Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-driven data center operations. The surge in demand for AI services has led to a significant increase in the need for advanced data centers, power supply, and cutting-edge chips. To meet this demand, companies are exploring alternative debt markets to secure funding for their operations.
Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to accelerate its transition to AI-focused data centers. 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 the capacity leased to CoreWeave under a 12-year agreement that is expected to generate around $10 billion in revenue. This move follows a series of large deals, including recent offerings tied to Google-backed data centers and CoreWeave, which raised a combined $6.7 billion.
Core Scientific plans to use the proceeds from the bond sale to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds. The company currently holds less than 1,000 bitcoin, according to its CFO, Jim Nygaard. Core Scientific's pivot from bitcoin mining to AI hosting is driven by the pursuit of higher profit 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 in the bitcoin mining industry, many miners have become unprofitable and are seeking alternative revenue streams. The shift to AI hosting has provided a new use case for miners' existing data centers and power contracts, attracting major hyperscalers such as Microsoft and Google. Core Scientific's shares have seen a significant increase, rising by about 6% on Tuesday and nearly 42% this year, while the price of bitcoin has fallen by 11%.