Core Scientific is set 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 put a strain on data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to fund their operations. Core Scientific, formerly a bitcoin mining company, recently sold $175 million in bitcoin to further its AI transition. According to Bloomberg, borrowers associated with AI infrastructure have raised $17.9 billion in junk bonds this year.
Core Scientific is constructing six data centers to support AI workloads, with a 12-year lease agreement with CoreWeave that could generate around $10 billion in revenue. This move follows a series of large deals, including recent offerings tied to Google-backed data centers and CoreWeave, which raised a combined $6.7 billion. Core Scientific plans to use the proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds. The company still holds less than 1,000 bitcoin, according to CFO Jim Nygaard.
Core Scientific's pivot from bitcoin mining to AI hosting is driven by profit margins. The company was founded in 2017 and grew into one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ.
The shift from bitcoin mining to AI hosting has been driven by the need for alternative revenue streams, as the average cash cost to mine one bitcoin rose while the price of BTC itself declined. Core Scientific's shares have risen by about 6% and are up nearly 42% this year, while bitcoin has fallen 11%.