Core Scientific, Inc. (CORZ): Business Model Canvas [11-2024 Updated]

Core Scientific, Inc. (CORZ) stands at the forefront of the digital asset mining industry, combining cutting-edge technology with strategic partnerships to deliver high-efficiency mining solutions. In this blog post, we will explore the intricacies of their Business Model Canvas, highlighting how their key activities, resources, and value propositions create a robust framework for success. Discover how Core Scientific addresses the needs of digital asset miners and high-performance computing clients while maintaining a sustainable cost structure and diverse revenue streams.

Core Scientific, Inc. (CORZ) - Business Model: Key Partnerships

Collaborations with CoreWeave for HPC hosting

On February 29, 2024, Core Scientific entered into a long-term contract with CoreWeave to provide 16 megawatts (MW) of infrastructure at its Austin, Texas facility. Following this, on June 3, 2024, additional long-term contracts were established to deliver approximately 200 MW of infrastructure for CoreWeave's High-Performance Computing (HPC) operations. This required modifications at several existing sites, with operational status expected to commence in the first half of fiscal 2025. By October 22, 2024, CoreWeave exercised its option for an additional 120 MW of infrastructure.

Contract Date	MW Provided	Operational Status
February 29, 2024	16 MW	Commenced
June 3, 2024	200 MW	Expected H1 2025
October 22, 2024	120 MW	Expected H2 2025

Partnerships with Bitmain for mining equipment

Core Scientific has established a strategic partnership with Bitmain, a leading manufacturer of cryptocurrency mining hardware. As of September 30, 2024, the company has issued new common stock to fulfill obligations related to this partnership, specifically totaling approximately $27.8 million. This relationship is critical for maintaining Core Scientific's competitive edge in the mining sector, particularly as the demand for efficient mining operations increases amid fluctuating Bitcoin prices.

Long-term contracts with customers for electricity-based consumption

Core Scientific has implemented long-term contracts that focus on electricity-based consumption for its hosting services. As of September 30, 2024, these contracts have resulted in a significant portion of the revenue stream. The total electricity-related revenue from hosting services was approximately $10.3 million for the third quarter of 2024, reflecting the company's shift from traditional mining to hosting HPC operations. The move is aimed at stabilizing revenue and reducing the risks associated with cryptocurrency market volatility.

Contract Type	Revenue (Q3 2024)	Revenue (Q3 2023)
Electricity-based Hosting	$10.3 million	$0 million

Core Scientific, Inc. (CORZ) - Business Model: Key Activities

Operating data centers for digital asset mining

Core Scientific operates a significant number of data centers for digital asset mining, employing a large fleet of miners. As of September 30, 2024, the company reported an average hourly operating power demand of approximately 607 megawatts (MW). They secured around 1,200 MW of contracted power capacity across their operational sites. The self-mining segment generated $328.8 million in revenue during the nine months ended September 30, 2024. The company achieved an average self-mining fleet energy efficiency of 24.5 joules per terahash for the same period.

Providing hosting services for third-party clients

Core Scientific also provides hosting services for third-party clients, which includes licensing data center space and related services. For the nine months ended September 30, 2024, the company generated $71.1 million from digital asset hosted mining services. The hosting services are structured around electricity-based consumption contracts, which are generally billed on a fixed and recurring basis each month. The revenue from HPC hosting, initiated in 2024, contributed $15.9 million to total revenue during the same period.

Service Type	Revenue (9 months ended Sept 30, 2024)	Average Power Demand	Contracted Power Capacity
Self-Mining	$328.8 million	607 MW	1,200 MW
Hosted Mining	$71.1 million	N/A	N/A
HPC Hosting	$15.9 million	N/A	200 MW (CoreWeave)

Engaging in research and development for infrastructure efficiency

Core Scientific invests in research and development to enhance the efficiency of its operations, focusing on reducing costs and increasing productivity across its mining and hosting services. For the nine months ended September 30, 2024, the company spent $6.8 million on research and development. This investment supports the development of proprietary hardware and software solutions aimed at optimizing energy consumption and overall operational efficiency. The objective is to leverage their existing infrastructure for high-performance computing (HPC) operations, thereby expanding their service offerings.

Core Scientific, Inc. (CORZ) - Business Model: Key Resources

Specialized mining hardware and software

Core Scientific utilizes advanced mining hardware and proprietary software to optimize its digital asset mining operations. As of September 30, 2024, the company reported a self-mining hash rate of 20.4 EH/s, a 36% increase from 15.0 EH/s in the previous year. This increase was attributed to the deployment of approximately 31,000 mining units.

The total digital asset self-mining revenue for the nine months ended September 30, 2024, reached $328.8 million, reflecting an 18% increase from $278.2 million for the same period in 2023. The average price of bitcoin during this period was $60,031, a 128% increase compared to $26,353 in the prior year.

Extensive digital infrastructure portfolio

Core Scientific maintains a significant digital infrastructure portfolio, which includes data centers strategically located to support both digital asset mining and high-performance computing (HPC) operations. The company reported total revenue of $415.7 million for the nine months ended September 30, 2024, up from $360.5 million in the same period in 2023.

In June 2024, Core Scientific initiated HPC hosting operations at its Austin, Texas facility, generating $15.9 million in revenue for the nine months ended September 30, 2024. The company has also secured contracts with CoreWeave for approximately 200 MW of HPC infrastructure.

Experienced workforce in data center management

Core Scientific’s workforce is a critical asset, comprising skilled professionals in data center management and operational efficiency. For the nine months ended September 30, 2024, the company reported total operating expenses of $88.7 million, which includes $74.7 million in general and administrative expenses. The company's operational focus has shifted towards HPC hosting, reflecting its strategy to leverage its workforce's expertise.

The increase in operational costs has been driven by a combination of scaling operations and enhancing data center capabilities, ensuring the company remains competitive in both digital asset mining and HPC services.

Resource Type	Details	Financial Impact
Mining Hardware	Self-mining hash rate: 20.4 EH/s	Self-mining revenue: $328.8 million (9M 2024)
Digital Infrastructure	HPC hosting contracts: 200 MW	HPC revenue: $15.9 million (9M 2024)
Workforce	Experienced management in data centers	Operating expenses: $88.7 million (9M 2024)

Core Scientific, Inc. (CORZ) - Business Model: Value Propositions

High-efficiency digital asset mining solutions

Core Scientific offers high-efficiency digital asset mining solutions, prominently featuring a self-mining hash rate of 20.4 EH/s as of September 30, 2024, up from 15.0 EH/s a year prior, representing a 36% increase. The company has deployed approximately 31,000 mining units, contributing to a significant rise in operational capabilities. Despite a decrease in the total number of bitcoins mined by 62% due to network conditions, the average price of bitcoin surged by 117% year-over-year, reaching $61,002 during the same period.

The total digital asset self-mining revenue for the nine months ended September 30, 2024, was $328.8 million, an 18% increase from $278.2 million in the previous year. The operational efficiency was further highlighted by a direct power cost per bitcoin self-mined of $33,946.

Reliable and scalable HPC hosting services

Core Scientific has expanded its service offerings to include High-Performance Computing (HPC) hosting, which generated $15.9 million in revenue for the nine months ended September 30, 2024. The introduction of HPC services marks a strategic pivot, leveraging existing infrastructure to provide consistent revenue streams with lower risk compared to traditional bitcoin mining. The company has entered into long-term contracts with CoreWeave for the delivery of approximately 200 MW of infrastructure, highlighting its commitment to scalability.

The gross profit from HPC hosting was recorded at $1.9 million, demonstrating the segment's viability. The revenue from HPC operations is expected to grow as the company modifies its existing sites to accommodate additional infrastructure.

Expertise in managing large-scale data center operations

Core Scientific's expertise in managing large-scale data center operations is a critical component of its value proposition. The company has demonstrated effective management of operational costs, with total revenue for the nine months ended September 30, 2024, reaching $415.7 million, a 15% increase from $360.5 million in the previous year. The total cost of revenue increased by 8% to $299.4 million, which indicates effective cost control amidst scaling operations.

Furthermore, the company’s operational efficiency is reflected in a gross margin increase from 23% to 28% year-over-year. Core Scientific's ability to adapt its infrastructure for varying services indicates its agility and expertise in data center management, positioning it favorably against competitors in the digital asset and HPC hosting markets.

Core Scientific, Inc. (CORZ) - Business Model: Customer Relationships

Long-term contracts fostering loyalty

Core Scientific has established significant long-term contracts to enhance customer loyalty. For instance, in February 2024, the company entered into a long-term contract with CoreWeave to deliver 16 MW of infrastructure. This was followed by additional agreements for approximately 200 MW of infrastructure, with operational status expected to begin in the first half of fiscal 2025.

These contracts are designed to secure a steady revenue stream, with the hosting contracts being structured to include both fixed and variable payments. The company aims to leverage its existing infrastructure to provide consistent revenue, lessening the risks associated with traditional mining operations.

Regular performance updates and transparent communication

Core Scientific emphasizes transparent communication and regular performance updates with its customers. The company provides updates on operational efficiency and financial performance metrics, including adjusted EBITDA, which was reported at $144.2 million for the nine months ended September 30, 2024, compared to $112.9 million for the same period in 2023.

Additionally, the company's self-mining hash rate increased to 20.4 EH/s for the nine months ended September 30, 2024, up from 15.0 EH/s in the previous year. This metric is crucial for customers as it reflects the operational capacity and efficiency of the company's mining operations.

Customized solutions to meet specific client needs

Core Scientific focuses on providing customized solutions tailored to meet the specific needs of its clients. The company has developed a diverse range of hosting services, including digital asset self-mining and high-performance computing (HPC) hosting. For the nine months ended September 30, 2024, the total revenue from digital asset hosted mining services was $71.1 million, while HPC hosting revenue was $15.9 million, reflecting the company's strategic pivot to meet varying customer demands.

Service Type	Revenue (in millions)	Percentage Change	Gross Profit (in millions)	Gross Margin
Digital Asset Self-Mining	$328.8	18%	$92.7	28%
Digital Asset Hosted Mining	$71.1	-2%	$21.7	30%
HPC Hosting	$15.9	NM	$1.9	12%
Total Revenue	$415.7	15%	$116.3	28%

Core Scientific's ability to adapt its offerings, such as the transition from traditional digital asset mining to HPC hosting, underlines its commitment to tailoring solutions that address evolving client requirements.

Core Scientific, Inc. (CORZ) - Business Model: Channels

Direct sales through corporate partnerships

Core Scientific, Inc. has established significant corporate partnerships to enhance its direct sales channels. Notably, in 2024, the company entered into a series of long-term contracts with CoreWeave, Inc. for high-performance computing (HPC) operations, delivering approximately 200 MW of infrastructure at its Austin, Texas facility. These partnerships are crucial as they not only provide a steady revenue stream but also leverage Core Scientific’s existing digital infrastructure and expertise.

Online platforms for service inquiries and contracts

The company utilizes online platforms for facilitating service inquiries and managing contracts. This includes a dedicated web interface where customers can engage with Core Scientific’s services, particularly in the HPC hosting market, which began operations in the second quarter of 2024. The total HPC hosting revenue for the nine months ended September 30, 2024, was reported at $15.9 million. This online engagement allows for streamlined communication and contract management, which is essential for maintaining customer relationships in a competitive landscape.

Industry conferences and networking events for visibility

Core Scientific actively participates in industry conferences and networking events to enhance its visibility and attract new customers. These events serve as platforms for showcasing the company’s capabilities in digital asset mining and HPC services. The company’s participation helps to solidify its reputation as a leading provider of digital infrastructure solutions. The strategic focus on attending such events is reflected in its marketing expenses, which include costs associated with trade shows and events.

Channel Type	Description	Revenue Contribution (2024)
Direct Sales	Long-term contracts with partners like CoreWeave	$200 million (projected from contracts)
Online Platforms	Web interface for service inquiries and contracts	$15.9 million (HPC hosting revenue)
Industry Conferences	Participation in trade shows and networking events	Included in marketing expenses

Core Scientific, Inc. (CORZ) - Business Model: Customer Segments

Digital asset miners seeking hosting services

Core Scientific provides hosting services primarily to digital asset miners. For the nine months ended September 30, 2024, the digital asset hosted mining revenue from customers reached $71.1 million, a slight decrease of 2% from $72.2 million in the same period of 2023. The demand for hosting services is driven by the growing complexity and costs associated with self-mining operations, prompting miners to seek efficient and economically viable solutions.

As of September 30, 2024, the top three hosting customers accounted for approximately 89% of the total revenue in the Digital Asset Hosting segment, indicating a high concentration of revenue from a few key clients. The company aims to attract more miners by offering scalable solutions that reduce operational overhead.

Companies requiring HPC for cloud computing and AI

Core Scientific has ventured into High-Performance Computing (HPC) hosting, targeting companies that require substantial computational power for cloud-based applications and artificial intelligence. In the three months ended September 30, 2024, HPC hosting revenue amounted to $10.3 million, compared to nil for the same period in 2023. This significant increase reflects the company's strategic shift towards HPC services, responding to the rising demand for advanced computing capabilities.

In 2024, Core Scientific entered into a series of long-term contracts with CoreWeave, Inc., to deliver approximately 200 MW of infrastructure for HPC operations. This move not only diversifies its customer base but also positions Core Scientific as a key player in the burgeoning HPC market, which is expected to grow substantially as more companies turn to AI and big data analytics.

Institutional investors interested in digital asset markets

Institutional investors are increasingly looking to invest in digital asset markets, and Core Scientific positions itself as a bridge between these investors and the underlying technologies. The company's self-mining revenue for the nine months ended September 30, 2024, was $328.8 million, marking an 18% increase from $278.2 million in the prior year. This growth is attributed to a 128% increase in the average price of Bitcoin, which reached $60,031 during this period.

Core Scientific's operations attract institutional investors by providing transparent and scalable solutions in the digital asset space, enhancing investor confidence. The company's strategic focus on enhancing its self-mining capabilities, with a self-mining hash rate of 20.4 EH/s, supports its appeal to institutional investors looking for robust returns in a volatile market.

Customer Segment	Revenue (9M 2024)	Revenue (9M 2023)	Change (%)	Key Clients Concentration (%)
Digital Asset Miners	$71.1 million	$72.2 million	-2%	89%
HPC Companies	$15.9 million	$0	NM	N/A
Institutional Investors	$328.8 million	$278.2 million	+18%	N/A

Core Scientific, Inc. (CORZ) - Business Model: Cost Structure

High electricity costs associated with mining operations

The cost of electricity is a significant factor in Core Scientific's overall cost structure, particularly for its digital asset self-mining operations. For the nine months ended September 30, 2024, the cost of digital asset self-mining was reported at $236.1 million. This reflects an increase of approximately 11% compared to $212.1 million for the same period in 2023. The company has also indicated a decrease in power costs by $14.3 million compared to the previous year, contributing to the overall cost management strategy.

Capital expenditures for data center construction and equipment

Core Scientific has made substantial capital investments in its infrastructure to support its mining operations. For the nine months ended September 30, 2024, net cash used in investing activities was approximately $66.4 million. This includes significant expenditures on property, plant, and equipment necessary for the expansion of their mining capacity and the establishment of HPC hosting services. The company has also engaged in long-term contracts to deliver additional infrastructure, indicating ongoing capital expenditure commitments.

Category	Amount (in millions)	Period
Digital Asset Self-Mining Costs	$236.1	9 months ended September 30, 2024
Capital Expenditures	$66.4	9 months ended September 30, 2024
Power Cost Decrease	$14.3	Comparison to previous year

Operational expenses including salaries and maintenance

Core Scientific's operational expenses have shown significant increases in various areas. For the nine months ended September 30, 2024, total operating expenses amounted to $88.7 million, compared to $78.1 million for the same period in 2023, marking a 13% increase. General and administrative expenses increased by $5.1 million or 7% to $74.7 million, driven primarily by higher payroll and benefits expenses. Additionally, sales and marketing expenses saw a significant rise to $7.1 million from $3.1 million.

Expense Category	Amount (in millions)	Period
Total Operating Expenses	$88.7	9 months ended September 30, 2024
General and Administrative Expenses	$74.7	9 months ended September 30, 2024
Sales and Marketing Expenses	$7.1	9 months ended September 30, 2024

Core Scientific, Inc. (CORZ) - Business Model: Revenue Streams

Digital Asset Self-Mining Revenue from Bitcoin

For the nine months ended September 30, 2024, Core Scientific generated $328.8 million in digital asset self-mining revenue, reflecting an 18% increase from $278.2 million in the same period of 2023. This increase was driven by a significant rise in the average price of Bitcoin, which surged by 128% to $60,031 compared to $26,353 in the prior year. However, the total number of bitcoins self-mined decreased by 48% to 5,621 compared to 10,721 in 2023 due to the April 2024 halving and increased network difficulty.

The self-mining hash rate increased by 36% to 20.4 EH/s from 15.0 EH/s year-over-year, despite the decrease in the number of bitcoins mined.

Metric	2024	2023	Change
Digital Asset Self-Mining Revenue	$328.8 million	$278.2 million	+18%
Average Price of Bitcoin	$60,031	$26,353	+128%
Total Bitcoins Self-Mined	5,621	10,721	-48%
Self-Mining Hash Rate	20.4 EH/s	15.0 EH/s	+36%

Recurring Revenue from Hosted Mining Contracts

Core Scientific's digital asset hosted mining revenue from customers decreased by 2% to $71.1 million for the nine months ended September 30, 2024, down from $72.2 million in the same period of 2023. The decline in revenue was primarily attributed to the termination of contracts with several customers as the company shifted its focus towards high-performance computing (HPC) hosting. The hosted mining revenue from related parties was nil for 2024, compared to $10.1 million in 2023.

The gross profit for the hosted mining segment was approximately $21.7 million with a gross margin of 30% for the nine months ended September 30, 2024, compared to a gross margin of 22% in the previous year.

Metric	2024	2023	Change
Hosted Mining Revenue from Customers	$71.1 million	$72.2 million	-2%
Hosted Mining Revenue from Related Parties	$0	$10.1 million	NM
Hosted Mining Gross Profit	$21.7 million	$18.1 million	+20%
Hosted Mining Gross Margin	30%	22%	+8%

Fee-Based Revenue from HPC Hosting Services

In 2024, Core Scientific launched its HPC hosting segment, generating $15.9 million in revenue for the nine months ended September 30, 2024. This revenue was attributed to new contracts with CoreWeave for HPC operations, which began in the second quarter of 2024. The gross profit for the HPC hosting segment was approximately $1.3 million with a gross margin of 13%.

Metric	2024	2023	Change
HPC Hosting Revenue	$15.9 million	$0	NM
HPC Hosting Gross Profit	$1.3 million	$0	NM
HPC Hosting Gross Margin	13%	N/A	N/A

Updated on 16 Nov 2024

Resources:

1. Core Scientific, Inc. (CORZ) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Core Scientific, Inc. (CORZ)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Core Scientific, Inc. (CORZ)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.