Core Scientific is planning to generate $3.3 billion through 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 led to increased pressure on data centers, power supply, and advanced chip technology, prompting companies to explore riskier debt markets to secure funding for operational development.
Core Scientific, formerly a prominent bitcoin miner, recently sold $175 million in bitcoin to further accelerate its AI-focused transition. According to Bloomberg, borrowers associated with AI infrastructure have raised a total of $17.9 billion in high-yield bonds so far this year.
Core Scientific is currently building six data centers designed to support AI workloads, with a 12-year lease agreement with CoreWeave that is expected to yield around $10 billion in revenue. This move follows a series of significant 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 subsidiary.
Core Scientific intends to utilize the proceeds to repay existing debt and establish reserves, while also supporting construction projects across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI development. The company currently 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 higher profit margins.
The company was founded in 2017 and grew to become 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 prices. After emerging from reorganization in January 2024 and being relisted on Nasdaq under the ticker CORZ, the company has undergone a significant transformation. The shift from bitcoin mining to AI hosting is primarily motivated by the potential for higher margins, as the bitcoin mining industry faced significant challenges following the April 2024 halving, which reduced block rewards and led to increased power costs and competition.
As a result, many miners became unprofitable and were forced to explore alternative revenue streams. The emergence of AI has provided a new opportunity for miners to utilize their existing data centers and power contracts, attracting major hyperscalers such as Microsoft, Google, and others.
Core Scientific was one of the first miners to make a large-scale pivot, capturing the attention of investors and driving the AI-focused push. The company's shares have experienced a significant increase, rising by approximately 6% on Tuesday and nearly 42% this year, while bitcoin prices have declined by 11%.