Bitcoin
Bitcoin miner Core Scientific turns down $1 billion takeover offer
Core Scientific Inc., a significant player in Bitcoin (Bitcoin) mining industry, rejected an unsolicited $1 billion acquisition offer from artificial intelligence (AI) startup CoreWeave Inc., as more and more companies rush to join the crypto bandwagon.
Core Scientific rejects takeover bid
Core Scientific, one of North America’s largest owners and operators of high-powered digital infrastructure for Bitcoin mining and hosting services, has received an unsolicited, non-binding proposal from CoreWeave to acquire all of its outstanding shares on a fully diluted for $5.75 per share in cash.
O proposalvaluing Core Scientific at $5.75 per share, was made on March 28, 2023, and was rejected by the company’s board of directors.
This proposal came shortly after Core Scientific and CoreWeave signed a series of 12-year contracts for Core Scientific to provide approximately 200 MW of infrastructure to host CoreWeave’s high-performance computing services.
Despite the potential benefits of the partnership, Core Scientific’s board determined that the offer significantly undervalued the company and was not in the best interests of the company and its shareholders. The board cited Core Scientific’s significant growth potential and its ability to capitalize on growing demand for data center space and high-performance computing facilities.
This decision follows Core Scientific’s exit from bankruptcy protection in January. Following the announcement, the company’s shares jumped as much as 16% to $8.30 on June 6, and have risen about 70% since the initial takeover offer.
Core Scientific’s $3.5 billion deal with CoreWeave
In other news, Core Scientific recently signed a significant 12-year contract agreement with CoreWeave, a cloud computing provider, to provide 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance computing (HPC) operations.
This partnership represents a milestone in Core Scientific’s strategy to diversify its business model and capitalize on the growing demand for data center space and high-performance computing facilities.
The deal, valued at $3.5 billion, is expected to generate cumulative revenues in excess of $3.5 billion over the initial 12-year contract periods.
The estimated average annual revenue from these contracts is approximately US$290 million. This revenue stream will allow Core Scientific to balance its portfolio between Bitcoin mining and alternative computer hosting, positioning the company to optimize cash flow and mitigate risk while maintaining substantial exposure to Bitcoin’s potential growth.
Approximately 18% of Core Scientific’s total operational infrastructure will be used to accommodate CoreWeave’s HPC operations.
More companies making forays into crypto
Bakkt, the digital asset platform launched by Intercontinental Exchange (ICE), parent company of the New York Stock Exchange (NYSE), is supposedly exploring a potential sale.
The company hired a financial advisor to evaluate several strategic options, including a possible sale or spin-off.
This news coincides with fintech brokerage Robinhood’s recent announcement of its acquisition from European cryptocurrency exchange Bitstamp for $200 million. This move reflects a broader trend of larger companies acquiring crypto-related companies as the industry consolidates.
Having gone public in 2021 through a merger with a blank check vehicle, Bakkt has been evaluating its strategic alternatives with the guidance of a financial advisor.
Despite posting a loss of $21 million in the first quarter and revenue of $855 million, Bakkt shares rose 15% to $22.33 on June 7. Its market value is around US$300 million.
The potential sale or dissolution of Bakkt emphasizes continued consolidation in the crypto industry as larger companies aim to bolster their presence in the digital asset space. With Bakkt holding a BitLicense from the New York State Department of Financial Services and establishing partnerships with companies such as Starbucks and Microsoft, the platform could emerge as an attractive acquisition target for companies looking to enter or expand in the crypto market.
As Web3 market participants continue to anticipate the arrival of a massive crypto summer, it definitely won’t be a surprise to see more established companies making inroads into the fledgling cryptoverse.