Core Scientific May Sell 'All' Bitcoin to Finance AI Pivot
TL;DR
Core Scientific plans to sell nearly all its Bitcoin holdings to fund a strategic pivot toward AI and high-performance computing, signaling a broader industry shift away from mining.
Key Takeaways
- •Core Scientific will monetize substantially all Bitcoin holdings to finance its transition to AI and HPC infrastructure.
- •The company expects most Bitcoin sales in Q1 2024, subject to market conditions, and currently holds less than 1,000 BTC.
- •Core Scientific aims to convert all its facilities to colocation services within 3 years, ending self-mining operations.
- •This reflects a broader trend among former Bitcoin miners rebranding or shifting focus to capitalize on AI demand.
- •Despite Q4 net income of $216M, revenue fell as self-mining contracted, with shares dropping 6.4% after the announcement.
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Core Scientific signaled on Monday that it will continue selling Bitcoin to fund its transition toward AI and high-performance computing, detailing plans to significantly reduce its holdings in the coming months while announcing fourth-quarter earnings results.
As capital expenditures associated with its data center buildout rise, the Austin, Texas-based firm plans “monetize substantially all of [its] Bitcoin holdings,” according to an SEC filing.
The company noted that the “majority of the sales” are expected to occur in the first quarter of this year. However, those liquidations are subject to market conditions.
Core Scientific’s willingness to sell Bitcoin underscores a broader shift among companies that once dominated the Bitcoin mining industry in the U.S., as a growing number of them seek to maximize revenue by capitalizing on insatiable demand for AI-associated resources.
Core Scientific CFO Jim Nygar said during the company’s earnings call that the company currently holds less than 1,000 Bitcoin. In January, the company sold 1,900 Bitcoin for $175 million “at materially higher prices above current market levels.”
Earlier this month, Bitcoin miner Cango dumped 4,451 Bitcoin to finance its efforts to lean into its AI business line. Not long after, former Bitcoin miner Bitfarms rebranded as Keel Infrastructure, saying a newfound focus on high-performance computing (HPC) means it is “no longer a Bitcoin company.”
The leading digital asset by market cap went unmentioned in the Austin, Texas-based firm’s latest earnings presentation, which billed Core Scientific as a leader in digital infrastructure for high-density colocation services. Those services are squarely aimed at providing resources necessary to run AI and HPC data centers.
On the company’s earnings call, Core Scientific CEO Adam Sullivan said the company is in the process of converting its facility in Pecos, Texas to colocation from Bitcoin mining. He said the site can support up to a whopping 430 megawatts of gross power capacity.
“Stepping back, our strategy remains the same,” he said. “We expect every megawatt in our portfolio to be dedicated to colocation within the next 3 years.”
That would signal an end to the company’s self-mining Bitcoin operations, which generated a majority of Core Scientific’s fourth-quarter revenue. The company earned $41.1 million from mining Bitcoin for itself compared to $31.3 million from colocation during the period. That’s in addition to $6.5 million from hosting Bitcoin mining from its customers in Q4.
Core Scientific posted fourth-quarter net income of $216 million compared to a loss of $291 million during the same period a year ago. Revenue for the period meanwhile fell to $70 million from $94.9 million a year ago as its self-mining business continued to contract.
The company’s shares fell 6.4% on Tuesday to $15.43, according to Yahoo Finance. Over the past year, they have climbed 52%, while peaking around $23.63 in November.