Core Scientific is poised to raise $3.3 billion through a high-yield bond sale, as part of its strategic shift towards AI-focused 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 to secure funding for operational development.
Following its sale of $175 million in bitcoin last month, Core Scientific, formerly a prominent bitcoin miner, is now building six AI-dedicated data centers, with the capacity leased to CoreWeave under a 12-year agreement expected to generate around $10 billion in revenue. This move is part of a larger trend, with AI infrastructure-related borrowers raising $17.9 billion in junk bonds so far this year.
Core Scientific's plans include repaying existing debt, funding reserves, and supporting construction projects across multiple states, highlighting the capital-intensive nature of AI infrastructure development. The company currently holds less than 1,000 bitcoins, according to its CFO, Jim Nygaard. This strategic pivot from bitcoin mining to AI hosting is driven by the quest for higher profit margins, as the bitcoin mining industry faces challenges such as high power costs and declining bitcoin prices. 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%.