Core Scientific Declines $1 Billion Buyout Offer From CoreWeave

Core Scientific Inc., a prominent player in the Bitcoin mining industry, has turned down a substantial $1 billion buyout offer from CoreWeave Inc., a privately held cloud computing provider. According to a source familiar with the matter reported by Bloomberg, CoreWeave proposed to acquire Core Scientific for $5.75 per share, a bid that Core Scientific ultimately decided to reject.

Despite declining the buyout offer, Core Scientific and CoreWeave have forged a significant partnership. Last Monday, the companies announced a series of 12-year contracts under which Core Scientific will provide approximately 200 megawatts (MW) of infrastructure to support CoreWeave's high-performance computing (HPC) operations. These contracts mark one of the largest hosting agreements for Core Scientific, highlighting the strategic importance of this collaboration.

Details of the Hosting Agreement

Under the terms of the agreements, Core Scientific is set to modify several existing owned sites to accommodate CoreWeave's NVIDIA GPUs. The site modifications are expected to begin in the early second half of 2024, with the goal of achieving operational status by the first half of 2025. This infrastructure will enable CoreWeave to expand its HPC capabilities significantly.

A press release detailed the scope and expected outcomes of the partnership: "Core Scientific will deliver approximately 200 megawatts of infrastructure to host CoreWeave’s high-performance compute operations. The modifications will commence early in the second half of 2024 and achieve operational status in the first half of 2025."

Financial Implications

The hosting agreement is projected to generate a substantial revenue stream for Core Scientific, with the contracts expected to bring in around $3.5 billion over the 12-year period. On an annual basis, this translates to an estimated average revenue of approximately $290 million. This long-term partnership positions Core Scientific as a key infrastructure provider in the HPC market and significantly enhances its financial outlook.

Core Scientific's decision to decline the $1 billion buyout offer from CoreWeave underscores its confidence in its current strategic direction and the potential long-term benefits of its partnership with CoreWeave. By securing one of the largest hosting agreements in its history, Core Scientific not only strengthens its position in the Bitcoin mining sector but also diversifies its revenue streams through significant involvement in the HPC industry.

The collaboration with CoreWeave highlights a mutual commitment to leveraging each other's strengths and resources, aiming for substantial growth and innovation in high-performance computing. This move marks a pivotal step in Core Scientific's journey, reflecting its strategic priorities and long-term vision.