of revenue in 2023 and 62% in 2024, with Microsoft still retaining some of its contracts with CoreWeave, while CoreWeave denies the cancellation of any contracts.
CoreWeave's Financial Indicators
In March 2024, Core Scientific inked a $100 million deal with CoreWeave to provide data center services to diversify revenue streams ahead of the Bitcoin halving. Part of the deal involved leasing a Tier 3 data center in Austin, Texas, supplying up to 16 megawatts of power. Despite previous challenges, the company remains one of the world's largest public Bitcoin miners, holding over 755 BTC, valued at approximately $66.7 million.
Industry-wide Stock Decline
On March 6, shares of other Bitcoin mining companies also experienced declines amid US stock market volatility. Cipher Mining shares fell nearly 9%, while CleanSpark and Bitfarms shares dropped 5% each. The Nasdaq Composite Index, a benchmark for tech stocks, declined by 2.6%. Macroeconomic factors, including a potential US recession and ongoing trade disputes, have pressured risky assets. Bitcoin also fell in value, slipping below $90,000.
The drop in Core Scientific's shares and other crypto mining companies reflects the increasing impact of macroeconomic factors on markets. With a looming recession and geopolitical challenges, investors tend to avoid risky assets.
