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 put a strain on data centers, power supply, and advanced chip technology, prompting companies to explore riskier debt markets to secure funding for their operations.
Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to accelerate its AI-focused pivot. According to Bloomberg, borrowers linked to AI infrastructure have raised $17.9 billion in high-yield bonds so far this year.
Core Scientific is developing six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement estimated to generate 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. Core Scientific plans to utilize the bond sale proceeds to repay existing debt, fund reserves, and support construction projects across multiple states if costs exceed available funds, underscoring the capital-intensive nature of the AI expansion. The company currently holds less 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, as the bitcoin mining industry faces challenges such as rising power costs and decreased profitability. The company's shares have seen a significant increase, with a 6% rise on Tuesday and a 42% increase this year, while bitcoin prices have fallen by 11%.