Wall Street Bitcoin miner Core Scientific Pays Down $267 Million Debt

The publicly listed Bitcoin (BTC) miner from Wall Street, Core Scientific (NASDAQ: CORZ), has repaid $267 million in debt using proceeds from its recently closed convertible senior notes offering.

The debt repayment includes $150 million in secured notes, $61 million from an exit facility, and $56 million in miner equipment loans. This move significantly reduces the company’s interest expenses, with rates dropping from as high as 12.5% on the prior borrowings to 3% on the new convertible notes.

Core Scientific announced and priced an upsized convertible senior notes offering on August 13-14, 2024. The company initially proposed a $350 million offering, which was increased to $400 million of convertible senior notes due 2029.

$CORZ Strengthens Balance Sheet and Supports Growth Plans with Proceeds from Recent Convertible Notes Offering

-Repays $267 million in debt, reducing interest rate from approximately 12.5% to 3%
-Removes restrictive covenants associated with certain notes
-Increases cash on hand… pic.twitter.com/ePyzjYOBMV

— Core Scientific (@Core_Scientific) August 20, 2024

After repaying the debt and covering offering expenses, Core Scientific added $172.8 million in cash to its balance sheet. The company plans to use these funds to support site acquisitions and initiatives in its high-performance computing (HPC) hosting business.

Adam Sullivan, CEO of Core Scientific

“With this transaction completed, we are moving forward with additional financial flexibility to invest in the continued expansion of our HPC hosting capacity while strengthening our Bitcoin mining business,” said Adam Sullivan, CEO of Core Scientific.

Marathon Digital Holdings, another publicly traded BTC miner, also recently successfully closed a $300 million offering of convertible senior notes. However, the funds raised were not used to pay off debts but to acquire a substantial amount of Bitcoins, worth $249 million.

From BTC to HPC

An increasing number of cryptocurrency miners are turning their attention to AI and HPC, a trend corroborated by recent analysis from investment management firm VanEck. This transition is driven by miners’ desires to diversify their operations and tap into the burgeoning demand for AI computational power. According to VanEck’s head of digital assets research, Matthew Sigel, this strategic shift has the potential to unlock $38 billion in value for the mining sector by 2027.

Notable examples of this trend have been observable since last year. For example, HIVE Blockchain has transitioned to HIVE Digital to more accurately represent its expanded focus. While the company continues its activities in BTC mining, it is now also enhancing its engagement with the HPC and AI sectors. In pursuit of this strategy, HIVE Digital recently announced the construction of a new hydroelectric-powered data center, a move expected to double its revenue streams.

The significance of HPC is also evident in the latest quarterly report from another miner, BitFuFu. “Cloud-mining revenue contributed approximately 60% of BitFuFu’s second-quarter revenue. Our cloud-mining business enables us to effectively lock in the price of Bitcoin, serving as a hedge against Bitcoin price volatility,” commented Leo Lu, Chairman and Chief Executive Officer of the company.

Core Scientific operates eight data centers across five states. The company generates revenue primarily through Bitcoin mining for its own account and by providing hosting services to third-party customers. The company is one of the five largest publicly traded BTC miners on Wall Street, with a market capitalization of $1.7 billion.