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 pushed data centers, power supply, and advanced chips to their limits, prompting companies to explore riskier debt market options to fund their operations.
Following the sale of $175 million in bitcoin last month, Core Scientific, formerly a bitcoin miner, is now building 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 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 plans follow a series of large deals, including recent offerings tied to Google-backed data centers and CoreWeave, which raised a combined $6.7 billion. The company intends to use 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 AI development.
Core Scientific still 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 higher margins, as the bitcoin mining industry faced significant challenges due to high power costs and a weak bitcoin price. The company's shares have seen a significant increase, with a 6% rise on Tuesday and a 42% increase this year, while bitcoin prices have fallen by 11%.