CoreWeave to Acquire Crypto Miner Core Scientific in $9 Billion All-Stock Deal
Acquisition Highlights Shift in AI Industry Focus
CoreWeave, an AI infrastructure firm, announced on Monday that it will acquire crypto miner Core Scientific in an all-stock deal valued at approximately $9 billion. This strategic move comes as companies in the artificial intelligence sector race to secure reliable power supplies to support their expanding workloads.
The Transition from Crypto to AI
The acquisition underscores the trend of AI companies transitioning beyond traditional data centers. They are increasingly looking to repurpose the energy-intensive sites and power contracts initially established during the cryptocurrency boom.
Financial Gains from the Acquisition
According to CoreWeave, the deal will lead to the immediate elimination of over $10 billion in cumulative future lease overhead. This amount pertains to existing contractual obligations for energy sites over the next 12 years.
Valuation and Market Response
The proposal offers a value of $20.40 per share, representing a premium of nearly 66% compared to Core Scientific’s stock closing price before rumors of the potential acquisition surfaced in late June. However, following the announcement, Core Scientific’s shares fell by 15% before trading began, while Nvidia-backed CoreWeave saw a decrease of approximately 4%.
Expected Closing Timeline
Both companies anticipate that the deal will close in the fourth quarter of this year. The final acquisition price is expected to be determined at that time.
A Brief History of CoreWeave
Founded in 2017 with a focus on Ethereum mining, CoreWeave made a significant pivot toward artificial intelligence a few years later. The company’s mining operations were halted following "The Merge," Ethereum’s 2022 upgrade that drastically reduced rewards for miners. CoreWeave’s revenue has experienced explosive growth, increasing more than eight-fold last year, as noted in its IPO prospectus.
Core Scientific’s Recovery Journey
The acquisition also marks a pivotal turnaround for Core Scientific, which filed for bankruptcy in late 2022 due to falling bitcoin prices and soaring energy costs. The company successfully exited bankruptcy in early 2024, setting the stage for this significant acquisition.
Previous Acquisition Proposal
Interestingly, Core Scientific received an unsolicited non-binding proposal from CoreWeave in June of last year to purchase all outstanding shares of the company. At that time, Core Scientific publicly stated that the offer significantly undervalued the company and was not in its best interests or those of its shareholders.
Strategic Agreements Between the Two Companies
In conjunction with the acquisition discussions, the companies entered a series of 12-year contracts, including an agreement for Core Scientific to provide CoreWeave with approximately 200 MW of infrastructure to power its high-performance computing services.
Conclusion
As the AI industry continues to grow, the acquisition of Core Scientific by CoreWeave illustrates a revolutionary shift towards integrating advanced computational power with energy resources previously dedicated to cryptocurrency mining. This merger not only reflects strategic business moves but also sheds light on the evolving landscape of technology and energy resource management.
Q&A Section
1. What is the value of the acquisition deal between CoreWeave and Core Scientific?
The deal is valued at approximately $9 billion.
2. Why is this acquisition significant for the AI industry?
The acquisition highlights AI companies’ shift from traditional data centers to repurposing energy-intensive sites used in cryptocurrency mining.
3. What financial benefits does CoreWeave expect from this acquisition?
CoreWeave anticipates eliminating over $10 billion in cumulative future lease overhead related to existing energy contracts.
4. How did the stock market respond to the news of the acquisition?
Core Scientific’s shares fell by 15%, while CoreWeave’s shares declined by about 4%.
5. When is the deal expected to close?
The acquisition is expected to close in the fourth quarter of this year, with the final price to be determined at that time.
