Core Scientific is set to raise $3.3 billion through a high-yield bond sale, furthering its strategic shift towards artificial intelligence-driven data center operations. The surge in demand for AI services has led to a significant strain on data centers, power supply, and advanced chip capabilities, prompting companies to explore riskier debt market options to support their operational growth. Following the sale of $175 million in bitcoin last month, Core Scientific, formerly a prominent 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 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 decision follows a series of large-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. The company plans to utilize the bond sale 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 development. With its pivot from bitcoin mining to AI hosting, Core Scientific is focusing on improving margins, having emerged from reorganization in January 2024 and relisted on Nasdaq under the ticker CORZ.
The company's shift towards AI is driven by the potential for higher profitability, as the bitcoin mining industry faces challenges due to rising power costs and decreased block rewards. Core Scientific's existing data centers and power contracts have become valuable assets in hosting AI-powered computers, attracting major hyperscalers such as Microsoft and Google parent Alphabet.
The company's shares have seen a significant increase, with a 6% rise on Tuesday and a nearly 42% gain this year, while bitcoin prices have declined by 11%.