Core Scientific CEO Adam Sullivan Secures Major AI Data Center Deals, Poised for Massive Growth
Core Scientific CEO Adam Sullivan envisions a substantial growth trajectory for the company, projecting it could become a $25 to $30 billion enterprise within the next few years. This potential is largely attributed to Core Scientific’s expansion into AI data center services, following a rebound in its ETF flows and successful bankruptcy exit.
Core Scientific’s AI Data Center Expansion
Sullivan discussed Core Scientific’s future prospects in an interview with analysts from Bernstein, highlighting the company’s strategy to leverage its AI data center services for rapid expansion. He emphasized that achieving gigawatt scale AI data centers could significantly elevate Core Scientific’s valuation. “Securing another 500MW or 1GW in deals over the next few years could transform us from a $2.5 billion company to a potential $25 to $30 billion company,” Sullivan stated.
Core Scientific’s Journey Post-Bankruptcy
Sullivan, who joined Core Scientific in April 2023, navigated the company through its Chapter 11 bankruptcy process, which was triggered by the 2022 Bitcoin price collapse and soaring energy costs. After emerging from bankruptcy in January 2024, Core Scientific signed a significant 12-year deal with AI hyperscaler CoreWeave, potentially worth up to $3.5 billion in total revenue.
Contracts and Conversions with CoreWeave
Core Scientific has secured three contracts with CoreWeave, encompassing a total of 382MW. These contracts involve converting existing Bitcoin mining facilities to CoreWeave GPU-ready data centers through 2026. Sullivan noted that while some Bitcoin mining rigs at these sites may be sold, most will be redirected to other Core Scientific locations.
Competitive Edge in Data Center Timelines
Core Scientific differentiates itself with its shorter delivery timelines compared to competitors like Digital Reality, Equinix, Switch, and CyrusOne, which typically require three to five years. Sullivan emphasized that Core Scientific operates within a sub-three-year timeline for infrastructure delivery, providing a significant competitive advantage.
Lack of Competition in AI Data Center Services
Despite the high margins associated with high-performance computing (HPC) services, Core Scientific has not encountered competition from other Bitcoin miners in its AI data center ventures. Sullivan pointed out that while some Bitcoin miners have potential HPC sites, they often lack the necessary data center experience and would need to hire additional talent to diversify successfully.
Diversification and Capital Allocation
Core Scientific’s diversification strategy includes allocating just 500MW of its 1.2GW capacity to Bitcoin mining, with the remainder focusing on HPC services. Sullivan explained that the company is prioritizing return on cash and is cautious about deploying significant capital into new infrastructure unless it is highly economical.
Focus on Efficient Capital Use
The company aims to reduce capital expenditures by shifting from replacing entire mining machines to just hashboard replacements. Sullivan emphasized Core Scientific’s goal to be the best return on capital Bitcoin mining business. Bernstein analyst Gautam Chhugani noted that Bitcoin mining is fundamentally a hash rate competition, and failing to invest in line with hash rate growth could lead to dilution.
Outlook and Analyst Ratings
Core Scientific is currently rated “outperform” by Bernstein, with a target price of $17 — representing a 70% increase from the stock’s closing value of $10 on Monday. Sullivan acknowledged the company’s focus on stabilizing cash flows amid record-low hash prices, emphasizing that they are an equity risk story until significant cash flows from the HPC business are realized.
FAQ
What is Core Scientific’s recent growth forecast?
Core Scientific CEO Adam Sullivan predicts that the company could grow to a valuation of $25 to $30 billion within the next few years, largely driven by its expansion into AI data center services.
How does Core Scientific plan to achieve this growth?
Core Scientific aims to achieve this growth by signing additional high-value contracts for gigawatt-scale AI data centers. The company has already secured a significant 12-year deal with CoreWeave, potentially worth up to $3.5 billion in total revenue.
What recent developments have impacted Core Scientific’s business?
Core Scientific successfully exited Chapter 11 bankruptcy in January 2024 after Bitcoin’s price collapse in 2022 and rising energy costs. Since then, the company has focused on diversifying into high-performance computing (HPC) and AI data centers.
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