Core Scientific and Block’s $300 Million Deal for Bitcoin Mining Chips

The transaction for Core Scientific’s acquisition of 3-nanometer chips for bitcoin mining from Jack Dorsey’s Block is estimated to be around $300 million, according to analysts from Bernstein, as reported by The Block.

On July 10, the companies announced a partnership to develop a cryptocurrency mining device based on a chip created by the Proto team of the payment firm. The parties disclosed the volume of ASICs acquired by the bitcoin miner only in terms of hashrate—approximately 15 EH/s. Core will be the first buyer of the chips.

Gautam Chhugani and Mahika Sapra from Bernstein calculated the probable monetary equivalent of the deal based on the cost of comparable competitive offerings in the market.

“However, the details will depend on specific commercial cooperation, as Core is positioned as a development partner, and on the expected efficiency gains compared to the latest devices from Bitmain,” they clarified.

In May 2023, Block completed the creation of a prototype 5-nanometer mining chip and less than a year later introduced a chip based on the 3-nanometer process.

Analysts noted that with this deal, the firm enters a market historically dominated by three Chinese companies: Bitmain (with a share of over 80%), MicroBT, and Canaan.

In their view, any new competition in the field of bitcoin mining chips is beneficial for cryptocurrency miners. It helps keep the cost of new equipment low.

“Given the growth of American miners scaling operations, diversifying the supply chain beyond China would be preferable for them,” Chhugani and Sapra believe.

The chip from Block could “gain recognition” among other industry participants besides Core, they added.

Back in March 2024, Bitdeer, founded by former Bitmain co-founder Jihan Wu, tested a bitcoin mining chip SEAL01 using 4-nanometer technology.