Core Scientific is set to raise $3.3 billion through a high-yield bond sale, as part of 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 seek funding from riskier debt markets to support their operations. Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to further its AI-focused pivot.
Borrowers associated with AI infrastructure have raised $17.9 billion in junk bonds so far this year, according to Bloomberg. Core Scientific is building six data centers to support AI workloads, with a 12-year lease agreement with CoreWeave that could 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 to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds, highlighting the capital-intensive nature of the AI buildout.
The company still 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 desire for higher profit margins.
The company was founded in 2017 and grew into one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ.
The shift from bitcoin mining to AI hosting has provided miners with a new use case for their existing data centers and power contracts, attracting hyperscalers such as Microsoft and Google. Core Scientific was one of the first miners to pivot on a large scale, sparking investors' interest and driving the AI push. The company'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%.