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 led to increased pressure on data centers, power supply, and advanced chips, prompting companies to explore riskier debt markets to secure funding for their operations. Core Scientific, formerly a bitcoin mining company, recently sold $175 million in bitcoin to further its AI-focused transition.
Borrowers associated with AI infrastructure have raised $17.9 billion in high-yield bonds this year, according to Bloomberg. 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 multiple states if costs exceed available funds.
The company currently holds less than 1,000 bitcoin, according to CFO Jim Nygaard. The shift from bitcoin mining to AI hosting is driven by the pursuit of higher margins. The decline in bitcoin prices and rising power costs have made mining unprofitable for many companies, leading them to explore alternative revenue streams. The existing data centers and power contracts of miners have found a new use case in hosting AI-powered computers, attracting major hyperscalers such as Microsoft and Alphabet.
Core Scientific was one of the first mining companies to pivot to AI on a large scale, capturing investors' attention and fueling the AI push. The company's shares have risen by about 6% and nearly 42% this year, while bitcoin prices have fallen by 11%.