Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-centric data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chips to their limits, prompting firms to explore riskier debt market options to fund 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 the capacity leased to CoreWeave under a 12-year agreement 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 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 is centered around the margins, as miners' most valuable assets, including already-built data centers and power contracts, have gained a new use case: hosting computers that power AI.
Their power contracts, grid connections, and cooling-ready sites are attracting major players, including Microsoft and Google parent Alphabet, in the ongoing AI race. Core Scientific was one of the first miners to pivot on a large scale, catching investors' attention and sparking the AI push. The company's shares were up about 6% on Tuesday and have risen nearly 42% this year, while bitcoin fell 11%.