Core Scientific is planning to generate $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-centric data center operations. The surge in demand for AI services has put a strain on data centers, power supply, and advanced chip capabilities, prompting companies to explore riskier debt market avenues to secure funding for operational development. Core Scientific, formerly a bitcoin mining entity, recently sold $175 million in bitcoin to further facilitate 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 currently developing six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that is anticipated to 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 collectively raised $6.7 billion.
Another company, Edged Compute, is currently marketing $1.3 billion in bonds to finance facilities leased to CoreWeave and an Alibaba subsidiary. Core Scientific intends to utilize the proceeds to repay existing debt and establish reserves, while also supporting construction projects across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI infrastructure development. The company currently holds fewer than 1,000 bitcoins, according to CFO Jim Nygaard. Core Scientific's pivot from bitcoin mining to AI hosting is primarily driven by margin considerations.
The company was founded in 2017 and grew to become one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022 due to high power costs and a decline in bitcoin prices. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ. The shift from bitcoin mining to AI hosting is centered around profitability, as the April 2024 halving reduced block rewards, and the average cash cost to mine one bitcoin increased while the price of BTC itself declined.
With rising power costs and intense competition, most miners became unprofitable and were forced to explore alternative revenue streams. The emergence of AI presented a new opportunity for miners to leverage their existing assets, including data centers and power contracts, to host AI-powered computers. Core Scientific was among the first miners to pivot on a large scale, attracting investor attention and fueling the AI-driven push.
The company's shares experienced a 6% increase on Tuesday and are up nearly 42% this year, while bitcoin prices have fallen by 11%.