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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.
Core Scientific Pays Down
$267 Million in Debt
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.
“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.
This article was written by Damian Chmiel at www.financemagnates.com.
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