Core Scientific is set to raise $3.3 billion through a high-yield bond sale, furthering its strategic shift towards AI-focused data center operations. The surge in demand for AI services has pushed data centers and power supply to their limits, prompting firms to explore riskier debt markets for funding. Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to accelerate its AI transition. According to Bloomberg, borrowers linked to AI infrastructure have raised $17.9 billion in junk bonds this year.
Core Scientific is building six AI data centers, with a 12-year lease agreement with CoreWeave expected to generate around $10 billion in revenue. This move follows a series of large deals, including Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Core Scientific plans to use the bond proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds, highlighting the capital-intensive nature of AI development.
The company currently holds less than 1,000 bitcoin, according to CFO Jim Nygaard. Core Scientific's pivot from bitcoin mining to AI hosting is driven by the pursuit of higher margins, as the bitcoin mining industry faces rising power costs and declining profitability.
The company's shares have risen by about 6% and nearly 42% this year, while bitcoin prices have fallen by 11%.