Core Scientific is set to raise $3.3 billion via a high-yield bond sale to support its strategic shift towards AI-driven data center operations. The surge in demand for AI services has led to increased pressure on data centers, power supply, and advanced chips, prompting companies 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 transition. According to Bloomberg, borrowers associated with AI infrastructure have raised $17.9 billion in junk bonds so far this year.

Core Scientific is building six data centers to support AI workloads, with CoreWeave leasing the capacity 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 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 AI development.

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. After emerging from reorganization in January 2024 and being relisted on Nasdaq under the ticker CORZ, the company has focused on transitioning to AI hosting.

The April 2024 halving and rising power costs made bitcoin mining unprofitable, prompting miners to seek alternative revenue streams. The pivot to AI hosting has enabled companies like Core Scientific to leverage their existing data centers and power contracts, attracting hyperscalers such as Microsoft and Google.

Core Scientific's shares have risen by about 6% and are up nearly 42% this year, while bitcoin has fallen 11%.