Core Scientific is set to raise $3.3 billion through a high-yield bond sale, furthering its strategic shift towards AI-driven data center operations. The surge in demand for AI services has pushed the limits of data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to fund their operations.
Core Scientific, formerly a bitcoin mining entity, recently sold $175 million in bitcoin to accelerate its AI transition. According to Bloomberg, borrowers associated with AI infrastructure have secured $17.9 billion in high-yield bonds this year. Core Scientific is constructing six data centers to support AI workloads, with a 12-year lease agreement with CoreWeave that could generate around $10 billion in revenue. This move follows a series of large transactions, including Google-backed data center deals and CoreWeave offerings, which collectively raised $6.7 billion.
Core Scientific intends to utilize the bond proceeds to repay existing debt, fund reserves, and support construction projects across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI development. The company currently holds fewer than 1,000 bitcoins, according to CFO Jim Nygaard.
Core Scientific's pivot from bitcoin mining to AI hosting is driven by the pursuit of higher margins. Following its emergence from reorganization in January 2024, the company has been focused on leveraging its existing assets, including data centers and power contracts, to host AI-powered computers.
This strategic shift has attracted the attention of hyperscalers such as Microsoft and Google, and has sparked a significant AI-focused push. Core Scientific's shares have seen a notable increase, rising by approximately 6% on Tuesday and nearly 42% this year, while bitcoin prices have declined by 11%.