Core Scientific is set to raise $3.3 billion through a high-yield bond sale, marking a significant step in its transition to AI-focused data center operations. The surge in demand for AI services has pushed the limits of data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to fund their operations. Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to further its AI ambitions. According to Bloomberg, borrowers linked to AI infrastructure have raised $17.9 billion in junk bonds this year.
Core Scientific is building six data centers to support AI workloads, with a 12-year lease agreement with CoreWeave that could generate around $10 billion in revenue. This move follows a string 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, highlighting the capital-intensive nature of AI development. The company still holds less than 1,000 bitcoin, according to CFO Jim Nygaard.
Core Scientific's pivot from bitcoin mining to AI hosting is driven by the pursuit of higher margins, as the bitcoin mining industry faced significant challenges due to rising power costs and a weak bitcoin price. The company's shares have risen by about 6% and are up nearly 42% this year, while bitcoin has fallen 11%.