After surviving Chapter 11 bankruptcy in late 2022, and emerging restructured in early 2024, Core Scientific Inc (NASDAQ:) is at the end of the line. On Monday, AI data center provider CoreWeave Inc (NASDAQ:) announced an all-stock acquisition of Core Scientific worth around $9 billion, which is based on CORZ price of $20.40 per share on July 3rd, 2025.
After the deal is done, CORZ shareholders are expected to own less than 10% of CoreWeave combined. Expectedly, CORZ stock plummeted nearly 20% after market open, while CRWV shares took a minor 4% dip. The deal should go into effect in late 2025, after receiving approvals from both shareholders and the Federal Trade Commission (FTC). The question is, should investors take another look at CoreWeave as the emerging AI hyperscaler?
What Does CoreWeave Get from Core Scientific?
Following the string of bankruptcies of overleveraged companies in the cryptocurrency sector, culminating in the FTX exchange collapse, miner Core Scientific failed to withstand the market shock.
This was the classic crypto trap – overextending during the market boom, then failing to keep up with debt maturities when the market deflated. However, by January 2024, Core Scientific pivoted from Bitcoin mining to high performance computing (HPC) and AI hosting. In addition to reducing debt by ~$1 billion, it was CoreWeave that boosted the company’s bottom line.
Namely, in October 2024, CoreWeave exercised an option with Core Scientific to potentially increase cumulative revenue by $2 billion over 12 years. This would have brought the total cumulative value of contracts with CoreWeave to $8.7 billion, or 500 MW worth of computing power by H2 2026.
At that time, Core Scientific had 1.2 GW of contracted power, of which 500 MW was delegated for Bitcoin mining. As of Q1 2025 ending March, Core Scientific built up a portfolio of nine data center sites, two of which are under development.
In turn, if CoreWeave proceeds with Core Scientific’s road map as planned, the company should gain an additional 1.3 GW of billable hosting power by 2027. As of the latest quarterly report delivered in early May, ending March, Core Scientific has $1.119 billion in total debt.
CoreWeave Getting Even More Overleveraged
Under the all-stock acquisition of Core Scientific, CoreWeave would assume the company’s total debt in addition to all its assets. In the announcement, the company noted that the financial impact will be the “immediate elimination of over $10 billion of cumulative future lease overhead to be paid for existing contractual sites over the next 12 years.”
This makes sense, as the bulk of Core Scientific’s revenue is already tied to CoreWeave. The acquisition of Core Scientific then makes it possible to consolidate or exit real estate tied to data centers, or terminate duplicate leases and shift workloads to new assets.
CoreWeave all but confirmed this plan by noting there is “potential to repurpose toward HPC usage or divest crypto mining business over the medium-term horizon.”
The key benefit of such an acquisition is to tap into Core Scientific’s existing assets which de-risks CoreWeave’s future expansion. After all, the actual operating costs would become much clearer, in addition to eliminating lease overhead.
As previously mentioned, CoreWeave would gain 500 MW in crypto mining, while 840 MW is available for CoreWeave’s core business of HPC hosting. The problem is that the company is already highly leveraged.
Since Q1 2024, CoreWeave has been accumulating a string of net losses, typically around $300 million to rapidly expand AI data center operations.
After raising $1.4 billion through initial public offering (IPO), CoreWeave has a total debt of $17.2 billion as of Q1 2025.
CoreWeave’s Risky AI Gambit?
In Q1 2025, ending March, CoreWeave reported a revenue backlog of $25.9 billion. This accounts for revenue that is legally committed but not yet recognized, as Remaining Performance Obligations (RPO) worth $14.7 billion, in addition to the strategic partnership with OpenAI worth $11.2 billion.
At the end of that quarter, CoreWeave only deployed 420 MW of computing power against the total 1.6 GW of contracted power. In short, the company’s leadership is firmly in the bullish AI camp, believing that investors are still underestimating AI demand.
“This acquisition accelerates our strategy to deploy AI and HPC workloads at scale.”
Michael Intrator, CoreWeave CEO
“At scale” is a reference to the Big Three hyperscalers – Microsoft (NASDAQ:) (Azure), Amazon (NASDAQ:) (AWS) and Alphabet (NASDAQ:) (GCP) – which we covered previously. Despite Big Tech’s expected investments over $300 billion in AI during 2025, CoreWeave seems confident there is ample room for growth.
After all, the company generated $981.6 million revenue in Q1 2025, an uptick of 420% year-over-year. Furthermore, CoreWeave has access to Nvidia’s cutting-edge tech, the latest one being Blackwell Ultra.
CoreWeave’s bullishness also aligns with our initial view that AI is not a bubble. Rather, it is a concerted effort to bring about a new layer of governance, for both actual governments and corporations. Public-private partnerships (PPPs) that brought $600 billion worth of commitments to Saudi Arabia (and the US) was just the latest example of AI not being a bubble.
Moreover, we’ve maintained all along that AI demand is yet to ramp up with text-to-video content prompts, which are drastically more demanding from a computing standpoint than simple text-to-text outputs.
Equally so, AI-powered asset generation is another source of computing demand that will change the entertainment landscape, from video games to movies. At the moment, Tencent appears to lead the way in that arena.
The bottom line is, AI is unlike the crypto sector. At a glance, it may seem that CoreWeave could follow Core Scientific’s bankruptcy due to overleveraging, but this would be to underestimate AI demand.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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