Core Scientific is set to raise $3.3 billion via 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 led to increased strain on data centers, power supply, and advanced chips, prompting companies to explore riskier debt market segments for funding.
Core Scientific, formerly a bitcoin mining entity, recently sold $175 million in bitcoin to further facilitate its AI-centric transition. According to Bloomberg, borrowers linked to AI infrastructure have raised $17.9 billion in junk bonds this year. Core Scientific is developing six data centers designed to support AI workloads, with CoreWeave leasing the capacity under a 12-year agreement that could yield around $10 billion in revenue.
This move follows a series of large-scale deals, including Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Core Scientific plans to utilize the bond sale proceeds to repay existing debt and establish reserves, while also supporting construction projects across multiple states if costs exceed available funds. The company currently holds less than 1,000 bitcoin, as stated by CFO Jim Nygaard. The pivot from bitcoin mining to AI hosting is driven by profit margins.
Following its emergence from reorganization in January 2024, Core Scientific has been focusing on transitioning its existing data centers and power contracts to host AI computing operations, attracting major hyperscalers like Microsoft and Alphabet. This strategic shift has garnered investor attention and fueled the company's AI-driven growth, with its shares rising by approximately 6% on Tuesday and nearly 42% this year.