Core Scientific is planning to generate $3.3 billion through a high-yield bond sale as it accelerates its shift towards AI-centric data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chip technology to their limits, prompting companies to explore riskier debt market segments for funding to support their operational development.
Core Scientific, formerly a bitcoin mining entity, sold $175 million in bitcoin last month 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 yield 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 intends 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 primarily driven by profit 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 transition from bitcoin mining to AI hosting is centered around maximizing margins, as the April 2024 halving and rising power costs rendered most miners unprofitable, prompting them to seek alternative revenue streams. The value of existing data centers and power contracts has been rediscovered in hosting AI-powered computers, attracting major players like Microsoft, Google parent Alphabet, and others in the ongoing AI race.
Core Scientific was one of the first miners to pivot on a large scale, capturing investors' attention and fueling the AI push. The company's shares have risen by approximately 6% and are up nearly 42% this year, while bitcoin has fallen by 11%.