Core Scientific is set to issue $3.3 billion in high-yield bonds as part of its strategic shift towards AI-driven data center operations. The surge in demand for AI services has put a strain on data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to secure funding for their operations.
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 large-scale deals, including recent offerings from Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. Core Scientific plans to utilize the bond 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 AI infrastructure development. The company currently holds less than 1,000 bitcoin, according to its CFO.
Founded in 2017, Core Scientific initially 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 decline in bitcoin price. After emerging from reorganization in January 2024 and being relisted on Nasdaq, the company has shifted its focus from bitcoin mining to AI hosting, driven by the pursuit of higher margins. The pivot has been facilitated by the utilization of existing data centers and power contracts, which have attracted major hyperscalers, including Microsoft and Google parent Alphabet, in the ongoing AI race. As a result, Core Scientific's shares have seen a significant increase, rising by approximately 6% on Tuesday and nearly 42% this year, while bitcoin has fallen by 11%.