The Rejected Core Scientific-CoreWeave Merger: What It Reveals About Valuation Gaps and Strategic Shifts in the Converging Crypto-AI Sector

The rejection of the $9 billion Core Scientific-CoreWeave merger in October 2025 marks a pivotal moment in the crypto-AI sector. Shareholders, including major investors like Two Seas Capital and Gullane Capital, voted against the all-stock deal, citing concerns over undervaluation and governance risks, according to a The Block report. This outcome isn't just a corporate setback-it's a window into the broader tension between legacy crypto infrastructure and the explosive demand for AI computing power. As the sector converges, investors must grapple with valuation gaps, strategic realignments, and the risks of betting on a transition that's far from seamless.

Valuation Gaps: Why the CoreWeave Deal Failed

The CoreWeave merger was structured as an all-stock transaction, offering 0.1235 CoreWeave shares per Core Scientific share without a downside collar, the The Block report noted. This left the final value of the deal entirely exposed to CoreWeave's volatile stock price, a risk shareholders deemed unacceptable. Proxy advisers like ISS and Glass Lewis echoed these concerns, arguing the bid undervalued Core Scientific's energy-dense infrastructure, according to the same The Block report.

The rejection highlights a stark valuation disparity between crypto miners and AI-focused infrastructure. For context, the recent $40 billion acquisition of Aligned Data Centers by BlackRock, Nvidia, Microsoft, and Elon Musk's xAI valued infrastructure at roughly $8 million per megawatt-160% higher than public bitcoin miners, the The Block report observed. This gap isn't arbitrary. AI training requires high-performance GPUs and energy efficiency, which crypto miners already possess but lack the software and networking expertise to monetize effectively. Investors are now demanding a premium for infrastructure that aligns with AI's insatiable appetite for compute power.

Strategic Shifts: From Bitcoin to AI

Bitcoin miners are increasingly repurposing their facilities for AI workloads, driven by declining profitability in crypto mining. The 2024 Bitcoin halving cut mining rewards by 50%, accelerating this pivot, as described in a CarbonCredits article. Companies like CleanSpark and Core Scientific are leveraging their existing power infrastructure, cooling systems, and automation to offer GPU leasing and model training services, a Datacenters.com report explains. For example, CleanSpark secured land and power in Georgia to build AI data centers, while Core Scientific is restructuring to provide compute clusters for AI startups (see the CarbonCredits article).

This transition is reshaping the sector's economics. The global AI infrastructure market is projected to grow at 25% annually, reaching $1.3 trillion by 2032, the CarbonCredits article estimates. Bitcoin miners are well-positioned to capitalize on this growth, as their facilities already meet the energy and hardware demands of AI. However, the shift isn't without friction. Upgrading hardware, overhauling networking, and hiring AI-specific talent require significant capital and operational expertise, the Datacenters.com report warns.

Investment Risks and Opportunities

The CoreWeave merger rejection underscores a critical lesson for investors: valuation is no longer about crypto's speculative potential but AI's tangible demand. The Aligned acquisition set a new benchmark-infrastructure relevant to AI commands a premium, while legacy crypto assets face downward pressure. This creates a bifurcation in the sector:

1. Winners: Miners that pivot swiftly to AI, securing long-term contracts with cloud providers or AI startups. These firms benefit from stable revenue streams and higher valuations.
2. Losers: Miners stuck in the crypto-only model, whose infrastructure becomes increasingly obsolete as AI demand outpaces crypto's cyclical nature.

Yet, the transition carries risks. For instance, Core Scientific's restructuring hinges on its ability to attract AI clients, a market crowded with established players like Microsoft and Google. Similarly, hardware upgrades and talent acquisition could strain cash flows. Investors must also watch for regulatory shifts-policymakers in Texas and Georgia are offering tax incentives for AI-focused repurposing, but these benefits may not scale nationwide, the Datacenters.com report cautions.

The Road Ahead

The crypto-AI sector is at an inflection point. The failed CoreWeave merger isn't an end but a recalibration. As AI infrastructure becomes the new gold rush, miners must prove they can adapt without sacrificing operational discipline. For investors, the key is to differentiate between companies that are merely rebranding and those building durable, AI-first capabilities.

The valuation gap between crypto and AI will likely widen in the short term, creating opportunities for those who can spot the former and avoid the latter. But as the sector evolves, one thing is clear: the future belongs to infrastructure that can power both Bitcoin and the AI revolution.