Core Scientific has secured a significant partnership with Advanced Micro Devices (AMD), marking a strategic shift from bitcoin mining to AI infrastructure. This agreement, involving 15-year leases for 529 megawatts (MW) of AI capacity, is projected to yield over $14 billion in contracted revenue.

Transitioning from Bitcoin Mining to AI Data Centers

The newly established capacity is anticipated to support AMD's customer deployments starting in 2027. The deal also grants AMD the option to reserve an additional 1.9 gigawatts (GW) through December 2028, potentially raising the total capacity to 2.5 GW.

As per the company's quarterly filing, AMD has leased 377 MW across Core Scientific's facilities located in Pecos and Hunt County, Texas, along with Muskogee, Oklahoma. An undisclosed cloud provider has also secured 152 MW in Auburn, Alabama, and Dalton, Georgia, facilitated by AMD.

Core Scientific and AMD plan to collaborate on data center design and the deployment of AMD's Instinct graphics processing units, EPYC processors, and ROCm software.

Additionally, AMD has obtained warrants to purchase up to 30 million shares of Core Scientific at a price of $23.47 per share, with approximately 6.5 million of these warrants vesting upon the signing of the initial leases. Further warrants will vest as more capacity is contracted.

This partnership boosts Core Scientific's total leased customer capacity to around 1.1 GW, which translates to a potential revenue of over $24 billion. As of mid-July, the company was billing for 437 MW, amounting to about $635 million in annualized colocation revenue.

The shift towards AI infrastructure is a direct response to the declining profitability of bitcoin mining. In the second quarter, colocation services generated $136.7 million, accounting for 83% of Core Scientific's total revenue of $164.2 million, while self-mining revenues plummeted by 66% to $21.5 million.

Moreover, Core Scientific has terminated its agreement to purchase bitcoin mining chips from Block, resulting in a charge of $41.9 million. The previous agreement involved the acquisition of 3-nanometer chips, which represented approximately 15 exahashes per second (EH/s) of mining capacity.

As of June 30, Core Scientific held 848 BTC valued at $49.7 million, an increase from 547 BTC three months prior. The company sold 2,385 BTC for $208.2 million during the first quarter.

In pre-market trading, shares of Core Scientific (CORZ) rose by 5.6%, while AMD's stock fell by 4% amid a broader decline in chip stocks.