• Bitcoin miner Core Scientific announced plans to significantly expand its AI business through a partnership with cloud provider CoreWeave.
• The deal is expected to add revenue of $6.7 billion over 12 years.
• Many bitcoin mining firms have been retrofitting existing facilities to serve AI clients as revenue from crypto mining plummets.

In January, U.S. bitcoin miner Core Scientific was bankrupt and battling angry lenders. Since its return to the stock market that month, the share price is up 140% as the company aggressively goes after building a business in artificial intelligence.

On Tuesday, the mining firm announced an expanded deal worth $6.7 billion with CoreWeave, an Nvidia-backed startup that's one of the main providers of the chipmaker's technology for running AI models. Core Scientific will deliver an additional 112 megawatts of computing infrastructure to support CoreWeave's operations.

Core Scientific said the deal will generate an additional $2 billion in revenue over 12 years, on top of an existing arrangement that's expected to bring in $4.7 billion. In total, the company plans to provide about 382 megawatts of infrastructure to CoreWeave by the first half of 2026, with the possibility of adding 118 megawatts at other Core Scientific sites.

Sites are expected to see modifications begin in the second half of 2024 and to be fully operational by the first half of 2026.

"We've seen tremendous growth since our emergence in January and have been laser focused on developing best-in-class digital infrastructure," Core Scientific CEO Adam Sullivan told CNBC. "This infrastructure advantage has allowed us to diversify revenue and reallocate certain facilities to address the growing need" for the type of technology required for AI.

For months, publicly traded bitcoin miners have been shifting into the AI infrastructure business because it became a lot less profitable to mine bitcoin after the halving in April. The companies had already spent the time and money decking out data centers across the country that could be retrofitted to serve an entirely new category of customers.

But converting to AI isn't as simple as repurposing existing infrastructure and machines, because requirements are different, as are the needs of the data network.

Needham analysts wrote in a report in May that almost all infrastructure that miners currently have would "need to be bulldozed and built from the ground up to accommodate HPC," or high-performance computing.

Core Scientific's Sullivan was among the mining leaders who attended a closed-door roundtable in June with former President Donald Trump, who recently jumped into the conversation of the convergence of bitcoin mining and AI.

The combined market capitalization of the 14 major U.S.-listed bitcoin miners tracked by JPMorgan hit a record high of $22.8 billion on June 15, according to a JPMorgan note.

Bit Digital, a bitcoin miner that now derives an estimated 27% of its revenue from AI, said in June that it had entered into an agreement with a customer to supply Nvidia GPUs over three years at a data center in Iceland, in a deal that's expected to generate $92 million in annual revenue. It's paying for the GPUs, in part, by liquidating some of its crypto holdings.

Hut 8, based in Miami, said in June that it raised $150 million in debt from private equity firm Coatue to help build out its data center portfolio for AI.

Core Scientific fell 7.5% on Monday as stocks plummeted across the globe, hitting both crypto prices and AI companies. Cantor Fitzgerald analysts said in a note that they view the sell-off as a buying opportunity for publicly traded mining stocks.

In June, CoreWeave offered to buy Core Scientific for $1.02 billion, not long after their initial agreement. Core Scientific rejected the bid. Core Scientific is currently worth about $1.5 billion.

WATCH: New multibillion-dollar deal adds to rising trend of bitcoin miners moving to AI