CoreWeave’s Negotiations to Acquire Core Scientific: A Potential Pivot for Bitcoin Mining
CoreWeave, a cloud infrastructure company, is currently in negotiations to acquire Core Scientific, a prominent Bitcoin (BTC) miner turned compute host, according to reports from the Wall Street Journal. This potential acquisition comes amidst a backdrop of fluctuating market conditions and evolving business strategies in the cryptocurrency and computing sectors. CoreWeave initially proposed a purchase price of $5.75 per share in June 2024, but withdrew amid concerns from Core Scientific’s board over the adequacy of the offer. As of this writing, both companies have refrained from making official statements regarding the ongoing negotiations.
Currently, Core Scientific’s stock (CORZ) is experiencing a notable uptick, trading at $16.44, reflecting a 33.7% increase in one session. This price marks a significant rebound from the past year, given that shares dropped approximately 15% before this rally. Despite this recovery, the stock remains below its all-time high following the company’s emergence from bankruptcy protection in January. In comparison, CoreWeave made headlines earlier this year by going public with a staggering market capitalization of $75 billion, positioning itself as a key player in the cloud services industry with notable clients like Microsoft, which constitutes 62% of its expected 2024 revenue.
Core Scientific’s leadership has previously rejected an unsolicited $1 billion acquisition offer, declaring it below intrinsic value. Instead, the firm has signed 12-year hosting agreements designed to provide 200 megawatts (MW) of power for CoreWeave’s high-performance computing operations. Company board members estimated that this strategy could generate approximately $3.5 billion in cumulative revenue. As the Bitcoin market faces increased scrutiny and volatility, diversifying revenue streams away from block subsidies—especially in light of the upcoming April 2024 Bitcoin halving—has become a priority for Core Scientific.
In terms of infrastructure, Core Scientific has already installed 16 MW of CoreWeave GPUs at its Austin location and has plans for further expansions across multiple sites in Texas and Oklahoma. The negotiations between CoreWeave and Core Scientific are reportedly aimed to be finalized within weeks, depending on the progress of discussions. However, specific financial details of the negotiations, including price parameters, have not been disclosed, leaving market observers intrigued about the outcome.
Market analysts highlight that Core Scientific’s swift transition toward artificial intelligence (AI) infrastructure, amid a power-constrained data center market, could warrant a premium price in any potential acquisition agreement. CoreWeave’s CEO Mike Intrator is keen on expanding the company’s capabilities to meet the burgeoning demand for cloud-based AI services, which currently outstrips the available inventory across hyperscale providers. Control of roughly 724 megawatts of contracted power positions Core Scientific among North America’s leading owners of immersion-cooled mining rigs, adding value to CoreWeave’s acquisition ambitions.
If the negotiations conclude successfully, CoreWeave would gain access to a fleet of Bitmain S21-class miners, along with a range of brownfield sites ready for transformation into GPU racks. For Core Scientific shareholders, this acquisition could result in receiving cash or stock at a currently undetermined ratio. As the landscape of cloud computing and cryptocurrency continues to evolve, this potential acquisition could mark a significant turning point in the operational strategies of both companies, shaping the future of blockchain and high-performance computing in North America.
