GPU cloud provider CoreWeave has reportedly made a $1 billion bid to acquire cryptomine and HPC hosting firm Core Scientific. The offer comes the same week the companies signed a multi-billion-dollar, 200MW hosting agreement.

Citing a 'person with knowledge of the matter,' Bloomberg reports CoreWeave has offered to acquire Bitcoin miner Core Scientific Inc. for $5.75 per share. The company’s stock is trading at around $6.71 at the time of writing.

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

The companies are yet to comment on the reports.

The duo have worked together for several years. Core Scientific said it has hosted “thousands” of CoreWeave’s GPUs in its data centers from 2019 to 2022 and in March, the companies announced CoreWeave was leasing 16MW of capacity from Core Scientific's Austin data center.

CoreWave signs 200MW deal with Core Scientific

This week Core Scientific announced the signing of a series of 12-year contracts with CoreWeave to provide 200MW of hosting capacity. The deal is reportedly worth $3.5 billion for Core Scientific.

Core Scientific said it will modify multiple existing, owned sites to host CoreWeave’s Nvidia GPUs. The site modifications are expected to commence early in the second half of 2024 and achieve operational status in the first half of 2025.

An estimated $300 million of the capital investments associated with Core Scientific-owned infrastructure will be credited against hosting payments at no more than 50 percent of monthly fees until fully repaid.

The agreements with CoreWeave provide opportunities for two renewal terms of five years each. The agreements also provide the option for further expansion with "meaningful additional megawatts" at other Core Scientific sites.

“Our new contracts with CoreWeave position us to transform our hosting business and our earnings power by capturing exciting growth opportunities in AI compute, one of today’s most dynamic technology segments, while also maintaining our strong Bitcoin mining franchise,” said Adam Sullivan, Core Scientific’s CEO.

“As demand for ready, high-power sites continues to outpace supply, we believe Core Scientific is well positioned to meet customer needs with a much shorter time to power than greenfield data center projects. Our expanding relationship with CoreWeave creates a pathway for Core Scientific to diversify our business model and balance our portfolio between bitcoin mining and alternative compute hosting, positioning us to maximize cash flow and minimize risk while maintaining our significant exposure to bitcoin’s upside potential.”

CoreScientific said that with 1.2GW of contracted power, the company is able to deliver nearly 500MW of HPC capacity to be used for alternative compute workloads based on geographic proximity to major cities and fiber lines.

The crypto-company intends to redeploy Bitcoin mining capacity from designated HPC sites to its other dedicated mining sites.

Moelis & Company LLC is acting as financial advisor to Core Scientific. Sidley Austin LLP is acting as legal advisor to Core Scientific.

Tale of two crypto firms

Founded in 2017 and originally focused on crypto and blockchain applications, CoreWeave has been investing heavily in its cloud offering, providing access to GPUs for AI applications. The company has since raised billions of dollars in equity and billions more in debt financing.

CoreWave currently offers services from three data center regions according to its website; US East in Weehawken, New Jersey; US West in Las Vegas, Nevada; and US Central in Chicago, Illinois.

However, the company has been on a major leasing spree. CoreWeave previously said that it expects to operate 14 data centers by the end of 2023 and 28 by the end of 2024.

Last year, the company announced $1.6bn plans for a data center at a Lincoln Rackhouse-owned site in Plano, Texas, in addition to moving into a Chirisa-owned data center in Chester, Virginia. It is also leasing Flexential data centers in Oregon and Georgia.

TierPoint has signed a long-term agreement with CoreWeave to provide the GPU firm with colocation services at one of its data centers, though details weren’t shared. The company is also a named Digital Realty customer, leasing space for “tens of thousands of GPUs” at an unspecified facility on the US West Coast.

Earlier this month the company announced plans to expand into Europe and set up two data centers in the UK. In Europe, the company is also hiring for a data center technician in Barcelona, Spain, within an EdgeConneX data center.

Also founded in 2017, Core Scientific operates cryptomining data center campuses in Texas, North Dakota, Kentucky, Georgia, and North Carolina.

Combined, Core Scientific has previously said its facilities have a live supply of 745MW and 372MW of pipeline supply. The company hosts its own mining hardware as well as customer hardware.

In December 2022, however, the company filed for Chapter 11 bankruptcy and its share price fell by 98 percent.