Core Scientific is set to raise $3.3 billion through a high-yield bond sale as it accelerates its shift towards artificial intelligence-focused data center operations. The surge in demand for AI services has strained data centers, power supply, and advanced chip capabilities.
To meet this demand, companies are exploring riskier debt market options to secure funding for their operations. Core Scientific, formerly a bitcoin mining entity, recently sold $175 million in bitcoin to further its AI-centric transition. Borrowers associated with AI infrastructure have raised $17.9 billion in junk bonds this year, according to Bloomberg.
Core Scientific is developing six data centers 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 deals, including recent offerings tied to Google-backed data centers and CoreWeave, which raised a combined $6.7 billion.
Core Scientific plans to utilize the proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds. 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. The company emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ.
The shift from bitcoin mining to AI hosting has been instrumental in the company's efforts to find alternative revenue streams. Core Scientific's shares have seen a significant increase, with a 6% rise on Tuesday and a 42% increase this year, while bitcoin prices have fallen by 11%.