Core Scientific and CoreWeave sign a 200 MW agreement; by 2028, the energy consumption of AI data centres is expected to reach 15%–20%.
TakeAway Points:
- Core Scientific (CORZ) and CoreWeave sign a 200 MW AI contract, demonstrating how Bitcoin mining and AI infrastructure are increasingly coming together.
- Data centres are expected to consume 8% of the nation’s electricity by 2030 due to the huge increase in artificial intelligence (AI) energy requirements.
- Due to significant investments made by big companies like Google and Microsoft, which have a significant impact on public perception, AI’s energy use is scrutinised less than that of Bitcoin.
Core AI Deal
Last month, Core Scientific (CORZ), a prominent bitcoin mining company, signed a significant 200 megawatt (MW) deal with cloud computing firm CoreWeave. This agreement involves Core Scientific modifying some of its existing infrastructure to host CoreWeave’s GPUs for high-performance computing operations.
This partnership marks a notable intersection between the bitcoin mining and artificial intelligence (AI) sectors, which have been increasingly discussed among miners, bitcoiners, and technologists. The collaboration leverages the robust data centers and attractive energy contracts that bitcoin miners have developed, providing a new revenue stream as bitcoin mining profitability trends lower.
Concerns for Energy Demand
The integration of AI into bitcoin mining operations raises significant concerns about energy consumption. AI’s growth is expected to drive a substantial increase in energy demand for data centers. Goldman Sachs predicts that data centers will consume 8% of the U.S.’s total power supply by 2030, up from 3% in 2022, with AI being a major contributing factor.
Schneider Electric’s research suggests that AI’s share of data center energy demand will rise to 15%-20% by 2028, up from an estimated 8% in 2023. Despite these projections, the discourse around AI’s energy consumption has not reached the same level of scrutiny as bitcoin’s energy use, possibly due to the significant investment and influence of major companies like Google, Microsoft, Amazon, and Meta in the AI sector.
Bitcoin Miners partner with AI
Bitcoin miners are increasingly seen as attractive partners for building AI data centers due to their available power supplies and operational capabilities. According to a research report by broker Bernstein, recent AI deals, including Core Scientific’s 12-year agreement with CoreWeave and Coatue Management’s $150 million investment in Hut 8 (HUT), have become key catalysts for the sector.
Bernstein initiated coverage of miner Iris Energy (IREN) with an outperform rating and a $26 price target, and Core Scientific with an outperform rating and a $17 objective. Iris Energy was trading at $13.40, and Core Scientific at $9.79 in early trading on Tuesday.
Bitcoin miners control about 6 gigawatts (GW) of power access, with a pipeline of up to 12 GW by 2027. Analysts led by Gautam Chhugani noted that bitcoin data centers are ideal for retrofit due to their high power density racks, cooling infrastructure, and general data center operating capabilities.
They expect 20% of bitcoin miners’ power capacity to pivot to AI by the end of 2027. The five largest U.S. bitcoin miners are expected to continue consolidating scale and grow to about 25% of the global bitcoin hashrate, with the medium-term option to pivot to AI.
TeraWulf’s Growth
Bitcoin miner TeraWulf Inc. has also been making strides in the AI sector. The company recently paid down its remaining debt early, providing greater flexibility to capitalize on the growing demand for energy infrastructure to power generative AI technology.
TeraWulf plans to expand its operational infrastructure capacity from 210 MW to 295 MW this year, with the potential to increase capacity by an additional 300 MW in the near term. The company is working on a high-performance computer project at its Lake Mariner facility in New York, which will power the GPUs essential for generative AI technology.
TeraWulf’s shares have more than doubled this year, driven by the push into AI hosting. The stock has surged following Core Scientific’s $3.5 billion hosting contracts with AI upstart CoreWeave. However, TeraWulf shares fell 8.4% to around $5 on Tuesday. The move into AI hosting has helped TeraWulf and Core Scientific outperform other miners, such as Marathon Digital and Riot Platforms, whose shares have been weighed down by concerns over thinning profits.
