Core Scientific (CORZ) is set to raise $3.3 billion through a high-yield bond sale, as part of its strategic shift towards artificial intelligence-driven 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 markets to secure funding for their operations. Core Scientific, formerly a bitcoin mining company, sold $175 million in bitcoin last month to accelerate its AI-focused transformation. According to Bloomberg, borrowers associated with AI infrastructure have raised $17.9 billion in high-yield bonds so far this year.
Core Scientific is building six data centers designed to support AI workloads, with the capacity leased to CoreWeave under a 12-year agreement 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 utilize the proceeds to repay existing debt, fund reserves, and support construction across several states if costs exceed available funds, highlighting the capital-intensive nature of the AI buildout.
The company currently holds less than 1,000 bitcoin, 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 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. It emerged from reorganization in January 2024 and was relisted on Nasdaq under the ticker CORZ.
The April 2024 halving and rising power costs made most miners unprofitable, prompting them to explore alternative revenue streams. The shift to AI hosting has enabled miners to leverage their existing data centers and power contracts, attracting hyperscalers such as Microsoft, Google parent Alphabet, and others.
Core Scientific was one of the first miners to pivot on a large scale, sparking investor interest and driving the AI push. The company's shares were up about 6% on Tuesday and have risen nearly 42% this year, while bitcoin has fallen 11%.