Key Takeaways
Core Scientific Inc. plans to raise $3.3 billion in a junk-bond sale to accelerate its transition from bitcoin mining to operating high-performance computing data centers for artificial intelligence workloads. The offering, one of the largest to date for a former crypto miner, will be used to repay existing debt and complete the construction of several new facilities.
"The pivot from bitcoin mining to AI hosting is all about the margins," Jim Nygaard, Core Scientific's Chief Financial Officer, said in a recent statement. He noted the company still holds "under 1,000 bitcoin" after selling $175 million worth last month to help finance the transition.
The proposed offering consists of senior secured notes due 2031, according to a company press release. Proceeds are earmarked to repay outstanding term loans, fund a debt service reserve account, and guarantee the completion of data center projects in Georgia, Texas, North Carolina, and Oklahoma. The deal joins a flurry of similar moves, with AI-related infrastructure borrowers raising $17.9 billion in the high-yield debt market so far this year, per Bloomberg data.
This debt offering is a critical step in Core Scientific's strategic scramble to capitalize on the AI boom by repurposing its valuable power contracts and data center infrastructure. The financing will directly support the buildout of six facilities fully leased to AI firm CoreWeave under a 12-year contract. That deal is expected to generate approximately $10 billion in stable, long-term revenue, a stark contrast to the historical volatility of bitcoin mining.
Founded in 2017, Core Scientific grew to become one of North America's largest bitcoin miners before filing for Chapter 11 bankruptcy protection in December 2022. The company was squeezed by soaring power costs and a prolonged downturn in bitcoin's price. It successfully emerged from reorganization in January 2024 and was relisted on the Nasdaq under the ticker CORZ.
The company's pivot away from its legacy business has been rapid. The economics of bitcoin mining became significantly more challenging after the April 2024 "halving" event, which cut mining rewards from 6.25 BTC to 3.125 BTC per block. With rising electricity costs and increased competition, many miners found their operations unprofitable, forcing them to seek alternative revenue streams.
Core Scientific is not alone. Other major crypto miners, including Riot Platforms (RIOT) and Hut 8 (HUT), are also investing heavily in infrastructure to diversify into AI hosting. These companies' most valuable assets—grid connections, power purchase agreements, and purpose-built facilities—are now in high demand from AI hyperscalers and specialized cloud providers like CoreWeave.
The capital-intensive nature of this buildout has pushed firms toward riskier corners of the debt market. CoreWeave itself, backed by Google, recently raised funds in a combined $6.7 billion offering with another data center firm. The trend highlights the immense appetite for capital to build the foundational infrastructure required to power the ongoing AI race. Shares of Core Scientific were up about 6% on the news and have gained nearly 42% this year, even as bitcoin's price has fallen 11%.
This article is for informational purposes only and does not constitute investment advice.
