Core Scientific is set to raise $3.3 billion through a high-yield bond sale, marking a significant step in its strategic shift towards AI-focused data center operations. The surge in demand for AI services has pushed the limits of data centers, power supply, and advanced chip technology, prompting companies to explore riskier debt markets to secure funding for their operations.
Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to accelerate its AI transition. According to Bloomberg, borrowers associated with AI infrastructure have raised $17.9 billion in high-yield bonds so far this year. Core Scientific is building 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 use the proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds. The company still holds fewer than 1,000 bitcoins, 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. With the rising power costs and intense competition in the mining sector, miners have been forced to explore alternative revenue streams. The shift towards AI hosting has enabled miners to repurpose their existing data centers and power contracts, attracting the attention of major hyperscalers, including Microsoft and Google parent Alphabet. Core Scientific's shares have seen a significant increase, rising by about 6% on Tuesday and nearly 42% this year, while bitcoin prices have fallen by 11%.