Core Scientific Shares Plunge 18% as Microsoft Cuts CoreWeave Commitments

Core Scientific, a leading Bitcoin miner, experienced a significant drop in its share price on March 6, falling by 18%. This decline was attributed to reports that microsoft had scaled back its commitments to CoreWeave, a key partner of core scientific. The partnership between Core Scientific and CoreWeave was formalized in March 2024 with a $100 million deal aimed at providing data center services. This move was intended to diversify Core Scientific's revenue streams ahead of the anticipated Bitcoin halving. The agreement involved leasing a Tier 3 data center in Austin, Texas, to provide up to 16 megawatts of capacity.

CoreWeave's initial public offering filing, dated March 3, disclosed that Microsoft is its largest customer, contributing 35% of its revenue in 2023 and an expected 62% in 2024. Despite the reduction in Microsoft's commitments, CoreWeave maintained that no contracts had been canceled, suggesting that some agreements remain in effect. The issues stemmed from CoreWeave's failure to meet deadlines and difficulties in delivering the necessary materials to scale artificial intelligence models.

Core Scientific, which had previously faced financial difficulties, has since emerged as one of the largest publicly listed Bitcoin miners. The company holds a substantial amount of Bitcoin, with 755.6 BTC valued at approximately $66.7 million at the time of writing. Its Bitcoin holdings have been on the rise since December 2024, reflecting its strategic efforts to diversify revenue streams and bolster its financial position.

The competitive landscape, dominated by established players like Microsoft's Azure and Amazon's AWS, presents a significant challenge for CoreWeave in capturing market share. The company's ability to navigate these competitive pressures and maintain its partnerships will be crucial for its future success. The recent setback underscores the importance of reliable partnerships and timely delivery of services in the rapidly evolving tech industry.