Core Scientific is poised to raise $3.3 billion via a high-yield bond sale, as the company continues its strategic shift towards AI-centric data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chip technology to their limits, prompting firms to explore riskier debt markets to secure funding for ongoing development. Core Scientific, formerly a prominent bitcoin miner, recently sold $175 million in bitcoin to further its AI-focused pivot.
Borrowers associated with AI infrastructure have raised a substantial $17.9 billion in high-yield bonds so far this year, according to Bloomberg. Core Scientific is currently building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that could generate around $10 billion in revenue. This move follows a series of large-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Another firm, Edged Compute, is currently marketing $1.3 billion in bonds to fund facilities leased to CoreWeave and an Alibaba unit.
Core Scientific intends to utilize the proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds, highlighting the capital-intensive nature of the AI buildout. The company still holds fewer than 1,000 bitcoin, according to CFO Jim Nygaard. Core Scientific's pivot from bitcoin mining to AI hosting is centered around maximizing margins.
The company was founded in 2017 and grew into one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022, due to high power costs and a weak bitcoin price. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ. The shift from bitcoin mining to AI hosting is driven by the pursuit of higher margins, as the April 2024 halving reduced block rewards, and rising power costs and competition rendered most miners unprofitable.
The rescue came in the form of AI, which enabled miners to repurpose their existing data centers and power contracts to host AI-powered computers. Their power contracts, grid connections, and cooling-ready sites have attracted the attention of hyperscalers, including Microsoft and Google parent Alphabet, in the ongoing AI race. Core Scientific was one of the first miners to pivot on a large scale, capturing investors' attention and sparking the AI push.
The company's shares have seen a significant increase, with a 6% rise on Tuesday and a nearly 42% increase this year, while bitcoin has fallen 11%.