Core Scientific(CORZ) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for the six months ended June 30, 2024 was $320.4 million, compared to$247.6 million for the same period in 2023[179] - Operating income for the six months ended June 30, 2024 was $61.8 million, compared to$17.1 million for the same period in 2023[179] - Net loss for the six months ended June 30, 2024 was $594.2 million, compared to$9.6 million for the same period in 2023[179] - Adjusted EBITDA for the six months ended June 30, 2024 was $134.0 million, compared to$85.3 million for the same period in 2023[179] - Total revenue increased by $14.2 million or 11$141.1 million for the three months ended June 30, 2024, from $126.9 million for the three months ended June 30, 2023[245] - Net loss increased by$795.6 million to $804.9 million for the three months ended June 30, 2024, from$9.3 million for the three months ended June 30, 2023[243] - Net loss widened to $594.2 million in the first half of 2024, compared to a net loss of$9.6 million in the same period of 2023, driven by non-operating expenses[266] - Total revenue increased by $72.8 million or 29$320.4 million for the six months ended June 30, 2024, from $247.6 million for the six months ended June 30, 2023[268] - Operating income increased significantly to$61.8 million for the six months ended June 30, 2024, compared to $17.1 million in the same period in 2023, driven by higher gross profit and reduced operating expenses[289] Mining Operations and Hash Rate - The company secured approximately 1,200 MW of contracted power capacity as of June 30, 2024[178] - The company improved its average self-mining fleet energy efficiency to 24.7 joules per terahash for the three months ended June 30, 2024, compared to 26.9 joules per terahash for the three months ended March 31, 2024[178] - The company's total mining equipment hash rate was 24.6 EH/s as of June 30, 2024, with 19.4 EH/s from self-miners and 5.2 EH/s from hosted miners[191] - The company's digital asset self-mining revenue, net of receivables, was$261.6 million for the six months ended June 30, 2024, compared to $194.9 million for the same period in 2023[193] - Self-mining hash rate increased to 19.4 EH/s as of June 30, 2024, up 28$56,643 to $72,674, with an average price of$65,677[317] - A hypothetical 10% increase or decrease in the price of bitcoin during the three months ended June 30, 2024, would have increased or decreased net loss by approximately $11.1 million[317] - The company did not hold any bitcoin as of June 30, 2024[316] Costs and Expenses - Electricity costs are a major operating expense, with seasonal demand and geopolitical factors impacting prices and availability[205] - Total cost to self-mine one bitcoin increased to$29,879 in Q2 2024, up from $13,471 in Q2 2023[218] - Direct power cost per bitcoin self-mined rose to$24,533 in Q2 2024, compared to $11,253 in Q2 2023[218] - Total cash-based hash cost decreased to$0.030 per terahash in Q2 2024, down from $0.036 in Q2 2023[218] - Cost of revenue increased by$12.3 million or 14%, to $102.3 million for the three months ended June 30, 2024, from$90.0 million for the three months ended June 30, 2023[248] - Cost of revenue increased by $25.1 million or 14$203.9 million for the six months ended June 30, 2024, from $178.8 million for the six months ended June 30, 2023[271] Revenue Segments - Digital asset self-mining revenue increased by$13.7 million or 14%, to $110.7 million for the three months ended June 30, 2024, from$97.1 million for the three months ended June 30, 2023[246] - Total digital asset hosted mining revenue from customers decreased by $1.5 million or 6$24.8 million for the three months ended June 30, 2024, from $26.3 million for the three months ended June 30, 2023[247] - Total HPC hosting revenue was$5.5 million for the three months ended June 30, 2024, compared to nil for the same period in the prior year[247] - Digital asset self-mining revenue increased by $65.6 million or 34$260.7 million for the six months ended June 30, 2024, from $195.1 million for the six months ended June 30, 2023[269] - Total digital asset hosted mining revenue from customers increased by$8.9 million or 20%, to $54.2 million for the six months ended June 30, 2024, from$45.2 million for the six months ended June 30, 2023[270] - Total HPC hosting revenue was $5.5 million for the six months ended June 30, 2024, compared to nil for the same period in the prior year[270] - Digital Asset Self-Mining segment revenue increased by 14$110.7 million in Q2 2024, driven by a 134% increase in bitcoin price and a 28% increase in self-mining hash rate to 19.4 EH/s[262] - Digital Asset Hosted Mining segment revenue decreased by 17% to $24.8 million in Q2 2024, but gross margin improved to 30$5.5 million in revenue and $0.6 million in gross profit in Q2 2024, as it began operations during the quarter[264] - Digital Asset Self-Mining segment revenue increased by 34$260.7 million, with gross profit rising 78% to $99.1 million and gross margin improving from 28$54.2 million, with gross profit increasing 27% to $16.7 million and gross margin improving from 25$5.5 million in revenue and $0.6 million in gross profit, with an 11$1.9 million or 5%, to $38.8 million for the three months ended June 30, 2024, from$37.0 million for the three months ended June 30, 2023[248] - Gross profit increased by $47.7 million or 69$116.5 million for the six months ended June 30, 2024, from $68.7 million for the six months ended June 30, 2023[271] - Digital Asset Self-Mining segment gross profit increased by 2$30.7 million in Q2 2024, despite a 52% decrease in bitcoin mined due to the April 2024 halving[262] - Digital Asset Hosted Mining segment gross profit increased by 11% to $7.4 million in Q2 2024, reflecting improved profitability[263] - Consolidated total revenue increased 29$320.4 million, with gross profit rising 69% to $116.5 million and gross margin improving from 28$0.5 million or 33%, to $2.2 million for the three months ended June 30, 2024, from$1.6 million for the three months ended June 30, 2023[243] - Sales and marketing expenses increased by $1.9 million or 174$3.0 million for the three months ended June 30, 2024, from $1.1 million for the three months ended June 30, 2023[243] - General and administrative expenses increased by$1.8 million or 8%, to $26.2 million for the three months ended June 30, 2024, from$24.4 million for the three months ended June 30, 2023[243] - Total operating expenses increased by $4.3 million (16$31.4 million for the three months ended June 30, 2024[254] - Research and development expenses increased by $0.5 million (33$2.2 million for the three months ended June 30, 2024[255] - Sales and marketing expenses increased by $1.9 million to$3.0 million for the three months ended June 30, 2024[255] - General and administrative expenses increased by $1.8 million to$26.2 million for the three months ended June 30, 2024[256] - Research and development expenses increased $0.9 million or 30$4.0 million for the six months ended June 30, 2024, from $3.1 million for the six months ended June 30, 2023[279] - Sales and marketing expenses increased$1.9 million or 89%, to $3.9 million for the six months ended June 30, 2024, from$2.1 million for the six months ended June 30, 2023[279] - General and administrative expenses decreased $5.8 million or 13$40.4 million for the six months ended June 30, 2024, from $46.2 million for the six months ended June 30, 2023[280] - Total operating expenses decreased$3.0 million or 6%, to $48.3 million for the six months ended June 30, 2024, from$51.3 million for the six months ended June 30, 2023[278] Non-Operating Expenses and Taxes - Total non-operating expenses, net increased by $792.7 million to$811.3 million for the three months ended June 30, 2024, driven by a $796.0 million change in fair value of warrant and contingent value rights[258] - Income tax expense was$0.1 million for both the three months ended June 30, 2024, and June 30, 2023[259] - Total non-operating expenses, net increased by $629.2 million to$655.7 million for the six months ended June 30, 2024, driven by a $735.9 million change in fair value of warrant and contingent value rights due to a stock price increase from$3.44 to $9.30 per share[282] - Income tax expense for the six months ended June 30, 2024, was$0.4 million, with an effective tax rate lower than the federal statutory rate of 21% due to a valuation allowance on deferred tax assets and non-deductible expenses[283] Cash Flow and Liquidity - Cash and cash equivalents increased by 91% to $96.1 million as of June 30, 2024, compared to$50.4 million as of December 31, 2023[295] - Restricted cash decreased by 95% to $1.0 million as of June 30, 2024, compared to$19.3 million as of December 31, 2023[295] - Total cash, cash equivalents, and restricted cash increased by 39% to $97.1 million as of June 30, 2024, compared to$69.7 million as of December 31, 2023[295] - Net cash provided by operating activities decreased to $23.4 million for the six months ended June 30, 2024, compared to$38.0 million for the same period in 2023[300] - Net cash used in investing activities increased to $35.2 million for the six months ended June 30, 2024, compared to$2.5 million for the same period in 2023[301] - Net cash provided by financing activities was $39.2 million for the six months ended June 30, 2024, compared to a net cash used of$11.0 million for the same period in 2023[302] - The company entered into a new $80.0 million credit and guaranty agreement (Exit Credit Agreement) upon emerging from bankruptcy, with$20.0 million of undrawn borrowing capacity remaining[291] Competition and Differentiation - The company faces significant competition in acquiring new miners, raising capital, and securing low-cost electricity and high-power sites[207][209] - The company differentiates itself through proprietary data center designs, thermodynamic solutions, and expertise in mining equipment optimization[212][213] - The company plans to expand its miner fleet and invest in R&D to maintain competitiveness and develop new technologies[209][213] Regulatory Environment - Regulatory developments, including U.S. and international efforts, could impact the company's operations and the broader digital asset industry[214][215][216] - The company will cease to be an emerging growth company as of December 31, 2024, due to its market value exceeding $700 million[313] Other Financial Metrics - The company uses non-GAAP financial measures like Adjusted EBITDA and key operating metrics such as self-mining hash rate to evaluate performance[217] - Adjusted EBITDA for Q2 2024 was$46.0 million, compared to $45.0 million in Q2 2023[218] - The top three hosting customers accounted for 87% of the Digital Asset Hosting segment's total revenue for the six months ended June 30, 2024, up from 72% in the same period in 2023[286]