Core Scientific, Inc./tx

Core Scientific, Inc. designs, builds, and operates large-scale, purpose-built data centers that support high-density colocation services and digital asset mining for its own account and, to a lesser extent, for third-party customers. The company's data centers are optimized for power-intensive, mission-critical computing workloads, with a focus on artificial intelligence (AI) and other high-performance computing (HPC) applications. As of December 31, 2025, Core Scientific owned or leased ten data centers across seven U.S. states, representing approximately 1.4 gigawatts (GW) ¹ of gross utility power capacity, or approximately 920 megawatts (MW) ² of total leasable customer power capacity. A portion of these facilities were in operation, with the remainder under construction or in various stages of development. The company is in the process of converting its entire portfolio to high-density colocation (HDC) infrastructure over the next three years, while continuing digital asset mining during conversion to meet existing power commitments or honor a small number of digital asset mining hosting commitments.

The company's core business model involves generating revenue primarily through Colocation services, Digital Asset Self-Mining, and Digital Asset Hosted Mining services. The Colocation segment provides space, power, cooling, facilities operations, security, and other services to third-party customers for AI/HPC operations, with customers paying fixed payments based on electric capacity and variable payments on a recurring basis. The Digital Asset Self-Mining segment generates revenue from operating its own fleet of specialized computers ("miners") to earn digital assets, primarily bitcoin, by solving cryptographic algorithms on blockchain networks. The Digital Asset Hosted Mining segment generates revenue through the sale of electricity-based consumption contracts for hosting services, which are recurring and generally priced based on power usage and other service components. In 2025, the majority of revenue was derived from earning digital assets for the company's own account, but a meaningful amount of revenue is expected from HDC in 2026 as billable customer power capacity is delivered.

As of December 31, 2025, Core Scientific's data center portfolio included ten facilities in Alabama (1), Georgia (2), Kentucky (1), North Carolina (1), North Dakota (1), Oklahoma (1), and Texas (3) ³. These facilities collectively represent 1,426 MW ⁴ of gross utility power capacity and 920 MW ⁵ of total leasable customer power capacity. The company had 590 MW ⁶ of leased customer power capacity and 330 MW ⁷ of unleased customer power capacity. Billable customer power capacity stood at 120 MW ⁸.

For the fiscal year ended December 31, 2025, total revenue decreased to $319.0 million ⁹ from $510.7 million ¹⁰ in 2024. This decrease was primarily due to lower digital asset self-mining revenue and digital asset hosted mining revenue, as the company shifted capital and infrastructure toward colocation, partially offset by higher colocation revenue from incremental billable customer power capacity. Operating loss increased to $245.6 million ¹¹ in 2025 from $142.1 million ¹² in 2024. The net loss was $288.6 million ¹³ in 2025, which included significant non-cash items, such as changes of $33.1 million ¹⁴ in the fair value of warrants and contingent value rights. Adjusted EBITDA decreased to $(29.7) million ¹⁵ in 2025 from $157.4 million ¹⁶ in 2024.

A detailed breakdown of revenue by segment for 2025 shows Colocation revenue at $65.4 million ¹⁷, Digital Asset Self-Mining revenue at $229.2 million ¹⁸, and Digital Asset Hosted Mining revenue from customers at $24.4 million ¹⁹. In terms of percentage of total revenue, Colocation revenue accounted for 20% ²⁰, Digital Asset Self-Mining revenue for 72% ²¹, and Digital Asset Hosted Mining revenue for 8% ²². Total cost of revenue for 2025 was $281.1 million ²³, resulting in a gross profit of $37.9 million ²⁴ and a consolidated gross margin of 12% ²⁵.

Comparing 2025 to 2024, Colocation revenue increased by $41.0 million ²⁶, driven by incremental billable customer power capacity at the Denton, Texas, and Marble, North Carolina data centers, and lease operations commencing at the Austin, Texas data center in Q2 2024. Digital asset self-mining revenue decreased by $179.5 million ²⁷, primarily due to a 65% ²⁸ reduction in bitcoin mined (from 6,595 ²⁹ in 2024 to 2,276 ³⁰ in 2025), the Bitcoin network's halving in April 2024, and more challenging network conditions, despite a 54% ³¹ increase in the average price of bitcoin to $101,639 ³². Digital asset hosted mining revenue decreased by $53.2 million ³³ due to the shift towards Colocation operations.

Significant operational developments during 2025 included the termination of an Agreement and Plan of Merger with CoreWeave, Inc. on October 30, 2025, following stockholder rejection. The company incurred $21.6 million ³⁴ in advisory, legal, and other professional fees related to this proposed transaction. Additionally, the company fully repaid five higher-interest debt facilities totaling approximately $26.6 million ³⁵ in principal, resulting in an aggregate $1.4 million ³⁶ loss on debt extinguishment. The company also entered into an arrangement with Block, Inc. to acquire 3 nm ASICs, with approximately $64.8 million ³⁷ of remaining cash payments associated with this arrangement as of December 31, 2025.

Core Scientific's strategy is to grow revenue and profitability by converting and expanding its large-scale data center infrastructure portfolio to deliver high-density colocation services for artificial intelligence and HPC workloads. The company intends to convert every megawatt in its portfolio to HDC infrastructure over the next three years. This transition is expected to increase the share of Colocation revenue and gradually reduce exposure to bitcoin spot price volatility, as the Colocation segment is characterized by long-term contracts, typically 10+ years, with stable and predictable revenue and cash flows.

The pace of this transition and the timing of related revenue and cash flows depend on customer deployment schedules under existing and future contracts, as well as the timing and cost of converting and commissioning incremental billable customer power capacity. Conversion capital expenditures and timelines are sensitive to equipment lead times and availability, labor constraints, permitting and interconnection sequencing, and supply chain and logistical challenges. The company is actively pursuing the acquisition of new sites, including land and power capacity, to expand its data center footprint beyond its current facilities.

As of December 31, 2025, the company had approximately $64.8 million ³⁸ of remaining cash payments associated with its arrangement with Block, Inc. for ASICs, with approximately $36.6 million ³⁹ paid upon delivery in January 2026 and the remaining balance payable primarily during 2026 and extending into early 2027. Aside from these miners, the company does not anticipate entering into new large-scale bitcoin mining equipment procurement agreements, expecting future capital expenditures related to mining equipment to decline.

The company expects to increase capital expenditures in 2026 relative to 2025 to support its strategic shift to colocation services. As of December 31, 2025, the company was contractually committed to approximately $989.8 million ⁴⁰ of capital expenditures, primarily for infrastructure modifications, equipment procurement, and labor related to the conversion of data centers to high-density colocation services. Of this amount, $716.8 million ⁴¹ will be passed through to the customer as invoiced, and $30.1 million ⁴² will be funded by the customer as prepaid base license fees for the Colocation segment. These capital expenditures are expected to occur within the next 12 to 24 months. Subsequent to December 31, 2025, and through February 26, 2026, the company contractually committed an additional $418.1 million ⁴³ of capital expenditures, with $107.4 million ⁴⁴ of this amount to be passed through to the customer as invoiced.

During 2026, the company currently expects to monetize substantially all of its bitcoin holdings, subject to market conditions, to enhance liquidity and fund planned capital expenditures and other cash requirements. The majority of these sales are anticipated to occur during the first quarter of 2026. In January 2026, the company entered into a long-term power supply arrangement, obligating it to purchase firm utility power capacity beginning in 2028. In connection with this, a cash deposit of $80 million ⁴⁵ was made into a restricted, interest-bearing escrow account.

Core Scientific faces several material risks, including its dependence on the timely and successful conversion of existing facilities to support high-density colocation customers and the ability to attract new ones, with delays or cost overruns posing significant threats. The high-density colocation business is currently highly dependent on a single customer, CoreWeave, and any failure to meet their expectations could harm future growth. The increased focus on high-density colocation may not be successful if demand for AI/HPC applications decreases, or if high energy costs, supply chain disruptions, government regulation, and compliance costs reduce profitability. The business is capital intensive, requiring additional capital, and failure to obtain necessary funds will force delays or termination of expansion efforts. Significant electric power is needed, and limited availability or public sentiment regarding high volume electrical use and climate change may increase costs or limit access to power. Any failure in critical systems, facilities, or services could lead to disruptions, harm reputation, and result in financial penalties. The company has identified a material weakness in its internal control over financial reporting related to accounting for intended demolition of assets during facility conversion, which led to a restatement of previously issued financial statements. The cash needs for high-density colocation growth initiatives will limit digital asset holdings, preventing recognition of gains from future appreciation. Digital assets, particularly bitcoin, are subject to price volatility, and the "halving" of rewards on the Bitcoin network could negatively impact revenue. Regulatory changes, including those from the SEC or FinCEN, could increase compliance costs or restrict digital asset use. Increasing scrutiny and changing expectations regarding Environmental, Social, and Governance (ESG) policies may impose additional costs or risks.

Management's message to shareholders emphasizes a strategic transition towards high-density colocation services for AI and HPC workloads, leveraging existing infrastructure and expertise. The company intends to convert every megawatt in its portfolio to high-density colocation infrastructure over the next three years, while continuing digital asset mining to cover power expenses and generate cash during the conversion period. Management expects to rapidly increase revenue from high-density colocation as capacity is delivered to existing and future customers. A key strategic priority is to develop and bring online the infrastructure required to meet existing contractual commitments to its high-density colocation customer, CoreWeave, which has expanded to 590 megawatts ⁴⁶ of leased customer power capacity. Another priority is to expand the infrastructure portfolio by securing additional land and power at new and existing sites, and to sign additional colocation customers to diversify the revenue base. The company plans to monetize substantially all of its bitcoin holdings during 2026, primarily in the first quarter, to enhance liquidity and fund planned capital expenditures and other cash requirements.