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 pushed the limits of data centers, power supply, and advanced chips, prompting companies to explore riskier debt market options to fund their operations. Following its sale of $175 million in bitcoin last month, Core Scientific, formerly a bitcoin miner, is now 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 is part of a larger trend, with AI infrastructure-related borrowers raising $17.9 billion in junk bonds so far this year.
Core Scientific's plans include repaying existing debt, funding reserves, and supporting construction across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI development. The company currently holds less than 1,000 bitcoin, according to its CFO.
This strategic pivot from bitcoin mining to AI hosting is driven by the pursuit of higher margins, as the bitcoin mining industry faced significant challenges due to rising power costs and a decline in bitcoin price. The company's shares have seen a notable increase, with a 6% rise on Tuesday and a nearly 42% increase this year, while bitcoin has fallen by 11%.