Core Scientific is poised to raise $3.3 billion through a high-yield bond sale, further solidifying its shift towards AI-focused data center operations. The surge in demand for AI services has pushed the limits of data centers, power supply, and advanced chips, prompting firms to explore riskier debt markets for funding.
Following the sale of $175 million in bitcoin, Core Scientific is allocating resources to support its AI pivot. Borrowers associated with AI infrastructure have secured $17.9 billion in junk bonds this year, according to Bloomberg. Core Scientific's six data centers, leased to CoreWeave under a 12-year agreement, are expected to generate around $10 billion in revenue.
This move follows a series of large deals, including Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Core Scientific intends to utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds.
The company currently holds fewer than 1,000 bitcoins, as stated by CFO Jim Nygaard. The strategic shift from bitcoin mining to AI hosting is primarily driven by profit margins.
The April 2024 halving and rising power costs led to a decline in mining profitability, prompting miners to seek alternative revenue streams. The existing infrastructure, including data centers and power contracts, has found new utility in hosting AI-powered computers.
This development has attracted the attention of major hyperscalers, such as Microsoft and Alphabet, fueling the AI-driven expansion. Core Scientific's shares have seen a significant increase, with a 6% rise on Tuesday and a 42% gain this year, while bitcoin prices have fallen by 11%.