Core Scientific is set to raise $3.3 billion through a high-yield bond sale as part of its strategic shift towards artificial intelligence-centric data center operations. The surge in demand for AI services has put a strain on data centers, power supply, and advanced chip technology, prompting companies to explore riskier debt markets to secure funding for operational development.
Core Scientific, a former bitcoin mining entity, 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 high-yield bonds so far this year. Core Scientific is building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement that could generate around $10 billion in revenue.
The company's 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. 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. Core Scientific's pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins.
The company emerged from reorganization in January 2024 and has since been relisted on Nasdaq under the ticker CORZ. With the rising costs of power and intense competition in the mining sector, the shift towards AI hosting has become a vital strategy for miners to maintain revenue streams. The company's shares have seen a significant increase, with a 6% rise on Tuesday and a nearly 42% increase this year, while bitcoin prices have fallen by 11%.