Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards artificial intelligence-driven data center operations. The surge in demand for AI services has led to increased strain on data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to secure funding for their operations. Core Scientific, formerly a prominent bitcoin miner, recently sold $175 million in bitcoin to further 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 building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that could generate around $10 billion in revenue. The company's 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 utilize 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 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. 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, due to high power costs and a weak bitcoin price. 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 been driven by the need for more profitable revenue streams, as the average cash cost to mine one bitcoin rose while the price of BTC itself declined. The company's existing data centers and power contracts have found a new use case in hosting computers that power AI, attracting the attention of hyperscalers such as Microsoft, Google parent Alphabet, and others. Core Scientific's shares have seen a significant increase, with a 6% rise on Tuesday and a 42% increase this year, while bitcoin has fallen 11%.