Core Scientific is poised to raise $3.3 billion via a high-yield bond sale, further solidifying its strategic shift towards AI-driven 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 to secure funding for operational development. Following its sale of $175 million in bitcoin last month, Core Scientific, formerly a prominent bitcoin miner, is now building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement estimated to generate around $10 billion in revenue.
This move is part of a larger trend, with borrowers linked to AI infrastructure having raised $17.9 billion in junk bonds so far this year. Core Scientific's decision follows a series of significant deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. The company 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. As of now, Core Scientific holds less than 1,000 bitcoin, according to CFO Jim Nygaard.
The company's pivot from bitcoin mining to AI hosting is primarily driven by the pursuit of more profitable margins. After emerging from reorganization in January 2024 and being relisted on Nasdaq under the ticker CORZ, Core Scientific has been focusing on leveraging its existing assets, including already-built data centers and power contracts, to host computers powering AI. This strategic shift has attracted the attention of hyperscalers such as Microsoft, Google parent Alphabet, and others, amidst the ongoing AI race.
Core Scientific's shares have seen a significant increase, with a 6% rise on Tuesday and a nearly 42% increase this year, while bitcoin has fallen by 11%.