Core Scientific is set to raise $3.3 billion through a high-yield bond sale, marking a significant step in its strategic shift towards 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 companies to explore riskier debt markets to secure funding for operational development.
Following its sale of $175 million in bitcoin last month, Core Scientific, formerly a major bitcoin miner, is now building six data centers designed to support AI workloads, with a 12-year lease agreement with CoreWeave that is expected to generate 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 so far this year. Core Scientific's decision follows a series of large-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion.
The company plans to utilize the bond sale proceeds to repay existing debt, fund reserves, and support construction projects across multiple states, highlighting the capital-intensive nature of AI infrastructure development. With its pivot from bitcoin mining to AI hosting, Core Scientific is focusing on enhancing margins, having emerged from reorganization in January 2024 and relisted on Nasdaq under the ticker CORZ. The company's strategic shift is driven by the changing landscape of the bitcoin market, with rising power costs, increased competition, and decreased profitability prompting miners to explore alternative revenue streams.
The value of existing data centers and power contracts has been rediscovered in hosting AI-powered computers, attracting major hyperscalers such as Microsoft and Google parent Alphabet. As one of the first large-scale miners to pivot towards AI, Core Scientific has garnered significant investor attention, with its shares rising by approximately 6% on Tuesday and nearly 42% this year, amidst a decline in bitcoin prices.