Core Scientific CEO Adam Sullivan Predicts $25-30 Billion Growth with AI Data Centers

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.

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