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 data centers and related infrastructure to their limits, prompting companies to explore alternative debt markets for funding.
Having recently sold $175 million in bitcoin, Core Scientific is now building six AI-optimized data centers, with a 12-year lease agreement with CoreWeave that could generate around $10 billion in revenue. This move follows a series of large-scale deals, including recent bond offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. The proceeds from the bond sale will be used to repay existing debt, fund reserves, and support construction costs across multiple states.
With the company currently holding less than 1,000 bitcoin, according to CFO Jim Nygaard, the pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins. The April 2024 halving and subsequent decline in bitcoin price led to a significant increase in mining costs, making it essential for miners to explore alternative revenue streams.
The repurposing of existing data centers and power contracts for AI hosting has attracted the attention of major hyperscalers, including Microsoft and Google parent Alphabet, and has sparked a significant AI-driven expansion. Core Scientific's shares have seen a notable increase, rising by about 6% on Tuesday and nearly 42% this year, amidst a decline in bitcoin prices.