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-focused data center operations. The surge in demand for AI services has put a strain on data centers, power supply, and advanced chip technology, prompting companies to explore alternative debt markets to secure funding for their operations. Following the sale of $175 million in bitcoin last month, Core Scientific, formerly a prominent bitcoin miner, is now building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that is expected to generate around $10 billion in revenue.
This move is part of a larger trend, with borrowers linked to AI infrastructure having raised $17.9 billion in high-yield bonds so far this year. Recent large-scale deals, including those tied to Google-backed data centers and CoreWeave, have collectively raised $6.7 billion, while another firm, Edged Compute, is currently marketing $1.3 billion in bonds to fund facilities leased to CoreWeave and an Alibaba unit.
Core Scientific intends to utilize the proceeds from the bond sale to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds, highlighting the capital-intensive nature of the AI buildout. The company currently holds less than 1,000 bitcoin, according to CFO Jim Nygaard. This significant pivot towards AI hosting is driven by the pursuit of higher margins, as the bitcoin mining industry has faced significant challenges due to rising power costs and a decline in bitcoin price. The company's shares have seen a notable increase, up about 6% on Tuesday and nearly 42% this year, while bitcoin has fallen 11%.