Tech & AI
Core Scientific plans to exit Bitcoin mining and focus on AI data centers
Core Scientific says it expects to finish winding down Bitcoin mining in the fourth quarter. It is shifting its power and buildings to renting data-center space to AI customers such as AMD and CoreWeave.
Quick Read
- Core Scientific expects to finish exiting Bitcoin mining in the fourth quarter, finance chief Jim Nygaard said on Thursday's earnings call.
- Renting data-center space for AI already earns the company many times what mining does.
- AMD and CoreWeave are among its biggest tenants, tying the company's fortunes to AI chip and computing demand.
What did Core Scientific announce?
Core Scientific (Nasdaq: CORZ) said on Thursday it plans to stop mining Bitcoin entirely by the end of the year. Chief financial officer Jim Nygaard told analysts on the earnings call that the company expects to complete the wind-down in the fourth quarter.
Why it matters: After that, the company plans to operate purely as a high-density colocation provider. It rents out space, power and cooling in its data centers to customers who bring their own computing gear, mostly for AI and high-performance computing.
Nygaard said the company kept shrinking its mining fleet through the third quarter.
Why is it leaving Bitcoin mining?
The money has already moved. Colocation brought in $215.43 million in the third quarter, many times what that business earned a year earlier. Mining revenue shrank sharply over the same stretch.
Mining has also become less rewarding across the industry. Blockchain.com data show miners' revenue fell after Bitcoin's April 2024 reward cut, which reduced the new coins paid out for each block of transactions.
Who are its AI customers?
Core Scientific hosts computing infrastructure for CoreWeave (Nasdaq: CRWV), which rents AI computing power to other companies. It also signed a long-term lease arrangement involving Advanced Micro Devices (Nasdaq: AMD) and a newer cloud provider across several campuses.
AMD leases 377 megawatts directly. A megawatt measures electrical power, and data-center leases like this are sized by how much power the space can draw.
Both tenants' shares rose on Friday. AMD gained 11.0% and CoreWeave added 6.3%.
What is the open question?
The other side: The new model concentrates Core Scientific's revenue on large tenants and on AI spending. CoreWeave shares sit 66.4% below their 52-week high, a sign of how fast sentiment toward AI infrastructure can swing.
The next test is whether the wind-down finishes in the fourth quarter, as Nygaard said. The company's fourth-quarter report could show whether the exit stayed on schedule.
For readers
What it could mean for you: If you own Core Scientific shares directly, the stock now rides on AI data-center tenants rather than on the price of Bitcoin. Its revenue could rise or fall with how much AMD, CoreWeave and similar customers want to spend on computing space. Bitcoin's swings may matter less to the business once mining stops. A slowdown in AI spending, or trouble at a big tenant, might hit the shares harder. A single stock has no other holdings to offset that news.
Questions and answers
Is Core Scientific still mining Bitcoin?
It is winding mining down and expects to finish in the fourth quarter, CFO Jim Nygaard said on the earnings call. After that, it plans to rent data-center space to AI and high-performance computing customers.
What does Core Scientific do for AMD?
It leases data-center capacity to AMD across several campuses under a long-term arrangement that also includes a newer cloud provider. AMD leases its portion directly.
Why are Bitcoin miners moving into AI?
For Core Scientific, revenue from renting data-center space grew many times over in a year, while mining revenue shrank. Blockchain.com data show mining revenue fell after Bitcoin's April 2024 reward cut reduced the new coins paid out per block.
The numbers
| Advanced Micro Devices (AMD) price | $449.04 |
|---|---|
| Advanced Micro Devices (AMD) change | +11.04% |
| Advanced Micro Devices (AMD) market value | $730 billion |
| Advanced Micro Devices (AMD) 52-week high | $649.42 |
| CoreWeave (CRWV) price | $46.40 |
| CoreWeave (CRWV) change | +6.28% |
| CoreWeave (CRWV) market value | $26 billion |
| CoreWeave (CRWV) 52-week high | $137.98 |
| S&P 500 change | +0.31% |
| 10-year Treasury yield | 4.86% |
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