Core Scientific's partnership with AMD could generate over $14 billion in revenue over 15 years, focusing on AI infrastructure.
Core Scientific has entered into a significant partnership with AMD, projected to generate over $14 billion in revenue over the next 15 years through initial contracts totaling 530 megawatts (MW). AMD will act as a credit guarantor for part of Core Scientific's infrastructure, enhancing the financial viability of the arrangement.
On July 28, the collaboration was formally announced, aiming to allocate up to 2.5 gigawatts (GW) of power in data centers primarily for artificial intelligence applications.
Streamlined Financing and Increased Profitability
According to Bernstein analysts, the contracted capacity includes a direct triple-net lease of 377 MW for AMD and an additional 152 MW for an undisclosed cloud provider, leveraging AMD's credit support. This structure is expected to lower financing costs and reduce counterparty risk compared to traditional models that depend on external credit.
AMD has also secured warrants for 30 million shares of Core Scientific at $23.47 per share, with vesting contingent upon achieving the 2.5 GW target.
The average annual revenue from this partnership is estimated at around $0.9 billion, translating to approximately $1.8 million per megawatt. This figure is slightly lower than recent deals involving AI equipment, which ranged from $1.9 to $2.4 million per megawatt. The direct lease for AMD is expected to yield nearly 100% margin, with an estimated EBITDA of about 96% from the deal.
Core Scientific anticipates capital expenditures for the AMD project to be between $11 million and $12 million per megawatt, amounting to around $6 billion in total. So far, approximately $1 billion has been spent, with the remainder expected to be financed through project bonds.
Shifting Industry Dynamics
Bernstein views the Core Scientific and AMD partnership as a pivotal move in transforming former bitcoin miners into infrastructure operators for AI technologies. This marks a shift from previous agreements where companies like Google provided tenant insurance, as AI chip manufacturers are now stepping in as anchor tenants and supporting long-term initiatives.
Other recent similar agreements include Hut 8's 704 MW allocation to a tenant identified as Nvidia and AMD's 200 MW reservation with Riot Platforms. Additionally, Core Scientific has paid Block $41.9 million to terminate a contract for mining chip supply, further emphasizing its pivot towards AI diversification.
