Two Seas Capital, the largest shareholder of Core Scientific, issued an open letter on Thursday saying it would vote against the company’s proposed sale to CoreWeave, in a potential blow to the $9 billion deal.
The investment management firm owns roughly 6.3 per cent of the crypto miner and said the sale “materially undervalues” Core Scientific and unnecessarily exposes its shareholders to substantial economic risk.
“We do not believe this transaction should receive shareholder approval,” it said.
CoreWeave announced its intention to buy Core Scientific last month in an all-stock deal, as it seeks to tap into more data center capacity in order to meet growing demand for artificial intelligence services.
CoreWeave provides access to data centers and Nvidia-powered AI chips to companies seeking to train large language models.
Two Seas says the transaction “decidedly and unfairly favors CoreWeave at the expense of Core Scientific shareholders.”
At the time of announcement, the deal valued Core Scientific at $20.40 per share.
The firm says it is not “philosophically” opposed to a merger but emphasizes that the board’s job is to ensure that any deal should reflect strategic value of Core Scientific’s assets.
Shares of Core Scientific were marginally up, while CoreWeave’s stock was 6 per cent higher but unchanged on the news.
The crypto mining firm’s stock ended over 17 per cent lower on the day the merger was announced.
Core Scientific did not immediately respond to a Reuters request for comment; CoreWeave declined to comment.
Bitcoin miners’ energy-intensive sites and power contracts, built during the crypto boom, have emerged as prime targets for AI companies expanding their computing infrastructure.
Core Scientific came out of bankruptcy in early 2024 and has since shifted its focus to leveraging its energy capacity to lean on AI.
Core Scientific first received an unsolicited, non-binding takeover offer from CoreWeave in June 2024. At the time, the company rejected the offer, saying it was significantly undervalued.
