Core Scientific (CORZ) is preparing to raise $3.3 billion through a junk bond sale as it continues its transition to artificial intelligence-driven data center operations.
The demand for AI services has pushed data centers, power supplies, and advanced chips to their limits. To keep up, companies are tapping riskier segments of the debt market to obtain funds to continue expanding their operations. Core Scientific, once a Bitcoin miner, sold $175 million worth of Bitcoin last month to bolster its AI pivot.
AI infrastructure-related borrowers have raised $17.9 billion in junk bonds so far this year, Bloomberg reported. CORZ is building six data centers itself that will support AI workloads, with capacity leased from CoreWeave in a 12-year deal that could generate about $10 billion in revenue, the report added, citing people familiar with the matter.
Core Scientific’s move follows a series of significant transactions. Recent deals related to Google-backed data centers and CoreWeave raised a total of $6.7 billion. Another company, Edged Compute, is marketing $1.3 billion in bonds to finance facilities leased to CoreWeave and a unit of Alibaba.
Core Scientific said it would use proceeds from the sale to repay existing debt and fund reserves. It also plans to support construction in several states if costs exceed available funds, highlighting how capital-intensive AI development has become.
The company still holds “less than 1,000 bitcoins,” according to CFO Jim Nygaard.
Big AI Pivot
Core Scientific was founded in 2017 and grew into one of North America’s largest bitcoin miners before filing for Chapter 11 in December 2022, crushed by high energy costs and a weak bitcoin price. It emerged from a reorganization in January 2024 and was re-listed on Nasdaq under the symbol CORZ.
The move from Bitcoin mining to AI hosting is all about margins.
The April 2024 block halving rewards from 6.25 BTC to 3.125, and by the end of 2025, the average cash cost to mine a bitcoin increased while the price of BTC itself was falling, from over $125,000 to around $75,800. With rising electricity costs and competition, most mining companies are no longer profitable and have had to find other ways to continue generating revenue.
That’s when AI came to the rescue. Miners’ most valuable assets, already-built data centers and electricity contracts, have now acquired a new use case: hosting computers that power AI.
Their power contracts, grid connections and cool-ready sites are attracting hyperscalers including Microsoft, Google parent Alphabet and others in the ongoing AI race. Core Scientific was one of the first mining companies to pivot at scale, attracting the attention of investors and sparking the rise of AI.
Shares of Core Scientific rose about 6% on Tuesday and nearly 42% this year, while bitcoin fell 11%.
