CoreWeave Offers About $1 Billion for Core Scientific

(Bloomberg) — CoreWeave Inc., a closely held cloud computing provider, has offered to acquire Bitcoin miner Core Scientific Inc. for about $1 billion, a person with knowledge of the matter said.

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CoreWeave’s all-cash bid of $5.75 per share for Austin, Texas-based Core Scientific was made on Monday, and comes as the company seeks to expand its artificial intelligence data center capacity, according to the person.

Shares of Core Scientific jumped as much as 39% on Tuesday. The stock was up 35% to $6.59 at 11:53 a.m. in New York, giving the company a market value of about $1.2 billion.

The companies announced late Monday they signed a series of 12-year contracts under which Core Scientific will deliver about 200 megawatts of infrastructure to host CoreWeave’s operations. Core Scientific is among the Bitcoin miners trying to take advantage of a shortage in data center space and large amounts of power amid the AI boom to expand beyond crypto.

CoreWeave’s offer represents a 55% premium to Core Scientific’s three-month volume-weighted average price as of May 31, the person said, asking not to be identified discussing confidential information.

Representatives for Roseland, New Jersey-based CoreWeave and Core Scientific declined to comment.

Growing Demand

The hosting agreement is one of the largest for a crypto miner. The contracts with CoreWeave are estimated to generate $3.5 billion in revenue, making the crypto miner a sizable infrastructure provider even among traditional data centers. Core Scientific has already provided such services to CoreWeave, which was also a crypto mining company, since 2019.

“The agreements underscore the growing demand for energy infrastructure and professional data center management, as well as investors’ expectations of the increasing value of these assets in the future,” said Matthew Kimmell, digital asset analyst at CoinShares.

Core Scientific is among the top mining companies by computing power. With its total of 1.2 gigawatts of contracted power, the miner is able to deliver nearly 500 megawatts of HPC power to be used for alternative compute workloads based on geographic proximity to major cities and fiber lines, according to its statement on Tuesday. That would put the company among the largest data center operators in the US.

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“As AI and data centers buy out all of the large power opportunities in the US, Bitcoin miners that sit on those assets will be able to monetize them for large premiums on invested capital,” said Ethen Vera, chief operating officer at crypto-mining services company Luxor Technology.

CoreWeave last month raised $8.6 billion in funding that included a $1.1 billion preferred equity deal that gave the startup a $19.1 billion valuation. It separately raised $7.5 billion in debt. The company’s investors include Nvidia Corp., Coatue Management, Altimeter Capital and Fidelity Management & Research Co.

–With assistance from David Pan.

(Updates shares, adds analyst reaction from third paragraph.)

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