Core Scientific is planning to generate $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 led to increased pressure on data centers, power supply, and advanced chips. To address this, companies are exploring riskier debt market options to secure funding for their operations. Core Scientific, formerly a bitcoin mining entity, recently sold $175 million in bitcoin to further its AI-focused transition.
According to Bloomberg, borrowers associated with AI infrastructure have raised $17.9 billion in high-yield bonds so far this year. Core Scientific is building six data centers to support AI workloads, with a 12-year lease agreement with CoreWeave that could yield around $10 billion in revenue. This move follows a series of large-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which raised a combined $6.7 billion.
Core Scientific intends to utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds. The company currently holds fewer 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.
The company emerged from reorganization in January 2024 and has since been relisted on Nasdaq under the ticker CORZ. With the rising costs of power and competition, miners have become unprofitable, prompting them to explore alternative revenue streams.
The company's existing data centers and power contracts have found a new use case in hosting AI-powered computers, attracting major hyperscalers such as Microsoft and Google. Core Scientific was one of the first miners to make a large-scale pivot, capturing investors' attention and fueling the AI push.
The company's shares have seen a significant increase, rising by about 6% on Tuesday and nearly 42% this year, while bitcoin prices have fallen by 11%.