Core Scientific is poised to issue $3.3 billion in high-yield bonds as part of its strategic shift towards AI-focused data center operations. The surge in demand for AI services has pushed the limits of data centers, power supply, and advanced chip technology, prompting companies to explore riskier debt markets to fund their operations. Core Scientific, formerly a major bitcoin miner, recently sold $175 million in bitcoin to accelerate its AI transition.
According to Bloomberg, borrowers involved in AI infrastructure have raised $17.9 billion in junk bonds this year. Core Scientific is constructing six data centers to support AI workloads, with CoreWeave leasing the capacity 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 intends 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 its CFO.
The pivot from bitcoin mining to AI hosting is driven by the pursuit of higher margins. With the decline of bitcoin prices and rising power costs, miners have become unprofitable, prompting them to seek alternative revenue streams.
The shift towards AI hosting has enabled miners to leverage their existing data centers and power contracts, attracting major hyperscalers like Microsoft and Google. Core Scientific's shares have risen by about 6% and are up nearly 42% this year, while bitcoin has fallen by 11%.