Core Scientific is poised to raise $3.3 billion via a high-yield bond sale, further solidifying its strategic shift towards artificial intelligence-driven data center operations. The surge in demand for AI services has led to increased pressure on data centers, power supply, and advanced chips, prompting companies to explore riskier debt market segments to secure necessary funds. Following the 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 CoreWeave leasing the capacity under a 12-year agreement expected to generate around $10 billion in revenue.
This development is part of a larger trend, with borrowers linked to AI infrastructure raising $17.9 billion in junk bonds so far this year. Core Scientific's move is preceded by 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 bond sale proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds, underscoring the capital-intensive nature of AI infrastructure development. Core Scientific currently holds fewer than 1,000 bitcoins, according to CFO Jim Nygaard.
The company's pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins, as the bitcoin mining industry faces challenges such as reduced block rewards and rising power costs. With its existing data centers and power contracts gaining new utility in hosting AI-powered computers, Core Scientific has attracted the attention of hyperscalers like Microsoft and Alphabet, sparking a significant AI-focused push. The company's shares have seen a notable increase, with a 6% rise on Tuesday and a nearly 42% increase year-to-date, amidst a decline in bitcoin prices.