Core Scientific jumps by a third on reports of talks to be acquired by CoreWeave

Quotes on Core Scientific, an owner and operator of high-powered digital infrastructure for bitcoin mining and hosting services with a market capitalization of less than $5 billion, soared more than 30% yesterday, June 26. As the Wall Street Journal reports, the company is in talks to be acquired by CoreWeave, which provides cloud infrastructure for AI capabilities. A year ago, the same deal through. At least one Wall Street analyst is skeptical that the acquisition now makes sense for CoreWeave, however. 

Core Scientific shares rose 33% to $16.36 apiece yesterday. The gains extended into premarket trading today, with shares adding another 8% as of this writing. The rally was sparked by a report by the WSJ, citing «people familiar with the matter,» that Core Scientific is in talks to be acquired by CoreWeave. 

The exact terms of the deal could not be learned, but Core Scientific has been growing rapidly and would likely command a solid premium, the WSJ reported. A deal could be finalized in the coming weeks if the talks do not hit any snags.

The companies have a long history of partnership. For example, last June they announced contracts for Core Scientific to supply hundreds of megawatts to host CoreWeave infrastructure worth billions. It was then that CoreWeave attempted to acquire Core Scientific for $5.75 per share. This valued the company at more than $1 billion. But Core Scientific rejected the offer as too low and said it would focus on its existing partnership with CoreWeave. 

Core Scientific's market capitalization is now nearly five times the previous offer, at $4.8 billion. 

With this deal, CoreWeave is trying to vertically integrate, says Gil Luria, D.A. Davidson head of tech research. CoreWeave mostly leases data center spaces, and it is now seeking to buy more.

But this deal is risky for CoreWeave, Luria warns: «To the extent that CoreWeave can use a very, very expensive, overvalued stock to make the acquisition, that's great, but if they need to borrow money to buy Core Scientific, that's going to make a really bad balance sheet even worse.» He concludes that «CoreWeave is really managed for the benefit of their debt holders; equity holders own almost nothing.» 

Since its IPO, CoreWeave has raised a total of $17.2 billion in debt and equity, as it reported in its first-quarter financials. Meanwhile, the company remains unprofitable, with the first-quarter net loss at $314.6 million. 

Core Scientific initially built out data center infrastructure to support its bitcoin self-mining operations and to provide colocation services to third-party miners. However, the sharp downturn in the crypto market in 2022 left the company on the brink of bankruptcy.

Following its emergence from bankruptcy in January 2024, Core Scientific has pivoted into infrastructure for AI, reallocating a substantial portion of its existing mining infrastructure to host high-performance computing workloads.

CoreWeave delivers cloud infrastructure optimized for AI workloads. The company’s model is straightforward: Thanks to its close relationship with Nvidia, which is a CoreWeave shareholder, supplier, and customer, CoreWeave can offer the GPU capacity required to meet demand and monetizes it through infrastructure-as-a-service offerings, according to Barron’s.

Microsoft is CoreWeave’s largest customer, accounting for over 60% of total revenue last year. The company went public in March, selling shares in the IPO at $40 per share, below the targeted $47-55 per share. But the stock popped in the following days, closing above $61 per share on April 2. Within three months of the IPO, CoreWeave’s market capitalization has tripled to reach $75 billion.

The AI translation of this story was reviewed by a human editor.