Core Scientific is set to raise $3.3 billion through a high-yield bond sale, furthering 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 operational development. Core Scientific, formerly a prominent bitcoin miner, recently sold $175 million in bitcoin to accelerate its AI transition. Borrowers associated with AI infrastructure have raised $17.9 billion in high-yield bonds this year, according to Bloomberg.
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-scale deals, including recent offerings tied to Google-backed data centers and CoreWeave, which collectively raised $6.7 billion.
Core Scientific intends 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 development. The company currently holds fewer than 1,000 bitcoins, as stated by CFO Jim Nygaard. Core Scientific's pivot from bitcoin mining to AI hosting is driven by profit margins.
The company, founded in 2017, emerged as one of North America's largest bitcoin miners before filing for Chapter 11 in December 2022 due to high power costs and a decline in bitcoin price. After reorganization in January 2024, it was relisted on Nasdaq under the ticker CORZ. The transition from bitcoin mining to AI hosting is centered around maximizing margins, as the bitcoin halving in April 2024 reduced block rewards, and rising power costs coupled with increased competition rendered most mining operations unprofitable. The value of existing data centers and power contracts was repurposed for hosting AI-powered computers, attracting major players like Microsoft, Google, and others in the AI race.
Core Scientific's shares have seen a significant increase, up about 6% on Tuesday and nearly 42% this year, while bitcoin prices have declined by 11%.