Bernstein analysts have revealed that the initial contracts between Core Scientific and AMD, totaling 530 MW, could yield over $14 billion in revenue over a span of 15 years. In this arrangement, the chip manufacturer will effectively serve as a credit guarantor for a portion of the bitcoin miner's infrastructure. This information was reported by The Block.

On July 28, the two companies announced a partnership that could allocate up to 2.5 GW of power in data centers for artificial intelligence applications.

Lower Risks, Higher Margins

According to Bernstein, the 530 MW contracted capacity includes 377 MW under a direct triple-net lease for AMD and 152 MW for an undisclosed cloud provider, supported by the chip maker's credit. Analysts believe that this structure reduces financing costs and counterparty risk compared to models where tenants rely on external credit support.

Additionally, AMD has acquired warrants to purchase 30 million shares of Core Scientific at a price of $23.47 per share, with vesting linked to the partners achieving the targeted 2.5 GW, as noted by Bernstein.

The average annual revenue from this agreement is projected to be around $0.9 billion, equating to approximately $1.8 million per megawatt. This figure is 5-25% lower than the $1.9-$2.4 million per megawatt range seen in recent deals involving miners deploying AI equipment. Notably, the 377 MW of direct triple-net leasing has a margin for AMD close to 100%, with a mixed EBITDA from the deal estimated at about 96%.

Core Scientific anticipates capital expenditures for the AMD deal to be between $11 million and $12 million per megawatt, with a total expected cost of around $6 billion. Approximately $1 billion has already been spent, while the remaining amount is expected to be raised through project bonds.

A Trend Confirmation

Bernstein experts view the partnership between Core Scientific and AMD as a significant step in the transition of former bitcoin miners into infrastructure operators for artificial intelligence. Unlike earlier agreements where technology companies like Google effectively insured tenants, the AI chip manufacturers themselves are now prepared to become anchor tenants and support long-term projects.

Recent examples of similar deals include:

  • Hut 8 announced a 704 MW allocation to a tenant identified as Nvidia by FT;
  • AMD reserved 200 MW with Riot Platforms.

It is also noteworthy that Core Scientific paid Block $41.9 million to terminate a contract for the supply of mining chips as part of its acceleration towards diversification into AI.