Core Scientific to Build 1.5GW AI Hub With Over $4 Billion in Funding

Core Scientific is redirecting its massive power infrastructure from mining Bitcoin to servicing the booming AI industry, a strategic pivot echoed by competitors like MARA Holdings and TeraWulf.

Bitcoin miner Core Scientific (NASDAQ:CORZ) is transforming its Texas mining farm into a 1.5-gigawatt AI data center, leveraging over $4 billion in new financing to challenge cloud incumbents and capture a piece of the high-performance computing market.

"We are deploying capital to accelerate service timelines," Core Scientific CEO Adam Sullivan said, highlighting the firm's focus on capitalizing on the demand for high-density data centers driven by the AI boom.

The company is raising $3.3 billion in senior secured notes due 2031 and has a $1 billion credit line from Morgan Stanley. This capital will fund the expansion of its Pecos, Texas site, where 300 megawatts of power will be converted from crypto mining to AI colocation services, with initial capacity expected by 2027.

The move pits Core Scientific, whose stock is up 42 percent year-to-date, against both traditional data center operators and other crypto miners like Hut 8 and Riot Platforms who are also pivoting to the more predictable, high-margin AI infrastructure business. The success of this transition could validate the investment thesis for an entire sub-sector of former crypto miners.

From Bitcoin Mining to AI Colocation

Core Scientific, which emerged from Chapter 11 bankruptcy in 2024, is making a decisive shift away from its origins as one of North America's largest Bitcoin miners. The company plans to convert the 300 megawatts currently powering its mining rigs at the Pecos site directly to high-density colocation services for AI workloads. This is part of a larger plan to develop the site into a 1.5-gigawatt campus, with approximately 1 gigawatt dedicated to commercial data center operations.

While the pivot is clear, Bitcoin mining remains the company's primary revenue source for now. In the fourth quarter, Core Scientific generated $41.1 million from its mining operations compared to $31.3 million from colocation, according to company statements. To fund the transition, the company has been liquidating its crypto holdings, with its Bitcoin balance falling from 2,537 at the end of 2025 to under 1,000 recently.

This strategy is not unique to Core Scientific. A growing number of publicly traded crypto miners, including MARA Holdings, TeraWulf, and Hut 8, are repurposing their energy-intensive infrastructure for AI applications. The trend reflects a search for more stable revenue streams as Bitcoin mining profitability compresses due to rising energy costs and increased competition.

A $4 Billion War Chest for Infrastructure

The scale of Core Scientific's ambition is backed by a significant capital raise. The planned $3.3 billion offering of senior secured notes, combined with a previously announced $1 billion credit facility from Morgan Stanley, gives the company a formidable war chest to fund its buildout. The company has already acquired over 200 acres of adjacent land in Pecos to support the campus development.

This expansion is not limited to Texas. The proceeds are earmarked for data center projects across Georgia, North Carolina, and Oklahoma. A 12-year, $10 billion agreement with cloud-computing firm CoreWeave underpins the firm's growth, providing a foundational client for its new data centers.

For investors, the strategy presents a new narrative for a volatile stock. All 11 analysts covering Core Scientific rate it a "Buy," with a median one-year price target of $26.48, implying nearly 27 percent upside from recent levels. The company's ability to execute this capital-intensive pivot from a volatile commodity producer to a critical infrastructure provider for the AI industry will determine if that bullish sentiment is warranted.

This article is for informational purposes only and does not constitute investment advice.