Core Scientific, Inc. (CORZ) came out with a quarterly loss of $0.10 per share versus the Zacks Consensus Estimate of a loss of $0.12. This compares to earnings of $0.19 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 16.67%. A quarter ago, it was expected that this company would post a loss of $0.10 per share when it actually produced a loss of $0.01, delivering a surprise of 90%.Over the last four quarters, the company has s ...

Financial Data and Key Metrics Changes - Total revenue for the quarter was $79.5 million, down 16% sequentially, with adjusted EBITDA at negative $6.1 million [34] - The sequential revenue decline was primarily driven by mining disconnections and relocations as the company continues converting sites to support high-density colocation [34] - The company earned 7.19 Bitcoin in the first quarter compared to 9.74 in the fourth quarter [34] Business Line Data and Key Metrics Changes - The company is focusing on high-density colocation, with significant progress made on contracts with CoreWeave, which are foundational to its growth strategy [9][18] - The company has a sales pipeline that includes a healthy mix of hyperscale and large enterprise customers, with several non-hyperscale deals ranging from 50 to 100 megawatts [12][13] Market Data and Key Metrics Changes - The demand for AI infrastructure is strong, with large enterprises beginning to roll out AI use cases, indicating a shift in market dynamics [7][11] - The company is positioned as a major supplier of infrastructure for AI workloads, capitalizing on the dislocation in the market where traditional data center providers struggle to meet density requirements [8] Company Strategy and Development Direction - The company aims to diversify its customer base, targeting to have CoreWeave represent less than 50% of its billable capacity by the end of 2028 [14] - The strategic priorities include executing on CoreWeave contracts, expanding data center capacity, and exploring M&A opportunities to enhance growth [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustained demand for high-density infrastructure, despite market noise suggesting a softening demand for AI infrastructure [11][28] - The company is focused on disciplined execution, sustainable growth, and long-term value creation, with a strong emphasis on capital allocation [29][30] Other Important Information - The company has approximately $780 million in liquidity, including cash, cash equivalents, and Bitcoin [30] - The structure of the CoreWeave contracts significantly reduces the company's capital burden and allows for strategic use of debt [19] Q&A Session Summary Question: Are there any credit enhancements built into your lease? - Management highlighted the excitement around the CoreWeave contracts and emphasized their value as a commercial counterparty [39] Question: Can you provide more color on the colocation CapEx and North Dakota plans? - Management indicated that preparations for the Grand Forks site are underway, with land acquisition to support future high-density colocation [41] Question: What has changed regarding large enterprise opportunities? - Management noted that large enterprises are developing their AI use cases, leading to increased demand and quicker timelines for contract finalization compared to hyperscalers [45][52] Question: How should we model the delivery of the eight megawatts and the additional 40 megawatts? - Management stated that the capacity will come online progressively over the next few months, making it difficult to provide exact dates [55] Question: What milestones should investors look for regarding construction timelines? - Management committed to providing monthly updates on construction progress and key project milestones [58] Question: How are conversations with customers changing due to tariffs? - Management acknowledged that tariffs may increase CapEx requirements, leading to higher lease rates, but noted that large enterprises are accelerating their demand [80] Question: What is the status of the three nanometer block ASICs? - Management confirmed that they expect to receive the machines in the second half of 2025 and believe they are insulated from tariff impacts [101]

[Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with accompanying notes detailing accounting policies and key financial items [Organization and Description of Business](index=12&type=section&id=1%20%E2%80%94%20Organization%20and%20Description%20of%20Business) Core Scientific, a digital infrastructure company, is transitioning its ten data centers from bitcoin mining to high-density colocation for AI workloads, operating through three segments - The company operates in three segments: Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation (for GPU-based HPC operations)[26](index=26&type=chunk) - A significant portion of the company's ten data centers are being converted to support AI-related workloads under new agreements with CoreWeave, Inc., a provider of high-performance computing (HPC)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company emerged from Chapter 11 bankruptcy on January 23, 2024, upon the effectiveness of its Plan of Reorganization[28](index=28&type=chunk) [Summary of Significant Accounting Policies](index=12&type=section&id=2%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note details significant accounting policies, including GAAP basis, estimates, early adoption of ASU 2023-08 for fair value measurement of digital assets, and distinct revenue recognition methods for its three segments - The company elected to early adopt ASU 2023-08, effective January 1, 2024, which requires measuring digital assets at fair value each reporting period with changes recognized in net income[36](index=36&type=chunk)[37](index=37&type=chunk) - Revenue from the Colocation segment is accounted for under ASC Topic 842 as an operating lease, as the lease components are predominant in the licensing arrangements[57](index=57&type=chunk) - Digital asset self-mining revenue is recognized based on non-cash compensation from third-party mining pool operators, measured at the spot rate for Bitcoin when control is transferred[45](index=45&type=chunk)[50](index=50&type=chunk) [Property, Plant, and Equipment](index=21&type=section&id=3%20%E2%80%94%20Property%2C%20Plant%2C%20and%20Equipment) Net property, plant, and equipment increased to **$650.3 million** by March 31, 2025, primarily due to a significant rise in construction in progress Property, Plant, and Equipment, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total PP&E (Gross) | $780,711 | $779,408 | | Less: accumulated depreciation | $407,184 | $385,922 | | Subtotal | $373,527 | $393,486 | | Add: Construction in progress | $276,764 | $162,856 | | **Property, plant and equipment, net** | **$650,291** | **$556,342** | [Commitments and Contingencies](index=27&type=section&id=8%20%E2%80%94%20Commitments%20and%20Contingencies) The company has **$1.25 billion** in capital expenditure commitments for data center conversion and is involved in various legal proceedings, some resolved post-bankruptcy - The company is contractually committed to approximately **$1.25 billion** of capital expenditures for infrastructure modifications and equipment related to its high-density colocation services, expected to occur within the next 12 to 24 months[98](index=98&type=chunk) - The company is subject to several legal proceedings, including a purported shareholder class action (Pang) and contract claims (GEM), some of which have been resolved post-bankruptcy emergence through stock issuance[100](index=100&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Segment Reporting](index=33&type=section&id=12%20%E2%80%94%20Segment%20Reporting) The company reports across three segments: Self-Mining, Hosted Mining, and Colocation, with Q1 2025 gross profits of **$6.0 million**, **$1.7 million**, and **$0.5 million** respectively Segment Gross Profit for Q1 2025 vs Q1 2024 (in thousands) | Segment | Q1 2025 Gross Profit | Q1 2025 Gross Margin | Q1 2024 Gross Profit | Q1 2024 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Digital Asset Self-Mining | $6,009 | 9% | $68,395 | 46% | | Digital Asset Hosted Mining | $1,737 | 46% | $9,251 | 32% | | Colocation | $467 | 5% | $— | —% | | **Consolidated** | **$8,213** | **10%** | **$77,646** | **43%** | - For Q1 2025, **84%** of the company's total revenue was generated from digital asset mining of bitcoin from a single customer (a mining pool operator)[135](index=135&type=chunk) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,625,371** | **$1,598,815** | | Cash and cash equivalents | $697,942 | $836,197 | | Digital assets | $80,646 | $23,893 | | Property, plant and equipment, net | $650,291 | $556,342 | | **Total Liabilities** | **$1,806,878** | **$2,418,995** | | Warrant liabilities | $421,902 | $1,097,285 | | Convertible and other notes payable, net | $1,071,843 | $1,073,990 | | **Total Stockholders' Deficit** | **$(181,507)** | **$(820,180)** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total revenue** | **$79,525** | **$179,291** | | Gross profit | $8,213 | $77,646 | | Operating (loss) income | $(42,596) | $55,227 | | Change in fair value of warrants and contingent value rights | $(621,464) | $(60,114) | | **Net income** | **$580,693** | **$210,691** | | **Diluted EPS** | **$1.25** | **$0.78** | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(40,599) | $22,174 | | Net cash used in investing activities | $(93,458) | $(31,970) | | Net cash (used in) provided by financing activities | $(4,198) | $54,363 | | **Net (decrease) increase in cash** | **$(138,255)** | **$44,567** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift from bitcoin mining to HPC/AI colocation, analyzing Q1 2025 financial results, liquidity, and key operating metrics, including the impact of bitcoin price volatility and the halving event - The company is undergoing a significant strategic transition from bitcoin mining to providing high-density colocation services for HPC and AI workloads, which it believes will offer more consistent, dollar-based revenue and lower risk[143](index=143&type=chunk)[151](index=151&type=chunk) Key Performance Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Self-Mining Hash rate (EH/s) | 18.1 | 19.3 | | Total cost to self-mine one bitcoin | $56,627 | $18,853 | | Total cash-based hash cost ($/TH) | $0.032 | $0.033 | | Adjusted EBITDA (in millions) | $(6.1) | $88.0 | - The April 2024 bitcoin 'halving' event, which reduced block rewards by **50%**, was a primary driver of the **55%** decrease in self-mining revenue year-over-year[174](index=174&type=chunk)[226](index=226&type=chunk) - Total revenue for Q1 2025 decreased by **56%** to **$79.5 million** from **$179.3 million** in Q1 2024, primarily due to lower self-mining and hosted mining revenue, partially offset by **$8.6 million** in new revenue from the Colocation segment[222](index=222&type=chunk) [Overview](index=38&type=section&id=Overview) Core Scientific is strategically transitioning from bitcoin mining to high-density colocation for HPC and AI, reporting **$79.5 million** in Q1 2025 revenue and **$580.7 million** net income - The company is strategically transitioning from bitcoin mining to high-density colocation services for HPC and AI customers[142](index=142&type=chunk)[143](index=143&type=chunk) Q1 2025 Financial Snapshot (in millions) | Metric | Q1 2025 | | :--- | :--- | | Total Revenue | $79.5 | | Operating Loss | $(42.6) | | Net Income | $580.7 | | Adjusted EBITDA | $(6.1) | [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Total revenue decreased **56%** to **$79.5 million** in Q1 2025, primarily due to reduced self-mining and hosted mining, while net income increased to **$580.7 million** due to a non-operating gain from warrant fair value changes - Total revenue decreased by **$99.8 million** (**56%**) YoY, driven by an **$82.8 million** drop in self-mining revenue and a **$25.6 million** drop in hosted mining revenue[222](index=222&type=chunk) - The decrease in self-mining revenue was caused by a **75%** decrease in bitcoin mined, resulting from the April 2024 halving, fewer deployed miners, and increased network difficulty, partially offset by a **74%** increase in the average price of bitcoin[223](index=223&type=chunk)[226](index=226&type=chunk) - Total non-operating income increased by **$467.8 million**, primarily due to a **$621.5 million** gain from the change in fair value of warrants and contingent value rights, which was driven by a decrease in the company's stock price[232](index=232&type=chunk)[235](index=235&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains **$698.7 million** in cash and equivalents, asserting sufficient liquidity for the next twelve months, despite using **$40.6 million** in operating cash and **$93.5 million** in investing activities in Q1 2025 - The company believes its operating cash flows and existing cash balance of **$698.7 million** are sufficient to satisfy cash requirements for the next twelve months and beyond[245](index=245&type=chunk)[247](index=247&type=chunk) - Net cash used in operating activities was **$40.6 million** in Q1 2025, compared to **$22.2 million** provided in Q1 2024, primarily due to a decrease in income before non-cash adjustments and changes in bitcoin holdings[251](index=251&type=chunk) - Purchases of property, plant, and equipment totaled **$88.4 million** in Q1 2025, with **$59.5 million** related to the Colocation segment, partially funded by **$42.0 million** in prepaid base license fees from a customer[252](index=252&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are bitcoin price volatility and electricity costs, holding **977 bitcoin** valued at **$80.6 million** as of March 31, 2025, with a 10% bitcoin price change impacting net income by **$6.7 million** - The company's primary market risks are the price of bitcoin and electricity commodity prices[261](index=261&type=chunk)[264](index=264&type=chunk) - As of March 31, 2025, the company held **977 bitcoin** with a carrying value of **$80.6 million**[261](index=261&type=chunk) - A hypothetical **10%** increase or decrease in the price of bitcoin produced during Q1 2025 would have changed net income by approximately **$6.7 million**[263](index=263&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[268](index=268&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[269](index=269&type=chunk) [Part II. Other Information](index=65&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, and other disclosures, including executive trading plans and exhibit listings [Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and refers to Note 8 of the financial statements for details on material pending matters - The company is involved in lawsuits and other contingencies in the ordinary course of business and refers to Note 8 of the financial statements for details on material proceedings[271](index=271&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors, clarifying that 'HPC Hosting' is now termed 'Colocation' - For a full discussion of risk factors, the report refers to Part I, Item 1A of the company's Annual Report on Form 10-K for the year ended December 31, 2024[273](index=273&type=chunk) - The company clarifies that the term 'HPC Hosting' used in prior reports is now referred to as the 'Colocation' segment[274](index=274&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company issued **0.1 million** shares from Tranche 1 Warrants for **$0.5 million** and **3.4 million** shares from Tranche 2 Warrants with minimal proceeds, relying on Bankruptcy Code Section 1145 - During Q1 2025, **0.1 million** shares of New Common Stock were issued upon exercise of Tranche 1 Warrants, resulting in **$0.5 million** in cash proceeds[275](index=275&type=chunk) - During Q1 2025, **3.4 million** shares of New Common Stock were issued upon exercise of Tranche 2 Warrants, resulting in minimal cash proceeds[276](index=276&type=chunk) [Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults on its senior securities during the period - None[277](index=277&type=chunk) [Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[278](index=278&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) The company reported no other significant information, but disclosed that an EVP adopted a Rule 10b5-1 trading plan to sell approximately **600,000** shares on March 4, 2025 - On March 4, 2025, Todd DuChene, EVP, Chief Legal and Administrative Officer, adopted a Rule 10b5-1 trading plan to sell an aggregate of approximately **600,000** shares[280](index=280&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and interactive data files - The report includes a list of filed exhibits, such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[281](index=281&type=chunk)

Business Transformation & Strategy - Core Scientific is transitioning from bitcoin mining to a high-density colocation provider[11] - The company aims to build a 1.3 GW+ billable power capacity data center platform by 2027[15] - Diversifying customer base and expanding colocation capacity through organic growth and M&A are key catalysts for 2025[42] Colocation Contracts & Revenue - Core Scientific has signed colocation contracts with potential revenue exceeding $10 Billion over 12 years[7, 12] - CoreWeave contracts contribute to approximately $850 Million in average annual run rate revenue[22] - The company anticipates a 75% to 80% profit margin from CoreWeave colocation contracts[22] Financial Performance & Debt - Q1 2025 colocation revenue was $8.573 Million, a 100% increase compared to Q1 2024[55] - Total debt as of March 31, 2025, was $1.119 Billion[46] - The company reported a net income of $580.693 Million for the three months ended March 31, 2025[55]

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) This section summarizes Core Scientific's Q1 2025 financial performance and strategic shift towards high-performance data infrastructure [First Quarter 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Core Scientific reported a significant increase in net income for Q1 2025, primarily driven by a non-cash mark-to-market adjustment, while total revenue and Adjusted EBITDA saw substantial declines compared to the prior year, reflecting an operational shift towards Colocation services Fiscal First Quarter 2025 Key Financial Highlights (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | Change (%) | | :--------------- | :----------------- | :----------------- | :---------------- | :--------- | | Net Income | $580.7 | $210.7 | +$370.0 | +175.6% | | Total Revenue | $79.5 | $179.3 | -$99.8 | -55.7% | | Operating Income | $(42.6) (Loss) | $55.2 (Income) | -$97.8 | -177.2% | | Adjusted EBITDA | $(6.1) | $88.0 | -$94.1 | -107.0% | - Net income increase primarily resulted from a **$621.5 million non-cash mark-to-market adjustment** on warrants and contingent value rights due to a decrease in share price[2](index=2&type=chunk) - The company is on track to deliver **250MW of billable capacity to CoreWeave by the end of 2025**, anticipating annualized colocation revenue of approximately **$360 million in 2026**[6](index=6&type=chunk) - Ended the quarter with a strong liquidity position, including **$778.6 million in cash and cash equivalents and digital assets**[6](index=6&type=chunk) [CEO Statement](index=1&type=section&id=CEO%20Statement) CEO Adam Sullivan highlighted Q1 2025 as an inflection point, emphasizing the company's rapid execution in delivering high-performance data infrastructure and its strategic positioning for the next era of data center infrastructure amidst accelerating demand - The quarter marks an inflection point for Core Scientific, transforming vision into execution by delivering infrastructure at scale[3](index=3&type=chunk) - The pace of demand for high-performance data infrastructure is accelerating, and the company's speed and precision are differentiating factors[3](index=3&type=chunk) - Core Scientific is not just expanding capacity but is shaping the foundation for the next era of data center infrastructure[3](index=3&type=chunk) [Detailed Financial Performance Analysis](index=1&type=section&id=Detailed%20Financial%20Performance%20Analysis) This section provides an in-depth analysis of Core Scientific's Q1 2025 financial results, detailing revenue, gross profit, operating expenses, net income, and Adjusted EBITDA [Total Revenue and Operating Results](index=1&type=section&id=Total%20Revenue%20and%20Operating%20Results) Total revenue for Q1 2025 significantly decreased year-over-year, primarily due to a 75% reduction in bitcoin mined from the halving event and a strategic shift towards Colocation services, with the revenue composition also shifting as Colocation emerged as a new stream Q1 2025 Total Revenue Breakdown (YoY) | Revenue Stream | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | Change (%) | | :----------------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Digital asset self-mining | $67.2 | $149.9 | -$82.7 | -55.2% | | Digital asset hosted mining | $3.8 | $29.3 | -$25.5 | -87.0% | | Colocation (formerly HPC hosting) | $8.6 | $0.0 | +$8.6 | N/A | | **Total Revenue** | **$79.5** | **$179.3** | **-$99.8** | **-55.7%** | - The decrease in total revenue was a result of a **75% decrease in bitcoin mined** due to the halving and the operational shift to Colocation[10](index=10&type=chunk) [Segmental Gross Profit Analysis](index=1&type=section&id=Segmental%20Gross%20Profit%20Analysis) Gross profit across digital asset mining segments declined sharply due to reduced bitcoin mining and the strategic shift, while the new Colocation segment, though contributing revenue, showed a lower gross margin due to its pass-through cost structure [Digital Asset Self-Mining Gross Profit](index=1&type=section&id=Digital%20Asset%20Self-Mining%20Gross%20Profit) Digital asset self-mining gross profit decreased significantly, primarily due to a substantial reduction in self-mining revenue from decreased bitcoin production, partially offset by higher bitcoin prices and lower power costs Digital Asset Self-Mining Gross Profit (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | Change (%) | | :----------------- | :----------------- | :----------------- | :---------------- | :--------- | | Gross Profit | $6.0 | $68.4 | -$62.4 | -91.2% | | Gross Margin | 9% | 46% | -37 pp | | - Decrease driven by an **$82.8 million decrease in self-mining revenue**, resulting from a **75% decrease in bitcoin mined** due to the halving and operational shift to Colocation[5](index=5&type=chunk) - Partially offset by a **74% increase in the average price of bitcoin** and a **33% decrease in power costs**[5](index=5&type=chunk) [Digital Asset Hosted Mining Gross Profit](index=1&type=section&id=Digital%20Asset%20Hosted%20Mining%20Gross%20Profit) Digital asset hosted mining gross profit also declined, mainly due to a decrease in hosted mining revenue as a result of the operational shift to Colocation, though partially mitigated by lower power costs Digital Asset Hosted Mining Gross Profit (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | Change (%) | | :----------------- | :----------------- | :----------------- | :---------------- | :--------- | | Gross Profit | $1.7 | $9.3 | -$7.6 | -81.7% | | Gross Margin | 46% | 32% | +14 pp | | - Decrease primarily due to a **$25.6 million decrease in hosted mining revenue** driven by the operational shift to Colocation[6](index=6&type=chunk)[7](index=7&type=chunk) - Partially offset by a **90% decrease in power costs** due to lower usage and rates, also driven by the operational shift[7](index=7&type=chunk) [Colocation Gross Profit](index=2&type=section&id=Colocation%20Gross%20Profit) The newly reported Colocation segment generated $0.5 million in gross profit with a 5% gross margin, or 8% non-GAAP gross margin excluding power pass-through costs, with revenue including a base license fee and direct pass-through of power costs Colocation Gross Profit and Margin (Q1 2025) | Metric | Q1 2025 (Millions) | | :----------------- | :----------------- | | Gross Profit | $0.5 | | Gross Margin | 5% | | Non-GAAP Gross Margin | 8% | - Colocation revenue includes a base license fee and the direct pass-through of power costs to clients, with no margin added on power[8](index=8&type=chunk) - Costs primarily consist of lease expense, direct pass-through of power costs, and facilities operations expenses[8](index=8&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Selling, general and administrative (SG&A) expenses increased significantly year-over-year, driven by higher stock-based compensation, non-capitalizable Colocation site startup costs, and increased personnel expenses to support the transition to Colocation operations Selling, General and Administrative Expenses (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | | :----- | :----------------- | :----------------- | :---------------- | | SG&A | $40.1 | $16.9 | +$23.2 | - Increase primarily attributable to a **$13.9 million increase in stock-based compensation**[9](index=9&type=chunk) - Also driven by a **$7.2 million increase in non-capitalizable Colocation site startup costs** and a **$2.5 million increase in personnel and related expenses** due to increased headcount for Colocation operations[9](index=9&type=chunk) [Net Income Analysis](index=2&type=section&id=Net%20Income%20Analysis) Net income saw a substantial increase, primarily due to a large non-cash mark-to-market adjustment on warrant liabilities, partially offset by a decrease in total revenue and the absence of reorganization items present in the prior year Net Income (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | | :-------- | :----------------- | :----------------- | :---------------- | | Net Income | $580.7 | $210.7 | +$370.0 | - Increase driven primarily by a net **$621.5 million mark-to-market adjustment on warrants and other contingent value rights**, comprising a **$634.3 million decrease in fair value of warrant liabilities**, partially offset by a **$12.8 million increase in fair value of contingent value rights**[10](index=10&type=chunk) - Also contributed by a **$16.3 million decrease in interest expense, net**, and a **$7.9 million increase in proceeds from money market funds**[10](index=10&type=chunk) - Partially offset by **$111.4 million of Reorganization items, net** (no comparable activity in fiscal 2025), and a **$99.8 million decrease in Total revenue**[10](index=10&type=chunk) [Non-GAAP Adjusted EBITDA Performance](index=2&type=section&id=Non-GAAP%20Adjusted%20EBITDA%20Performance) Non-GAAP Adjusted EBITDA significantly decreased, primarily due to lower total revenue, a decrease in the fair value of digital assets, and increased cash operating expenses, partially offset by reduced cash cost of revenue Non-GAAP Adjusted EBITDA (YoY) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | | :-------------- | :----------------- | :----------------- | :---------------- | | Adjusted EBITDA | $(6.1) | $88.0 | -$94.1 | - Decrease driven by a **$99.8 million decrease in total revenue**, an **$11.2 million decrease in the change in fair value of digital assets**, and a **$7.4 million increase in cash operating expenses**[11](index=11&type=chunk) - Partially offset by a **$21.4 million decrease in cash cost of revenue** and a **$3.0 million decrease in realized losses on energy derivatives**[11](index=11&type=chunk) [Company Profile](index=3&type=section&id=Company%20Profile) This section provides an overview of Core Scientific's business, highlighting its leadership in digital infrastructure and its strategic shift towards AI-related colocation services [About Core Scientific](index=3&type=section&id=ABOUT%20CORE%20SCIENTIFIC) Core Scientific is a leader in digital infrastructure for high-density colocation services and digital asset mining, actively transitioning a significant portion of its facilities to support AI-related workloads, moving beyond its primary self-mining revenue model - Core Scientific is a leader in digital infrastructure for high-density colocation services and digital asset mining[18](index=18&type=chunk) - The company operates dedicated, purpose-built facilities for digital asset mining and provides digital infrastructure, software solutions, and services to third-party customers[18](index=18&type=chunk) - Currently allocating and converting a significant portion of its ten facilities across multiple states to support artificial intelligence-related workloads under new contracts[18](index=18&type=chunk) - Historically derived the majority of revenue from self-mining digital assets, but is undergoing an operational shift[18](index=18&type=chunk) [Forward-Looking Statements & Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing factors that could cause actual results to differ materially from projections [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section serves as a cautionary note, highlighting that the press release contains forward-looking statements subject to various risks and uncertainties, which could cause actual results to differ materially from projections, and the company disclaims any obligation to update these statements - The press release contains forward-looking statements regarding projections, estimates, and forecasts of financial metrics, market opportunity, growth plans, and the company's ability to execute contracts and source energy[19](index=19&type=chunk) - All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially[20](index=20&type=chunk) - Key risks include the ability to earn digital assets profitably, attract colocation customers, perform under agreements, maintain competitive position, impact of network hash rate, ability to raise capital, power availability, system failures, climate change, changes in blockchain transaction methods, security breaches, market slowdowns, digital asset price volatility, and regulatory changes[20](index=20&type=chunk) - The company disclaims any obligation to update or revise any forward-looking statement, except as required by applicable law[20](index=20&type=chunk)[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated balance sheets, statements of operations, and cash flows, providing a summary of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight increase in total assets, driven by property, plant and equipment, while total liabilities decreased significantly, primarily due to a reduction in warrant liabilities, leading to a substantial improvement in stockholders' deficit Condensed Consolidated Balance Sheets (Key Figures, in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--------------------------- | :------------- | :---------------- | | Total Assets | $1,625,371 | $1,598,815 | | Total Liabilities | $1,806,878 | $2,418,995 | | Total Stockholders' Deficit | $(181,507) | $(820,180) | | Cash and cash equivalents | $697,942 | $836,197 | | Digital assets | $80,646 | $23,893 | | Warrant liabilities | $421,902 | $1,097,285 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations reflects a substantial decrease in total revenue and gross profit, leading to an operating loss, however, a significant non-operating income from the change in fair value of warrants and contingent value rights resulted in a higher net income compared to the prior year Condensed Consolidated Statements of Operations (Key Figures, in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $79,525 | $179,291 | | Gross profit | $8,213 | $77,646 | | Operating (loss) income | $(42,596) | $55,227 | | Change in fair value of warrants and contingent value rights | $(621,464) | $(60,114) | | Net income | $580,693 | $210,691 | | Net income per share - Basic | $1.44 | $0.91 | | Net income per share - Diluted | $1.25 | $0.78 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operating activities turned negative in Q1 2025, primarily due to adjustments reconciling net income, including the non-cash warrant valuation change, while investing activities saw increased cash usage for property, plant, and equipment purchases, and financing activities also used cash Condensed Consolidated Statements of Cash Flows (Key Figures, in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(40,599) | $22,174 | | Net cash used in investing activities | $(93,458) | $(31,970) | | Net cash (used in) provided by financing activities | $(4,198) | $54,363 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(138,255) | $44,567 | | Cash, cash equivalents and restricted cash—end of period | $698,725 | $114,276 | - Purchases of property, plant and equipment increased significantly to **$88.4 million in Q1 2025** from **$31.9 million in Q1 2024**[29](index=29&type=chunk) - The change in fair value of warrant liabilities was a significant non-cash adjustment, decreasing by **$634.3 million in Q1 2025**[29](index=29&type=chunk) [Detailed Segment Results](index=9&type=section&id=Detailed%20Segment%20Results) This section provides a detailed breakdown of financial performance across the Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation segments, highlighting revenue, costs, and gross profit for each [Digital Asset Self-Mining Segment](index=9&type=section&id=Digital%20Asset%20Self-Mining%20Segment) The self-mining segment experienced a substantial decline in revenue and gross profit, with power fees remaining the largest cost component despite a decrease, and gross margin fell sharply from 46% to 9% Digital Asset Self-Mining Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :--------- | :--------- | | Digital asset self-mining revenue | $67,179 | $149,959 | | Cost of digital asset self-mining: | | | | Power fees | $30,319 | $44,983 | | Depreciation expense | $19,259 | $27,478 | | Total cost of digital asset self-mining | $61,170 | $81,564 | | Digital Asset Self-Mining gross profit | $6,009 | $68,395 | | Digital Asset Self-Mining gross margin | 9% | 46% | [Digital Asset Hosted Mining Segment](index=9&type=section&id=Digital%20Asset%20Hosted%20Mining%20Segment) The hosted mining segment also saw a significant reduction in revenue and gross profit, reflecting the company's strategic shift, with power fees, while still a major cost, decreasing substantially Digital Asset Hosted Mining Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :--------- | :--------- | | Digital asset hosted mining revenue from customers | $3,773 | $29,332 | | Cost of digital asset hosted mining services: | | | | Power fees | $1,367 | $13,494 | | Total cost of digital asset hosted mining services | $2,036 | $20,081 | | Digital Asset Hosted Mining gross profit | $1,737 | $9,251 | | Digital Asset Hosted Mining gross margin | 46% | 32% | [Colocation Segment](index=9&type=section&id=Colocation%20Segment) The new Colocation segment generated $8.6 million in revenue, primarily from license fees and power pass-through, and reported a gross profit of $0.5 million, with a 5% HPC Hosting gross margin and an 8% Colocation licensing gross margin Colocation Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :--------- | :--------- | | Colocation revenue: | | | | License fees | $5,995 | — | | Power fees passed through to customer | $2,586 | — | | Total Colocation revenue | $8,573 | — | | Cost of Colocation services: | | | | Cost of licensing revenue | $5,520 | — | | Power fees passed through to customer | $2,586 | — | | Total cost of Colocation services | $8,106 | — | | Colocation gross profit | $467 | — | | Colocation licensing gross margin | 8% | — | | HPC Hosting gross margin | 5% | — | [Consolidated Segment Results](index=9&type=section&id=Consolidated%20Segment%20Results) Consolidated results show a significant decrease in total revenue and gross profit, leading to a lower consolidated gross margin of 10% compared to 43% in the prior year, reflecting the overall impact of the operational shift and market changes Consolidated Segment Results (in thousands) | Metric | Q1 2025 | Q1 2024 | | :------------------------- | :--------- | :--------- | | Consolidated total revenue | $79,525 | $179,291 | | Consolidated cost of revenue | $71,312 | $101,645 | | Consolidated gross profit | $8,213 | $77,646 | | Consolidated gross margin | 10% | 43% | [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles Adjusted EBITDA, a non-GAAP financial measure used to evaluate the company's operational performance by excluding certain non-cash and non-recurring items [Adjusted EBITDA Definition and Rationale](index=10&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Rationale) Adjusted EBITDA is presented as a non-GAAP financial measure to provide insights into the company's operating results by excluding non-cash items, interest, taxes, and other non-recurring or non-operational charges, and is used by management and investors for evaluating performance and making operational decisions - Adjusted EBITDA is defined as net income adjusted for interest, taxes, depreciation, amortization, stock-based compensation, reorganization items, unrealized fair value adjustments on energy derivatives, changes in fair value of warrants and contingent value rights, colocation organizational startup costs, post-emergence bankruptcy advisory costs, and other non-cash items[34](index=34&type=chunk) - The measure is used by management, investors, and the Board to evaluate and compare operating results, return on capital, and operating efficiencies, as it removes the effect of certain non-cash items, variable charges, and timing differences[34](index=34&type=chunk) - It is a key measurement used internally for operating decisions, performance evaluation, and strategic/financial planning[34](index=34&type=chunk) - Adjusted EBITDA should not be considered in isolation or as a substitute for GAAP financial information, and its computation may not be comparable to other companies[35](index=35&type=chunk) [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation table details the adjustments made to net income to arrive at Adjusted EBITDA, showing a significant shift from positive Adjusted EBITDA in Q1 2024 to negative in Q1 2025, largely influenced by the change in fair value of warrants and contingent value rights Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $580,693 | $210,691 | | Adjustments: | | | | Interest (income) expense, net | $(2,187) | $14,087 | | Depreciation and amortization | $19,731 | $28,996 | | Stock-based compensation expense | $16,185 | $(1,060) | | Reorganization items, net | — | $(111,439) | | Change in fair value of warrants and contingent value rights | $(621,464) | $(60,114) | | **Adjusted EBITDA** | **$(6,071)** | **$87,996** | [Investor Relations & Corporate Information](index=3&type=section&id=Investor%20Relations%20%26%20Corporate%20Information) This section provides details on investor communication, including conference call information, audio replay access, and contact details for investor relations and media inquiries [Conference Call and Live Webcast](index=3&type=section&id=CONFERENCE%20CALL%20AND%20LIVE%20WEBCAST) Core Scientific hosted a conference call and live webcast on May 7, 2025, to discuss the fiscal first quarter 2025 results, featuring key executives - Conference call held on **Wednesday, May 7, 2025, at 4:30 pm Eastern Time**[13](index=13&type=chunk) - Speakers included Adam Sullivan (CEO), Jim Nygaard (CFO), and Jon Charbonneau (VP, Investor Relations)[13](index=13&type=chunk) - Investors could dial in via telephone or listen to a live audio webcast on the company's Investor Relations page[14](index=14&type=chunk)[15](index=15&type=chunk) - A supplementary investor presentation for Q1 2025 was accessible online[16](index=16&type=chunk) [Audio Replay](index=3&type=section&id=AUDIO%20REPLAY) An audio replay of the conference call is available for one year via the company's investor relations website and a dedicated telephone number - An audio replay of the event is archived on the Investor Relations section of the Company's website[17](index=17&type=chunk) - Replay also accessible via telephone by dialing **+1 (877) 660-6853 (U.S. toll free)** or **+1 (201) 612-7415 (U.S. local)** and entering Access Code **13753188**[17](index=17&type=chunk) [Contacts](index=12&type=section&id=CONTACTS) Contact information for investor relations and media inquiries is provided for stakeholders - Investors can contact **ir@corescientific.com**[40](index=40&type=chunk) - Media can contact **press@corescientific.com**[40](index=40&type=chunk)

Group 1: Core Scientific, Inc. (CORZ) - Core Scientific's shares increased by 5.3% to close at $8.42, following a period of 16.6% loss over the past four weeks, indicating a strong trading volume [1] - The company is benefiting from securing long-term high-performance computing (HPC) contracts, expanding infrastructure capacity, and diversifying its customer base, positioning it for strong growth and higher profit margins in the future [1] - The consensus EPS estimate for the upcoming quarter is a loss of $0.10 per share, reflecting a year-over-year change of -152.6%, with expected revenues of $99.39 million, down 44.6% from the previous year [2] Group 2: Industry Insights - Core Scientific is part of the Zacks Financial - Miscellaneous Services industry, which includes WisdomTree, Inc. (WT), whose shares increased by 0.3% to $9.13, with a 5.1% return over the past month [3] - WisdomTree's consensus EPS estimate for the upcoming report is $0.16, representing a year-over-year change of +33.3%, with the estimate remaining unchanged over the past month [4]

Core Insights - Chain Reaction has launched the 3nm EL3CTRUM A31 ASIC, targeting sub-10 J/TH for high-efficiency Bitcoin mining operations, setting a new benchmark for modularity and customizability [1][2] - The company is also developing 2nm ASIC technology to enhance performance and energy efficiency for future Bitcoin mining [2][3] Product Features - The EL3CTRUM A31 ASIC architecture allows data center operators to optimize their infrastructure, reduce energy costs, and maintain profitability in changing mining conditions [2] - Key innovations include best-in-class efficiency, customer-centric optimization tailored to regional power strategies, and modular scalability for customized solutions [8] Strategic Partnerships - Chain Reaction emphasizes customer partnerships to ensure continuous product advancement and supply chain reliability, collaborating with industry leaders [4][5] - The company is expanding its collaboration with Core Scientific, focusing on ASIC innovation and privacy-enhanced 3PU™ technology for encrypted AI computing [5][6] Industry Positioning - Chain Reaction is positioned as a leader in high-performance computing through specialized ASIC solutions, with a commitment to advancing mining efficiency and scalability [7] - The company leverages advanced semiconductor technologies, ensuring early access to innovations below 2nm [9]

Core Scientific's (NASDAQ: CORZ ) transformation from a struggling bitcoin miner to a key AI-Infrastructure marks one of the most significant strategic pivots in the industry. By leveraging its existing power capacity and data centerWe are a group of experienced investors that like to dig deeper into stocks to find growth stories at a reasonable price with strong economic moats. We also aim to conduct high-quality analysis by deep diving into valuations, key business drivers, risk/reward, and different futu ...

Summary of Key Points from the Conference Call Industry Overview - The digital infrastructure industry, particularly data centers, is experiencing robust demand driven by the growth of Artificial Intelligence (AI) and the increasing need for server capacity [1][18]. - Data center demand is closely linked to GPU sales, particularly from NVIDIA (NVDA), which is a significant player in the market [1][2]. Company Insights NVIDIA (NVDA) - NVDA reported Blackwell revenue of $11 billion, exceeding expectations, indicating strong demand for GPUs [2]. - Concerns regarding supply chain issues related to the Blackwell ramp are considered overstated, with expectations for continued demand growth [2]. - NVDA chip sales are projected to account for 63%, 64%, and 87% of data center demand in 2025, 2026, and 2027, respectively [3][12]. Digital Realty (DLR) - DLR launched a new hyperscale data center fund aiming to raise $2.5 billion, which could expand to $5 billion with debt [6][34]. - The fund is expected to enhance DLR's investment capacity and returns while allowing for monetization of stabilized assets [35]. - DLR has increased rental rates for leases over 1 MW by 106% since Q2 2022, reflecting strong demand and limited supply [37]. Equinix (EQIX) - EQIX faced challenges with a gas-powered data center project in Dublin, highlighting the difficulties in securing power for new developments [14][36]. - The company noted that stronger bookings could have been achieved if there was available capacity in tier-one metropolitan areas [14]. Core Scientific (CORZ) - CORZ leased an additional 70 MW of critical IT load, bringing total leased capacity to 590 MW, which is expected to generate $1.2 billion in revenues over a 12-year term [29]. Market Dynamics - The demand for data centers is expected to triple in the next 3-5 years, with significant growth projected in markets like Dallas, Columbus, and Atlanta [39]. - The primary constraint on growth is power availability, which is expected to limit portfolio growth and drive rental rates higher [18]. - New transmission projects approved by PJM aim to improve grid reliability and support future data center build-outs [47][48]. Financial Projections - Data center net absorption in top North American markets reached nearly 5 GW in 2024, compared to 360 MW in 2019, indicating a significant increase in demand [18]. - The projected total capacity of data centers in the U.S. is expected to reach 58.6 GW, with substantial growth in both operational and planned projects [41]. Conclusion - The digital infrastructure sector, particularly data centers, is poised for significant growth driven by AI and increasing demand for server capacity. Companies like NVDA, DLR, and EQIX are strategically positioned to capitalize on these trends, despite challenges related to power availability and market constraints.

Core Insights - The article discusses the investment position of the analyst in CORZ shares, indicating a beneficial long position through various means such as stock ownership and derivatives [1]. Group 1 - The analyst expresses personal opinions regarding the investment without receiving compensation from any company mentioned [1]. - There is an emphasis on the independence of the analyst's views, which may not reflect the overall stance of Seeking Alpha [2]. - The article clarifies that Seeking Alpha does not provide licensed investment advice or recommendations [2].