Core Scientific is poised to raise $3.3 billion via a high-yield bond sale as part of its strategic shift towards AI-driven data center operations. The surge in demand for AI services has pushed data centers, power supply, and advanced chips to their limits, prompting firms to explore riskier debt market avenues to secure funding for operational development. Having sold $175 million in bitcoin last month, Core Scientific, formerly a bitcoin miner, is now building six data centers designed to support AI workloads, with CoreWeave leasing the capacity under a 12-year agreement that could yield 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. Core Scientific intends to utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds, underscoring the capital-intensive nature of AI infrastructure development.
The company currently holds less than 1,000 bitcoin, according to its CFO, Jim Nygaard. Founded in 2017, Core Scientific evolved 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. Having emerged from reorganization in January 2024 and been relisted on Nasdaq under the ticker CORZ, the company's pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins. The April 2024 halving and subsequent rise in power costs, coupled with a downturn in bitcoin's price, rendered most mining operations unprofitable, prompting miners to seek alternative revenue streams.
The advent of AI has provided a new use case for miners' existing assets, including data centers and power contracts, which are now being leveraged to host AI-powered computers. This strategic shift has attracted the attention of hyperscalers such as Microsoft and Google parent Alphabet, with Core Scientific's shares experiencing a significant uptick, rising by approximately 6% on Tuesday and nearly 42% this year, amidst a decline in bitcoin's value.