Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-focused data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chips to their limits, prompting companies to explore riskier debt markets to fund their operations. Having sold $175 million in bitcoin last month, Core Scientific, formerly a bitcoin miner, is now building 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 is part of a larger trend, with AI infrastructure-related borrowers raising $17.9 billion in junk bonds so far this year. Core Scientific plans to use 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 AI buildout.
The company currently holds less than 1,000 bitcoin. Following its founding in 2017 and growth into one of North America's largest bitcoin miners, Core Scientific filed for Chapter 11 in December 2022 due to high power costs and a weak bitcoin price.
After emerging from reorganization in January 2024 and being relisted on Nasdaq, the company has pivoted from bitcoin mining to AI hosting in pursuit of better margins. The April 2024 halving and rising power costs made mining unprofitable, prompting miners to explore alternative revenue streams, with AI hosting emerging as a viable option.
Core Scientific's existing data centers and power contracts have gained a new use case in hosting AI-powered computers, attracting hyperscalers like Microsoft and Google parent Alphabet. As one of the first miners to pivot on a large scale, Core Scientific has caught investors' attention, sparking an AI push that has seen its shares rise by nearly 42% this year.