Core Scientific is poised to raise $3.3 billion through a high-yield bond sale, marking a significant step in its strategic shift towards AI-focused data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chip technology to their limits, prompting firms to explore riskier debt market segments to secure funding for operational development.
Having previously sold $175 million in bitcoin, Core Scientific is now building six data centers designed 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 substantial deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Core Scientific plans to utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI infrastructure development. The company currently holds less than 1,000 bitcoin, according to CFO Jim Nygaard.
The strategic pivot from bitcoin mining to AI hosting is driven by the pursuit of more favorable margins, as the bitcoin mining industry faces challenges such as high power costs and a weak bitcoin price. With the average cash cost to mine one bitcoin rising and the price of BTC experiencing a downturn, miners have become unprofitable, prompting them to explore alternative revenue streams. The pivot has enabled miners to repurpose their existing data centers and power contracts to host AI-powered computers, attracting the attention of hyperscalers such as Microsoft and Google parent Alphabet.
Core Scientific's shares have seen a significant increase, with a 6% rise on Tuesday and a nearly 42% increase this year, while bitcoin has fallen by 11%.