Core Scientific is set to raise $3.3 billion through a high-yield bond sale, further solidifying its transition to artificial intelligence-centered 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 market segments for funding.
Following the sale of $175 million in bitcoin last month, Core Scientific, formerly a bitcoin mining entity, is now building six data centers to support AI workloads, with a 12-year lease agreement to 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 utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple 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 faced significant challenges due to rising power costs and a decline in bitcoin price.
The company's transition has sparked investor interest, with its shares rising approximately 6% on Tuesday and nearly 42% this year, amidst a decline in bitcoin value.