Bitcoin mining giant Core Scientific has revealed a strategic alliance with CoreWeave, a provider of artificial intelligence cloud computing, in a move to diversify its revenue ahead of the anticipated Bitcoin halving. Core Scientific will repurpose a former Hewlett Packard tier 3 data center in Texas to meet the infrastructure needs of CoreWeave. The deal promises to yield more than $100 million for Core Scientific.
Expansion into High-Performance Computing
Under the agreement, Core Scientific will allocate up to 16 MW of power at its new Austin facility to CoreWeave. The collaboration marks Core Scientific’s entry into the high-performance computing sector. CoreWeave, with a $7 billion valuation as of December 2023, is backed by recognized financial entities including Jane Street, JP Morgan Asset Management, and Fidelity. Core Scientific’s CEO highlighted the dual focus of the new data center in supporting both Bitcoin mining and specialized GPU cloud computing.
Strategic Shift Prior to Bitcoin Halving
This strategic expansion surfaces as the Bitcoin ecosystem braces for the halving event, which will slash block reward income by 50%, reducing miners’ earnings. The upcoming halving, scheduled for 2024, follows previous cycles in 2020, 2016, and 2012, and aims to curb inflation by decreasing the rate of new Bitcoin issuance.
The halving is expected to drive up operational costs for miners, with electricity expenses already constituting a significant part of the cost structure, as per CoinShares analysis. Post-halving projections indicate an average production cost of $37,856 per Bitcoin for miners.
Core Scientific, which mined 19,274 Bitcoins valued at $812 million in 2023, stands as North America’s most prominent publicly traded crypto mining firm. The company has recently emerged from a Chapter 11 bankruptcy, orchestrated to manage its $400 million debt, which was attributed to declining Bitcoin prices, surging energy costs, and financial ties with the defunct Celsius Network.