AUSTIN - Core Scientific, Inc. (NASDAQ: CORZ), a leading provider of high-powered digital infrastructure for bitcoin mining and hosting services, has declined an unsolicited acquisition proposal from CoreWeave. The offer, made on Sunday, was to purchase all outstanding shares of Core Scientific for $5.75 per share in cash.
Following careful consideration with its financial and legal advisors, the Board of Core Scientific determined that the proposal from CoreWeave undervalued the company and did not align with the best interests of its shareholders.
The decision was influenced by the potential for growth and value creation from a series of 12-year contracts with CoreWeave, which Core Scientific had announced previously. These contracts, to provide approximately 200 MW of infrastructure for CoreWeave's high-performance computing services, are expected to generate over $3.5 billion in cumulative revenue.
Core Scientific is concentrating on leveraging its substantial digital infrastructure assets to grow its high-performance computing (HPC) hosting business. The company has over 300 MW of additional HPC capacity available and is exploring future transactions with CoreWeave or other potential HPC customers. Core Scientific aims to balance the variability of its bitcoin mining operations with the steady cash flow from its HPC hosting services, enhancing earnings power and financial stability.
Shareholders of Core Scientific have been advised that no action is required from them at this juncture.
Moelis (NYSE:MC) & Company LLC and Sidley Austin LLP are serving as financial and legal advisors, respectively, to Core Scientific.
This decision comes as Core Scientific continues to operate one of North America's largest fleets of bitcoin mining and hosting services, with data centers spread across Georgia, Kentucky, North Carolina, North Dakota, and Texas. The majority of the company's revenue is derived from bitcoin earned through self-mining operations.
The information provided in this article is based on a press release statement from Core Scientific.
In other recent news, Core Scientific has been making significant strides with various developments. The company has been upgraded from a Neutral to a Buy rating by BTIG, due to its consistent operational execution and the potential strengthening of Bitcoin price. This upgrade could enable Core Scientific to more aggressively reduce its current debt of approximately $589 million.
In addition, Core Scientific has reported a record-setting March 2024 in Bitcoin earnings, self-mining 906 Bitcoin and facilitating the earning of an estimated 309 Bitcoin for its customers. The company has also deployed approximately 2,500 S21 miners, boosting its total operational hash rate to 25.6 exahash.
Moreover, Core Scientific has initiated a 72-megawatt capacity expansion at its Denton, Texas data center. This project is expected to be completed by the end of the second quarter of 2024 and will increase the operational infrastructure at the Denton data center to 197 megawatts.
Furthermore, Core Scientific has inked a multi-year contract with CoreWeave, a specialized GPU cloud provider. This deal, which could generate over $100 million in revenue, involves Core Scientific supplying up to 16 megawatts of data center capacity to CoreWeave.
These recent developments reflect Core Scientific's continuous efforts to enhance its operations and financial performance.
InvestingPro Insights
Amidst the news of Core Scientific (NASDAQ: CORZ) rejecting an unsolicited acquisition offer, the company's stock has demonstrated notable market performance. According to InvestingPro, Core Scientific has seen a significant return over the last week, with a 46.22% increase in price total return.
This surge is part of a larger pattern, as the stock has also experienced a strong return over the last three months, posting an 86.2% price total return. Additionally, the company is trading near its 52-week high, with the price at 98.35% of the high-water mark.
InvestingPro data highlights a market capitalization of $1.27 billion for Core Scientific, underscoring its substantial presence in the digital infrastructure and bitcoin mining industry. The company's revenue growth for the last twelve months as of Q1 2024 stands at -1.3%, which contrasts with a much more robust quarterly revenue growth of 48.6% for Q1 2024. Moreover, the company boasts a healthy gross profit margin of 30.18% for the same period.
An InvestingPro Tip worth noting is that analysts have revised their earnings upwards for the upcoming period, suggesting optimism about Core Scientific's financial outlook. Furthermore, the company is predicted to become profitable this year, an important milestone for investors to consider when evaluating the company's trajectory.
For those interested in deeper analysis and additional insights, there are currently 13 more InvestingPro Tips available for Core Scientific. Investors can access these insights and benefit from a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. This comprehensive suite of financial metrics and expert analysis can provide valuable context to shareholders and potential investors as they navigate the evolving landscape of digital infrastructure and cryptocurrency mining.
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