CoreWeave’s Core Scientific Acquisition Strengthens its AI Cloud Expansion

CoreWeave has announced that it will acquire Core Scientific in a major all-stock deal. CoreWeave is buying Core Scientific in a $9 billion deal. This move will help the company to grow its AI data centers and lower operating costs. As reported by Yahoo Finance, the deal was confirmed on Monday, July 7, and brings together two companies that have already been working closely.

CoreWeave is one of the fastest-growing companies in the AI infrastructure space. Core Scientific has been shifting its business from Bitcoin mining to hosting AI data centers. This deal allows CoreWeave to take control of the data center space it already uses and expand its AI cloud services.

Why CoreWeave Is Buying Its Own Landlord

CoreWeave was already using Core Scientific’s data centers to power its growing GPU cloud services. Now, by buying Core Scientific, the company is essentially purchasing its landlord. This will give CoreWeave ownership of about 1.3 gigawatts of data center capacity, including 840 megawatts it was already renting.

The company will also gain access to over 1 gigawatt of future power capacity. In the world of AI, having enough power is one of the biggest challenges. Microsoft CEO Satya Nadella recently said that power, not hardware, is now the main limitation for expanding AI systems. So, getting control of this future capacity will help CoreWeave to meet the growing demand for its services without worrying about power shortages.

Along with the rented capacity, CoreWeave will also take over 500 megawatts of Bitcoin mining infrastructure from Core Scientific. This part of the business can either be reused for AI workloads or sold, offering additional flexibility and value.

In addition, CoreWeave expects to save a huge amount of money by owning its infrastructure. It was on track to pay $10 billion in lease payments over the next 10 years. Now, those payments will no longer be necessary. The company estimates that it will save more than $500 million each year, indicating that the acquisition will quickly pay for itself by the end of 2027.

Beyond operational savings, CoreWeave also expects to lower its cost of borrowing. The combined company’s larger size means it will qualify for lower interest rates when raising funds for future expansion. Management said this could save “several hundred basis points” in financing costs.

What’s in It for Core Scientific and What Happens Next

While the deal helps CoreWeave, it also makes sense for Core Scientific. The company had been moving away from Bitcoin mining, which became less profitable after the April 2024 Bitcoin halving. At the same time, Core Scientific was working to become a data center host for AI companies, including CoreWeave. But competing as an AI cloud provider would require more investment and technical expertise.

Core Scientific was facing pressure on both ends: falling mining profits and rising costs to shift into AI. Rather than continue down that risky road, Core Scientific chose to join forces with CoreWeave, which is already a leader in the space.

The acquisition is expected to close in the fourth quarter of this year. After that, CoreWeave will likely become even stronger. Of course, the company still faces challenges, including high market expectations and its close link to Nvidia, whose chips power much of its services. But overall, this CoreWeave’s Core Scientific Acquisition reduces risk and sets the company up for major growth in the AI cloud space.

CoreWeave’s post-acquisition position will be more secure, with more power, lower costs, and greater flexibility. While its stock remains highly valued and somewhat tied to Nvidia’s ecosystem, its risks are now more manageable thanks to this strategic move.