Core Scientific Aims to Raise $3.3 Billion Through Bond Sale to Fuel AI Data Center Expansion

Core Scientific is poised to secure $3.3 billion in funding through a high-yield bond sale, marking a significant step in its strategic shift towards artificial intelligence-focused data center operations. The surge in demand for AI services has led to increased pressure on data centers, power supplies, and advanced chip technology, prompting companies to explore riskier debt markets to support their growth.

Having recently sold $175 million in bitcoin, Core Scientific is now focusing on its AI pivot. According to Bloomberg, borrowers associated with AI infrastructure have raised a substantial $17.9 billion in junk bonds this year.

Core Scientific's six data centers, designed to support AI workloads, are leased to CoreWeave under a 12-year agreement that is expected to generate 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, replenish reserves, and support construction costs across multiple states. The company currently holds fewer than 1,000 bitcoins. Founded in 2017, Core Scientific initially grew as a prominent bitcoin miner in North America before filing for Chapter 11 in December 2022 due to high power costs and a declining bitcoin price.

After emerging from reorganization in January 2024 and relisting on Nasdaq, the company has been executing a strategic pivot from bitcoin mining to AI hosting, driven by the pursuit of higher margins. The recent halving of block rewards and rising power costs have rendered most mining operations unprofitable, prompting miners to seek alternative revenue streams.

The integration of AI hosting has provided a new use case for existing data centers and power contracts, attracting major hyperscalers such as Microsoft and Google. Core Scientific's shares have experienced a significant increase, with a 6% rise on Tuesday and a 42% growth this year, while the price of bitcoin has fallen by 11%.