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, 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. The company is in the process of converting its entire data center 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 three operating segments: Colocation, Digital Asset Self-Mining, and Digital Asset Hosted Mining. The Colocation segment provides high-density colocation services to third parties for AI/HPC operations, with customers paying fixed and variable payments on a recurring basis. The Digital Asset Self-Mining segment generates revenue from operating its own fleet of specialized computers to earn digital assets, primarily bitcoin, by validating transactions on blockchain networks. The Digital Asset Hosted Mining segment provides hosting services to third parties for digital asset mining, generating recurring revenue through electricity-based consumption contracts. The company derived the majority of its 2025 revenue from earning digital assets for its own account but expects a meaningful amount of revenue from HDC in 2026 as billable customer power capacity is delivered.

The Colocation segment provides space, power, cooling, facilities operations, security, and other services to third-party customers for machine learning and artificial intelligence workloads. Under these contracts, customers pay fixed payments based on electric capacity and variable payments on a recurring basis. HDC colocation leases may include all or portions of a data center, with revenue primarily based on power usage and square footage. For the year ended December 31, 2025, Colocation revenue was $65.424 million ³, contributing 20% ⁴ of total revenue. The gross profit for the Colocation segment was $19.745 million ⁵, with a gross margin of 30% ⁶.

The Digital Asset Self-Mining segment generates revenue from the deployment and operation of the company's own fleet of specialized computers, or "miners," within its owned digital infrastructure as part of a pool of users that solve complex cryptographic algorithms to validate transactions on blockchain networks, primarily the Bitcoin network. In 2025, Digital Asset Self-Mining revenue was $229.207 million ⁷, representing 72% ⁸ of total revenue. The gross profit for this segment was $10.339 million ⁹, with a gross margin of 5% ¹⁰. The company mined 2,276 ¹¹ bitcoin in 2025, at an average price of $101,639 ¹², with a self-mining hash rate of 15.7 exahash per second (EH/s) ¹³.

The Digital Asset Hosted Mining segment generates revenue through the sale of electricity-based consumption contracts for hosting services, which are recurring. The company provides deployment, monitoring, troubleshooting, optimization, and maintenance of customers' digital asset mining equipment, along with necessary electrical power and other infrastructure services. For the year ended December 31, 2025, Digital Asset Hosted Mining revenue from customers was $24.388 million ¹⁴, contributing 8% ¹⁵ of total revenue. The gross profit for this segment was $7.814 million ¹⁶, with a gross margin of 32% ¹⁷. The company does not expect to further expand its Digital Asset Hosted Mining operations in 2026 and future years.

For the fiscal year ended December 31, 2025, total revenue decreased to $319.019 million ¹⁸ from $510.672 million ¹⁹ in 2024. Gross profit was $37.898 million ²⁰, resulting in a gross margin of 12% ²¹. Operating loss increased to $245.589 million ²² in 2025 from $142.065 million ²³ in 2024. Net loss for 2025 was $288.616 million ²⁴, with diluted EPS of $(0.88) ²⁵. Cash and cash equivalents stood at $311.378 million ²⁶ as of December 31, 2025, down from $836.197 million ²⁷ in 2024. Total convertible and other notes payable, net of current portion, was $1,060.325 million ²⁸ as of December 31, 2025, compared to $1,073.990 million ²⁹ in 2024. Digital assets held were valued at $222.000 million ³⁰ as of December 31, 2025.

Comparing 2025 to 2024, Colocation revenue increased by $41.046 million ³¹, 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. Digital Asset Self-Mining revenue decreased by $179.533 million ³², primarily due to lower bitcoin production (2,276 ³³ bitcoin in 2025 vs. 6,595 ³⁴ bitcoin in 2024), partially offset by a higher average bitcoin price ($101,639 ³⁵ in 2025 vs. $65,894 ³⁶ in 2024). Digital Asset Hosted Mining revenue decreased by $53.166 million ³⁷, mainly due to the shift towards Colocation operations. Consolidated gross margin decreased from 24% ³⁸ in 2024 to 12% ³⁹ in 2025.

During 2025, the company incurred $21.6 million ⁴⁰ of advisory, legal, and other professional or consulting fees related to a proposed merger agreement with CoreWeave, Inc., which was terminated on October 30, 2025, following stockholder rejection. The company also fully repaid five higher-interest debt facilities totaling approximately $26.6 million ⁴¹ in principal, resulting in an aggregate $1.4 million ⁴² loss on debt extinguishment. Capital expenditures increased significantly to $729.0 million ⁴³ in 2025 from $95.0 million ⁴⁴ in 2024, reflecting investments in colocation expansion.

Management's specific revenue, margin, or EPS guidance for the upcoming period is not explicitly stated in the filing. However, the company expects to rapidly increase revenue derived from high-density colocation (HDC) services as capacity gets delivered to its current end customer and as it signs and begins generating revenue from new colocation customers.

The primary growth area for Core Scientific is the conversion and expansion of its large-scale data center infrastructure portfolio to deliver high-density colocation services for artificial intelligence and HPC workloads. The company plans to develop and bring online the infrastructure required to meet its existing contractual commitments to its high-density colocation customer, CoreWeave, which has increased to approximately 590 MW ⁴⁵ of leased power capacity. This transition is expected to gradually reduce the company's exposure to bitcoin spot price volatility by leveraging long-term contracts with customers, typically spanning 10+ years ⁴⁶, which are characterized by stable, predictable revenue and cash flows. 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.

The operational outlook indicates a strategic shift towards colocation services. The company intends to convert every megawatt in its portfolio to HDC infrastructure over the next three years ⁴⁷. This conversion process involves constructing, refurbishing, reallocating, or converting its ten facilities in Alabama, Georgia, Kentucky, North Carolina, North Dakota, Oklahoma, and Texas to support AI-related workloads. The pace of this transition and the timing of related revenue and cash flows depend on customer deployment schedules and the timing and cost of converting and commissioning incremental billable customer power capacity. The company expects future capital expenditures related to mining equipment to decline as it shifts capital allocation toward HDC infrastructure.

Planned capital allocation for 2026 includes an expected increase in capital expenditures relative to 2025 to support the strategic shift to colocation services. As of December 31, 2025, the company was contractually committed to approximately $989.8 million ⁴⁸ of capital expenditures, primarily for infrastructure modifications, equipment procurement, and labor associated with the conversion of data centers to HDC services. Of this amount, $716.8 million ⁴⁹ will be passed through to the customer as invoiced, and $30.1 million ⁵⁰ 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 ⁵¹. Subsequent to December 31, 2025, and through February 26, 2026, the company contractually committed an additional $418.1 million ⁵² of capital expenditures, with $107.4 million ⁵³ to be passed through to the customer as invoiced. The company also made a cash deposit of $80 million ⁵⁴ into a restricted, interest-bearing escrow account in January 2026 for a long-term power supply arrangement. The company expects to monetize substantially all of its bitcoin holdings during 2026, subject to market conditions, to enhance liquidity and fund planned capital expenditures and other cash requirements, with the majority of these sales anticipated in the first quarter of 2026.

Core Scientific faces several material risks, including its dependence on timely and successful conversion of existing facilities to support high-density colocation customers, and the ability to attract new ones. The high-density colocation business is currently highly dependent on a single customer, CoreWeave, which accounts for 100% ⁵⁵ of the Colocation segment revenue. The company is subject to risks associated with its need for significant electric power and the limited availability of electrical power and resources, equipment, and materials. Any failure in critical systems, facilities, or services could lead to disruptions, harm reputation, and result in financial penalties and legal liabilities. The business is capital intensive, and failure to obtain necessary capital when needed will force delays, limits, or termination of expansion efforts. The company has identified a material weakness in its internal control over financial reporting related to accounting for intended demolition of building and infrastructure assets, which resulted in the restatement of previously issued financial statements. 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 related to digital assets, data privacy, and ESG policies, could increase compliance costs and adversely impact the market. The company may incur additional indebtedness, which could limit cash flow and expose it to risks. As of December 31, 2025, the company had U.S. federal and state net operating loss carryforwards of approximately $727.8 million ⁵⁶ and $184.2 million ⁵⁷, respectively, and U.S. federal and state capital loss carryforwards of approximately $220.7 million ⁵⁸ and $47.8 million ⁵⁹, respectively, which may be subject to limitations on utilization.

Management's message to shareholders emphasizes a strategic transition towards high-density colocation services for AI and HPC workloads, aiming to leverage existing infrastructure and expertise. The company expects to rapidly increase revenue from HDC services as capacity is delivered to existing and future customers. Management intends to convert every megawatt in its portfolio to HDC infrastructure over the next three years, while continuing digital asset mining primarily to cover power expenses and generate cash during the transition. The company is actively pursuing the acquisition of new sites to expand its data center footprint. A key strategic priority is to optimize cash from the sale of bitcoin received from mining activities, with plans to monetize substantially all bitcoin holdings in 2026, primarily in the first quarter, to enhance liquidity and fund planned capital expenditures. Management also highlights the importance of addressing the identified material weakness in internal control over financial reporting through additional training and management review.