Core Scientific Secures Up to $1 Billion From Morgan Stanley for Pivot From Bitcoin Mining to AI

Core Scientific’s efforts to turn away from Bitcoin The mining industry is getting a boost from Morgan Stanley, with the company securing up to $1 billion in financing from the bank.

The Austin, Texas-based company reported a press release On Thursday, the Wall Street giant announced that the company had agreed to borrow up to $500 million under an initial agreement as it moves toward providing high-density colocation infrastructure.

The deal is structured to potentially allow Core to borrow an additional $500 million, providing the company with funds that can also be used to expand the physical footprint of additional facilities and secure more power for data centers.

“With this additional financing capacity, we can operate decisively by deploying capital to accelerate project timelines, making us an even more attractive infrastructure provider to customers,” CEO Adam Sullivan said in a statement.

The development shows how banks like Morgan Stanley are willing to provide companies like Core with a short-term safety net — financing was secured under a 364-day term — that could also allow them to lean more aggressively on their overall expansion.

Sullivan has said that Core’s north star is to move away from Bitcoin mining completely over the next three years, with every available megawatt being channeled into service tech companies’ growing efforts to compete amid the AI ​​boom.

The company currently operates seven facilities in the US, including one in Texas, where the company is actively transitioning from Bitcoin mining to high-density colocation.

Core’s stock price fell 2% to $15.50 on Friday Yahoo Finance. Its shares are up 61% in the past year as the company finds itself among a growing list of companies involved in Bitcoin mining that are increasingly seeing revenue opportunities elsewhere.

Earlier this week the company made indicated that it would likely “monetize substantially all of its Bitcoin holdings to fund the transition, after cashing out 1,900 Bitcoin for $175 million last month, leaving less than 1,000 Bitcoin in company coffers.”

The company still generates most of its revenue by mining Bitcoin for itself. That segment generated $41 million in revenue in the fourth quarter, compared to $31 million for colocation.

In a note published Tuesday, analysts at investment bank Compass Point reaffirmed a buy rating in addition to a price target of $28 per share. They underscored their “confidence in Core Scientific’s ability to execute and fill rentable locations with investment-grade customers.”