In a notable strategic move, Bitcoin mining company Core Scientific has announced it will diversify its revenue streams amid Bitcoin’s upcoming halving. The company has signed a partnership agreement with artificial intelligence startup CoreWeave. The deal, with a potential value of more than $100 million, includes the provision of data center services.
The data center in question, a Tier 3 facility in Austin, Texas, previously home to Hewlett Packard, will be used to host CoreWeave’s infrastructure. This new partnership will enable Core Scientific to deliver up to 16 megawatts of capacity to its Austin data center, expanding its business into high-performance computing (HPC) in addition to its existing bitcoin mining operations.
Backed by prominent financial giants such as Jane Street, JP Morgan Asset Management, and Fidelity, CoreWeave is a leading AI cloud computing company. It specializes in providing infrastructure for compute-intensive applications, including machine learning, and was valued at $7 billion at the end of December 2023.
Diversifying customer portfolio
Adam Sullivan, CEO of Core Scientific, emphasized the importance of this expansion: “Our new data center in Austin will not only support CoreWeave’s current needs, but also significantly diversify and expand our customer portfolio across two high-performance compute categories: bitcoin mining and specialty GPU cloud compute.”
This development comes at a crucial time for Core Scientific and the broader bitcoin mining industry. With Bitcoin’s impending halving, which will reduce the block reward for miners from 6.25 BTC per block to 3.125 BTC, many companies are looking for ways to diversify their revenues and soften the impact of the reduced rewards.
Bitcoin halving
The BTC halving, a mechanism designed to control Bitcoin inflation and gradually reduce supply, is expected to increase production costs for miners. Analyzes suggest that average production costs will rise to $37,856 per Bitcoin after the halving, with electricity costs making up a significant portion of expenses.
In 2023, Core Scientific was recognized as the largest publicly traded crypto mining company in North America, with holdings of 19,274 BTC, worth approximately $812 million. The company recently completed Chapter 11 bankruptcy proceedings, paying off $400 million in debt. This debt burden was due to falling BTC prices, rising energy costs, and issues related to the bankrupt Celsius Network. With this new deal, Core Scientific takes an important step forward in securing its future in the ever-changing crypto world.
Source: https://newsbit.nl/core-scientific-breidt-uit-met-ai-startup-deal-ter-voorbereiding-op-bitcoin-halving/
