Core Scientific Plans $3.3 Billion Bond Issue to Accelerate AI Data Center Expansion

Core Scientific is set to raise $3.3 billion through a high-yield bond sale, further solidifying its transition into AI-driven data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chip technology to their limits, prompting firms to explore riskier debt market avenues for funding. Following its sale of $175 million in bitcoin last month, Core Scientific, formerly a bitcoin mining entity, is now building six data centers tailored to support AI workloads, with CoreWeave securing a 12-year lease that could yield around $10 billion in revenue.

This move is part of a larger trend, with AI infrastructure-related borrowers raising $17.9 billion in junk bonds this year, as reported by Bloomberg. Core Scientific’s strategy follows significant deals, including Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. The company intends to utilize the bond sale proceeds to repay existing debt, bolster reserves, and support construction endeavors across multiple states if costs exceed available funds, underscoring the capital-intensive nature of AI development. With its bitcoin holdings now under 1,000, according to CFO Jim Nygaard, Core Scientific’s pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins.

Founded in 2017, the company emerged from reorganization in January 2024 and has since been relisted on Nasdaq under the ticker CORZ, symbolizing its transition. The shift towards AI is a response to the diminishing profitability of bitcoin mining, exacerbated by the April 2024 halving and rising power costs. As miners’ data centers and power contracts gained new utility in hosting AI computers, Core Scientific was among the first to pivot on a large scale, capturing investors’ attention and fueling the AI push.

With its shares up about 6% and nearly 42% this year, while bitcoin prices fell 11%, Core Scientific’s strategic maneuver reflects the evolving landscape of data center operations and the race towards AI supremacy.