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 put a strain on data centers, power supply, and advanced chip capabilities, prompting companies to explore riskier debt markets to secure funding for their operations. Core Scientific, previously a major bitcoin miner, recently sold $175 million in bitcoin to further accelerate its AI transition.
According to Bloomberg, borrowers associated with AI infrastructure have raised a total of $17.9 billion in junk 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 unit. Core Scientific intends to utilize the proceeds to repay existing debt and fund reserves, as well as support construction across multiple states if costs exceed available funds, highlighting the capital-intensive nature of the AI buildout.
The company still holds fewer than 1,000 bitcoins, 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's transition began after filing for Chapter 11 in December 2022, due to high power costs and a decline in bitcoin prices, and has since emerged from reorganization in January 2024. The shift towards AI hosting has enabled miners to repurpose their existing data centers and power contracts, attracting major hyperscalers such as Microsoft and Google parent Alphabet.
Core Scientific's shares have seen a significant increase, rising by approximately 6% on Tuesday and nearly 42% this year, while bitcoin prices have fallen by 11%.