Core Scientific is set to raise $3.3 billion through a high-yield bond sale, further solidifying its strategic shift towards AI-driven data center operations. The surge in demand for AI services has stretched the capacity of data centers, power supplies, and advanced chips to their limits, prompting companies to explore riskier debt markets to secure necessary funds.
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 a 12-year lease agreement with CoreWeave that could generate around $10 billion in revenue. This development 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 move is preceded by several large deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion. The company plans to utilize the proceeds to repay existing debt, fund reserves, and support construction across multiple states if costs exceed available funds, highlighting the capital-intensive nature of AI infrastructure development.
As of now, Core Scientific holds less than 1,000 bitcoin, according to CFO Jim Nygaard. The company's pivot from bitcoin mining to AI hosting is driven by the pursuit of more lucrative margins, as the bitcoin mining industry faces significant challenges due to rising power costs and intense competition. With the average cash cost to mine one bitcoin increasing and the price of BTC experiencing a downturn, many miners have become unprofitable, prompting them to explore alternative revenue streams.
The shift towards AI hosting has enabled miners to repurpose their existing data centers and power contracts, attracting major hyperscalers such as Microsoft and Google parent Alphabet. Core Scientific's shares have seen a significant increase, rising by about 6% on Tuesday and nearly 42% this year, while bitcoin has fallen by 11%.