Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-focused 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 options to fund their operations.
Core Scientific, formerly a bitcoin miner, recently sold $175 million in bitcoin to further its AI transition. Borrowers associated with AI infrastructure have raised $17.9 billion in junk bonds this year, according to Bloomberg. Core Scientific is building six data centers to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that could generate around $10 billion in revenue.
This move follows a series 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. The company currently holds less than 1,000 bitcoin.
Founded in 2017, Core Scientific grew into one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022 due to high power costs and a weak bitcoin price. After emerging from reorganization in January 2024, the company was relisted on Nasdaq under the ticker CORZ.
The shift from bitcoin mining to AI hosting is driven by profit margins. The April 2024 halving reduced block rewards, and the average cash cost to mine one bitcoin increased, while the price of BTC declined.
As a result, most miners became unprofitable and sought alternative revenue streams. The pivot to AI hosting has enabled miners to leverage their existing data centers and power contracts to host AI-powered computers. Core Scientific's shares have risen by about 6% and are up nearly 42% this year, while bitcoin has fallen by 11%.