Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards AI-driven data center operations. The surge in demand for AI services has led to increased strain on data centers, power supply, and advanced chip technology, prompting companies to explore alternative debt markets to fund their operations.
Core Scientific, formerly a prominent bitcoin miner, recently sold $175 million in bitcoin to further accelerate its AI-focused pivot. According to Bloomberg, borrowers associated with AI infrastructure have secured $17.9 billion in high-yield bonds so far this year.
Core Scientific is currently building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that is expected to generate around $10 billion in revenue. This move follows a series of large-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion.
Another company, Edged Compute, is currently marketing $1.3 billion in bonds to fund facilities leased to CoreWeave and an Alibaba subsidiary. Core Scientific intends to utilize the proceeds to repay existing debt, fund reserves, and support construction projects across multiple states if costs exceed available funds, highlighting the capital-intensive nature of the AI expansion. The company still holds less than 1,000 bitcoin, according to CFO Jim Nygaard.
Core Scientific's transition from bitcoin mining to AI hosting is driven by the pursuit of higher profit margins. The company, founded in 2017, was once one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022 due to high power costs and a decline in bitcoin prices.
After emerging from reorganization in January 2024 and being relisted on Nasdaq under the ticker CORZ, the company has been focused on its AI-driven pivot. The shift towards AI hosting has enabled miners to repurpose their existing data centers and power contracts, attracting major hyperscalers such as Microsoft, Google parent Alphabet, and others in the ongoing AI race. Core Scientific's shares have seen a significant increase, rising by about 6% on Tuesday and nearly 42% this year, while bitcoin prices have fallen by 11%.