Core Scientific(CORZ) - 2025 Q2 - Quarterly Report

Part I. Financial Information Presents the company's unaudited financial statements and management's analysis of financial condition and operational results Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited) Shows significant growth in total assets and liabilities, driven by increases in digital assets and property, plant, and equipment Condensed Consolidated Balance Sheets (in thousands): | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Current Assets | $1,004,760 | $903,962 | $100,798 | 11.15% | | Property, plant and equipment, net | $828,603 | $556,342 | $272,261 | 48.94% | | Total Assets | $1,978,052 | $1,598,815 | $379,237 | 23.72% | | Total Current Liabilities | $562,722 | $134,562 | $428,160 | 318.20% | | Total Liabilities | $3,042,728 | $2,418,995 | $623,733 | 25.79% | | Total Stockholders' Deficit | $(1,064,676) | $(820,180) | $(244,496) | 29.81% | - The company's digital assets significantly increased from $23.9 million at December 31, 2024, to $172.8 million at June 30, 2025, reflecting a substantial increase in holdings[20] - Customer funding receivable and other current assets saw a large increase from $43.1 million to $250.6 million, indicating increased activity or prepayments from customers[20] Condensed Consolidated Statements of Operations (Unaudited) Reports a significant year-over-year decline in revenue and gross profit, resulting in a substantial operating loss Condensed Consolidated Statements of Operations (in thousands): | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total revenue | $78,628 | $141,102 | $(62,474) | -44.28% | | Gross profit | $5,025 | $38,817 | $(33,792) | -87.05% | | Operating (loss) income | $(26,284) | $6,579 | $(32,863) | -499.51% | | Net loss | $(936,799) | $(804,896) | $(131,903) | 16.39% | | Net loss per share (basic and diluted) | $(0.04) | $(4.51) | $4.47 | -99.11% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total revenue | $158,153 | $320,393 | $(162,240) | -50.64% | | Gross profit | $13,238 | $116,463 | $(103,225) | -88.64% | | Operating (loss) income | $(68,880) | $61,806 | $(130,686) | -211.45% | | Net loss | $(356,106) | $(594,205) | $238,099 | -40.07% | | Net loss per share (basic and diluted) | $(0.21) | $(2.87) | $2.66 | -92.68% | - Digital asset self-mining revenue decreased significantly by 44% for the three months ended June 30, 2025, and 50% for the six months ended June 30, 2025, compared to the prior year periods[23] - Colocation revenue showed strong growth, increasing by 91% for the three months and 147% for the six months ended June 30, 2025, reflecting the company's strategic shift[23] - A substantial increase in the change in fair value of warrants and contingent value rights contributed significantly to the net loss for both periods, reaching $909.9 million for the three months and $288.5 million for the six months ended June 30, 2025[23] Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) Details the increase in stockholders' deficit due to net loss, partially offset by stock-based compensation and warrant exercises Changes in Stockholders' Deficit (in thousands): | Metric | Balance at Dec 31, 2024 | Net Loss (6M 2025) | Stock-Based Comp (6M 2025) | Exercise of Warrants (6M 2025) | Balance at June 30, 2025 | | :---------------------- | :---------------------- | :----------------- | :--------------------------- | :----------------------------- | :----------------------- | | Additional Paid-In Capital | $2,915,035 | — | $40,751 | $70,930 | $3,026,645 | | Accumulated Deficit | $(3,735,218) | $(356,106) | — | — | $(4,091,324) | | Total Stockholders' Deficit | $(820,180) | $(356,106) | $40,751 | $70,930 | $(1,064,676) | - The total stockholders' deficit increased from $(820.2) million at December 31, 2024, to $(1,064.7) million at June 30, 2025, primarily due to the net loss incurred during the period[25] - Stock-based compensation and the exercise of warrants contributed to an increase in additional paid-in capital, partially offsetting the accumulated deficit[25] Condensed Consolidated Statements of Cash Flows (Unaudited) Highlights a shift to negative operating cash flow and significantly increased cash usage in investing activities Condensed Consolidated Statements of Cash Flows (in thousands): | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net cash (used in) provided by operating activities | $(6,599) | $23,378 | $(29,977) | -128.23% | | Net cash used in investing activities | $(213,066) | $(35,154) | $(177,912) | 506.12% | | Net cash (used in) provided by financing activities | $(35,970) | $39,172 | $(75,142) | -191.84% | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(255,635) | $27,396 | $(283,031) | -1033.16% | | Cash, cash equivalents and restricted cash—end of period | $581,345 | $97,105 | $484,240 | 498.68% | - Operating activities shifted from providing $23.4 million in cash in H1 2024 to using $6.6 million in H1 2025, primarily due to a decrease from the bitcoin holding strategy and lower net income before non-cash adjustments[32][285] - Investing activities saw a significant increase in cash usage, from $35.2 million in H1 2024 to $213.1 million in H1 2025, largely driven by $180.5 million in property, plant, and equipment purchases for the Colocation segment[32][286] - Financing activities moved from providing $39.2 million in cash in H1 2024 to using $36.0 million in H1 2025, mainly due to debt extinguishment payments and the absence of proceeds from common stock issuance and exit facility draws seen in the prior year[32][288] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations of accounting policies and specific financial components supporting the consolidated statements 1 — Organization and Description of Business Details the company's business as a digital infrastructure leader transitioning from bitcoin mining to HPC colocation services - Core Scientific is a leader in digital infrastructure for high-density colocation and digital asset mining, with a strategic shift towards HPC colocation services for AI workloads[36][37][152] - The company operates in three segments: Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation (formerly HPC Hosting), with the Colocation segment being a new focus since April 1, 2024[38][165] - The strategic transition involves converting most of its ten facilities to support AI workloads and next-generation colocation services, aiming for more stable and predictable revenue streams[36][153][154] 2 — Summary of Significant Accounting Policies Outlines significant accounting policies for revenue recognition, digital assets, leases, and stock-based compensation Digital Assets Roll-Forward (in thousands): | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Digital assets, beginning of period | $23,893 | $2,284 | | Digital asset self-mining revenue, net of receivables | $129,770 | $261,566 | | Mining revenue from shared hosting | — | $13,818 | | Proceeds from sales of digital assets and shared hosting | — | $(277,562) | | Increase (decrease) in fair value of digital assets | $19,109 | $(41) | | Digital assets, end of period | $172,772 | — | Bitcoin Holdings (in thousands, except quantity): | Date | Quantity | Cost Basis | Fair Value | | :--------------- | :------- | :--------- | :--------- | | June 30, 2025 | 1,612 | $154,755 | $172,772 | | December 31, 2024 | 256 | $24,991 | $23,893 | - Deferred revenue significantly increased from $18.1 million at December 31, 2024, to $150.1 million at June 30, 2025, reflecting advanced payments for colocation services, typically recognized within 30 months[48][50] - The company adopted ASU 2023-09 (Income Taxes) as of January 1, 2025, which affects annual income tax disclosures but not interim reporting[70] 3 — Property, Plant, and Equipment Details the composition of property, plant, and equipment, highlighting a significant increase in construction in progress Property, Plant and Equipment, Net (in thousands): | Category | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total (excluding CIP) | $351,098 | $393,486 | $(42,388) | -10.77% | | Construction in progress | $477,505 | $162,856 | $314,649 | 193.20% | | Property, plant and equipment, net | $828,603 | $556,342 | $272,261 | 48.94% | Depreciation Expense (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $18,600 | $29,300 | $(10,700) | -36.52% | | Six months ended June 30 | $38,100 | $58,100 | $(20,000) | -34.42% | - Construction in progress more than doubled, increasing by $314.6 million (193.2%) from December 31, 2024, to June 30, 2025, indicating substantial ongoing capital investments[74] 4 — Balance Sheet Components Provides a breakdown of customer funding receivable and accrued expenses, highlighting a surge in customer-funded construction Customer Funding Receivable and Other Current Assets (in thousands): | Category | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :---------------- | :--------- | :--------- | | Customer funding receivable | $230,672 | $7,442 | $223,230 | 2999.60% | | Other | $19,971 | $35,647 | $(15,676) | -44.00% | | Total customer funding receivable and other current assets | $250,643 | $43,089 | $207,554 | 481.60% | Accrued Expenses (in thousands): | Category | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | :--------- | | Accrued customer funded construction | $80,618 | — | $80,618 | N/A | | Accrued capital expenditures | $67,643 | $12,106 | $55,537 | 458.76% | | Other | $32,380 | $52,564 | $(20,184) | -38.40% | | Total accrued expenses | $180,641 | $64,670 | $115,971 | 179.33% | - Customer funding receivable increased dramatically by nearly 3000% to $230.7 million, primarily representing amounts due from customers for construction-related payables incurred on their behalf[75] 5 — Leases Details lessee and lessor accounting for leases, highlighting significant growth in colocation lease revenue Lease Components on Balance Sheet (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $108,584 | $114,472 | | Finance lease right-of-use assets | $5,019 | $5,873 | | Operating lease liabilities, current portion | $10,438 | $9,974 | | Operating lease liabilities, net of current portion | $92,229 | $97,843 | | Finance lease liabilities, current portion | $547 | $1,669 | Total Lease Expense (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $5,547 | $4,996 | $551 | 11.03% | | Six months ended June 30 | $11,081 | $7,771 | $3,310 | 42.59% | Total Lease Revenue (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $10,560 | $5,519 | $5,041 | 91.33% | | Six months ended June 30 | $19,133 | $5,519 | $13,614 | 246.67% | - Operating lease revenue significantly increased by 91% for the three months and 247% for the six months ended June 30, 2025, driven by colocation licensing agreements[83] - The company has substantial future noncancellable minimum operating lease payments expected to be received, totaling $269.8 million, excluding $9.83 billion from leases not yet commenced[83] 6 — Convertible and Other Notes Payable Details the company's debt structure, highlighting the repayment of several higher-interest debt facilities during the quarter Notes Payable (in thousands): | Category | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :---------------- | :--------- | :--------- | | 2031 Convertible Notes | $625,000 | $625,000 | $0 | 0.00% | | 2029 Convertible Notes | $460,000 | $460,000 | $0 | 0.00% | | Equipment and Settlement Notes | — | $33,857 | $(33,857) | -100.00% | | Other Notes | $1,550 | $3,152 | $(1,602) | -50.82% | | Total notes payable, net | $1,059,246 | $1,090,280 | $(31,034) | -2.85% | | Current portion | $1,550 | $16,290 | $(14,740) | -90.49% | - During the three months ended June 30, 2025, the company repaid five higher-interest debt facilities totaling approximately $26.6 million in principal, leading to a $1.4 million loss on debt extinguishment[85] Interest Expense on Convertible Notes (in thousands): | Period | 2025 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--------- | :--------- | | Three months ended June 30 | $4,754 | N/A | N/A | | Six months ended June 30 | $9,501 | N/A | N/A | 7 — Warrant Liabilities Describes the company's warrant agreements and details the number of warrants exercised and remaining during the period - The company has two tranches of warrants: Tranche 1 Warrants (98.3 million, $6.81 exercise price, expire Jan 2027) and Tranche 2 Warrants (81.9 million, $0.01 exercise price, expire Jan 2029)[88] Warrant Exercise Activity (June 30, 2025): | Warrant Type | Exercised (3 Months) | Exercised (6 Months) | Cash Receipts (3 Months) | Cash Receipts (6 Months) | Unexercised (June 30, 2025) | | :----------- | :------------------- | :------------------- | :----------------------- | :----------------------- | :-------------------------- | | Tranche 1 | 0.1 million | 0.1 million | $0.3 million | $0.6 million | 97.5 million | | Tranche 2 | 2.5 million | 5.9 million | Immaterial | Immaterial | 15.1 million | 8 — Fair Value Measurements Provides information on recurring fair value measurements for assets and liabilities, including digital assets and warrants Fair Value Hierarchy (June 30, 2025, in thousands): | Item | Level 1 | Level 2 | Level 3 | Fair Value | | :------------------------------------------ | :-------- | :------ | :------ | :--------- | | Money market funds | $576,361 | — | — | $576,361 | | Digital assets | $172,772 | — | — | $172,772 | | Contingent value rights | $3,366 | — | — | $3,366 | | Warrants | $1,316,690 | — | — | $1,316,690 | - An increase in the fair value of Warrants of $923.7 million for the three months and $289.4 million for the six months ended June 30, 2025, was recognized in the Condensed Consolidated Statements of Operations[92] Fair Value of Convertible Notes (June 30, 2025, in thousands): | Note Type | Carrying Amount | Fair Value | Fair Value Hierarchy | | :-------------------------------- | :-------------- | :--------- | :------------------- | | 3.00% Convertible Senior Notes due 2029 | $460,000 | $795,101 | Level 1 | | 0.00% Convertible Senior Notes due 2031 | $625,000 | $679,666 | Level 1 | 9 — Commitments and Contingencies Outlines significant contractual commitments for capital expenditures and details ongoing legal proceedings - As of June 30, 2025, the company was contractually committed for approximately $1.71 billion in capital expenditures for high-density colocation conversions, with $1.26 billion to be passed through to customers and $427.9 million funded by prepaid license fees[102] - The company is involved in several legal proceedings, including purported shareholder class actions (Pang and Ihle), an employment claim, and contract claims, with some resolved through settlements involving common stock issuance[103][104][109][110][112] - A patent infringement claim was filed against the company in July 2025, alleging infringement in its bitcoin mining business, with motions to dismiss and transfer pending[114] 10 — Income Taxes Details the company's income tax expense, which remained near zero due to a full valuation allowance on deferred tax assets Income Tax Expense (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $158 | $144 | $14 | 9.72% | | Six months ended June 30 | $363 | $350 | $13 | 3.71% | - The effective income tax rate for both three and six months ended June 30, 2025 and 2024, was approximately 0.0% or (0.1)%, primarily due to a full valuation allowance on net deferred tax assets[120][121] - The 'One Big Beautiful Bill Act' was signed into law on July 4, 2025, and the company is analyzing its tax impacts but does not expect a material effect on its financial statements[119] 11 — Stock-Based Compensation Describes the company's equity-based incentive plan, including vesting conditions and total compensation expense recognized - The Incentive Plan was amended to increase authorized shares from 40 million to 48 million, granting MSUs with market-based share price goals and PSUs with service, market (RTSR), and performance (MW growth, customer acquisition) conditions[122][124] Unrecognized Compensation Cost (June 30, 2025, in thousands): | Award Type | Unrecognized Compensation Cost | Weighted-Average Recognition Period (Years) | | :--------- | :----------------------------- | :------------------------------------------ | | RSUs | $115,323 | 2.3 | | PSUs | $50,261 | 2.8 | | MSUs | $4,693 | 1.5 | | Total | $170,277 | | Stock-Based Compensation Expense (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $24,346 | $8,494 | $15,852 | 186.63% | | Six months ended June 30 | $40,751 | $7,434 | $33,317 | 448.17% | 12 — Net Loss Per Share Provides the reconciliation for basic and diluted net loss per share and lists potentially dilutive securities Net Loss Per Share Reconciliation (in thousands, except per share amounts): | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(936,799) | $(804,896) | $(356,106) | $(594,205) | | Basic and diluted net loss | $(13,274) | $(804,896) | $(67,002) | $(594,205) | | Weighted average shares outstanding - basic and diluted | 317,985 | 178,505 | 316,593 | 207,092 | | Net loss per share - basic and diluted | $(0.04) | $(4.51) | $(0.21) | $(2.87) | - Basic and diluted net loss per share significantly improved from $(4.51) to $(0.04) for the three months and from $(2.87) to $(0.21) for the six months ended June 30, 2025, despite an increase in net loss, due to adjustments for warrant fair value and increased weighted average shares outstanding[132] Potentially Dilutive Securities (in thousands): | Security Type | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Convertible Notes | 69,611 | 40,059 | | RSUs, PSUs, and MSUs | 25,204 | 18,778 | | Stock options | 344 | 369 | | Tranche 1 Warrants | 97,542 | 98,259 | | Total shares issuable from potentially dilutive securities | 192,701 | 157,465 | 13 — Segment Reporting Provides a breakdown of revenue and gross profit for each of the company's three reportable segments - The company operates in three segments: Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation, with Colocation becoming a new segment in Q2 2024[134] Segment Revenue and Gross Profit (3 Months Ended June 30, in thousands): | Segment | 2025 Revenue | 2024 Revenue | Revenue Change ($) | Revenue Change (%) | 2025 Gross Profit | 2024 Gross Profit | Gross Profit Change ($) | Gross Profit Change (%) | | :-------------------------- | :----------- | :----------- | :----------------- | :----------------- | :---------------- | :---------------- | :---------------------- | :---------------------- | | Digital Asset Self-Mining | $62,424 | $110,743 | $(48,319) | -43.63% | $2,835 | $30,742 | $(27,907) | -90.77% | | Digital Asset Hosted Mining | $5,644 | $24,840 | $(19,196) | -77.28% | $1,060 | $7,447 | $(6,387) | -85.77% | | Colocation | $10,560 | $5,519 | $5,041 | 91.33% | $1,130 | $628 | $502 | 79.94% | | Consolidated | $78,628 | $141,102 | $(62,474) | -44.28% | $5,025 | $38,817 | $(33,792) | -87.05% | Segment Revenue and Gross Profit (6 Months Ended June 30, in thousands): | Segment | 2025 Revenue | 2024 Revenue | Revenue Change ($) | Revenue Change (%) | 2025 Gross Profit | 2024 Gross Profit | Gross Profit Change ($) | Gross Profit Change (%) | | :-------------------------- | :----------- | :----------- | :----------------- | :----------------- | :---------------- | :---------------- | :---------------------- | :---------------------- | | Digital Asset Self-Mining | $129,603 | $260,702 | $(131,099) | -50.29% | $8,844 | $99,137 | $(90,293) | -91.08% | | Digital Asset Hosted Mining | $9,417 | $54,172 | $(44,755) | -82.62% | $2,797 | $16,698 | $(13,901) | -83.25% | | Colocation | $19,133 | $5,519 | $13,614 | 246.67% | $1,597 | $628 | $969 | 154.30% | | Consolidated | $158,153 | $320,393 | $(162,240) | -50.64% | $13,238 | $116,463 | $(103,225) | -88.64% | - For the three and six months ended June 30, 2025, 79% and 82% of total revenue, respectively, was generated from digital asset mining of bitcoin from one customer (Customer G)[142][143][145] 14 — Supplemental Cash Flow and Noncash Information Provides additional details on cash paid for interest and taxes, and a list of noncash investing and financing activities Supplemental Cash Flow Information (in thousands): | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Cash paid for interest | $8,386 | $18,074 | | Income tax payments (refunds) | $457 | $(1,288) | | Cash paid for reorganization items | — | $53,835 | - Noncash investing activities for H1 2025 included $129.9 million in purchases of PP&E in accounts payable and accrued expense, and $19.6 million from noncash exercise of warrants[146] - Noncash financing activities in H1 2024 included significant issuances of new common stock, contingent value rights, and warrants related to the company's emergence from bankruptcy[146] 15 — Subsequent Events Discloses the significant subsequent event of entering into a merger agreement with CoreWeave, Inc - On July 7, 2025, Core Scientific entered into a Merger Agreement with CoreWeave, Inc for an all-stock acquisition[148] - Each outstanding share of Core Scientific common stock will be converted into 0.1235 shares of CoreWeave Class A common stock[148] - The transaction is contingent upon approval from Core Scientific's stockholders and customary regulatory approvals[148] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of financial results, strategic shifts, and key performance factors Overview Details the strategic shift from bitcoin mining to high-density colocation services for HPC and AI applications - Core Scientific is transitioning from bitcoin mining to high-density colocation services for HPC, particularly AI-related applications, to achieve more stable and predictable revenue[152][153] - The company is converting most of its ten facilities across the US to support AI workloads, primarily for an existing HPC customer, while continuing to self-mine digital assets profitably until alternative opportunities arise[154][155] Key Financial and Operational Metrics (6 Months Ended June 30, in millions): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------- | :--- | :--- | :--------- | :--------- | | Total revenue | $158.2 | $320.4 | $(162.2) | -50.6% | | Operating (loss) income | $(68.9) | $61.8 | $(130.7) | -211.5% | | Net loss | $(356.1) | $(594.2) | $238.1 | -40.1% | | Adjusted EBITDA | $15.4 | $134.0 | $(118.6) | -88.5% | Recent Developments Highlights the definitive merger agreement with CoreWeave, recent debt repayments, and new colocation agreements - On July 7, 2025, Core Scientific entered into a definitive merger agreement to be acquired by CoreWeave, Inc in an all-stock transaction, with each share converting to 0.1235 shares of CoreWeave Class A common stock[158] - During Q2 2025, the company repaid five higher-interest debt facilities totaling approximately $26.6 million in principal, resulting in a $1.4 million loss on debt extinguishment[159] - A new agreement with CoreWeave was announced on February 26, 2025, to deliver an additional approximately 70 MW of gross power at the company's Denton, Texas facility[159] Our Business Model Describes the shift to a business model focused on contracting digital infrastructure for high-density colocation services - The business model is shifting to focus primarily on contracting digital infrastructure for high-density colocation services, including HPC operations for cloud computing, machine learning, and AI[161][162] - The company will continue digital asset mining only as long as it remains profitable, with a strategy to expand its data center infrastructure for high-density colocation and maximize contracted infrastructure[161][162] Bitcoin Miners in Operation (Hash rate in EH/s, Number of Miners in thousands): | Mining Equipment | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :--------------- | :------------ | :----------- | :------------ | | Self-miners (Hash rate) | 17.6 | 19.1 | 19.4 | | Self-miners (Number) | 151.4 | 164.0 | 163.5 | | Hosted miners (Hash rate) | 3.0 | 1.0 | 5.2 | | Hosted miners (Number) | 21.7 | 7.1 | 41.8 | | Total (Hash rate) | 20.6 | 20.1 | 24.6 | | Total (Number) | 173.1 | 171.1 | 205.3 | Summary of Digital Asset Activity Summarizes the change in digital asset holdings, highlighting a shift from selling to holding self-mined assets Digital Asset Activity (6 Months Ended June 30, in thousands): | Metric | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Digital assets, beginning of period | $23,893 | $2,284 | | Digital asset self-mining revenue, net of receivables | $129,770 | $261,566 | | Mining proceeds from shared hosting | — | $13,818 | | Proceeds from sales of digital assets | — | $(277,562) | | Change in fair value of digital assets | $19,109 | $(41) | | Digital assets, end of period | $172,772 | — | - The company's digital asset holdings increased significantly from $23.9 million at the beginning of 2025 to $172.8 million by June 30, 2025, primarily due to self-mining revenue and an increase in the fair value of digital assets[172] - In H1 2024, the company sold digital assets for $277.6 million, while in H1 2025, there were no reported sales, indicating a shift in digital asset management strategy[172] Performance Metrics Presents key business operating metrics, including hash rate, cost per bitcoin, and Adjusted EBITDA Key Business Operating Metrics: | Metric | June 30, 2025 | June 30, 2024 | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | | Self-Mining Hash rate (EH/s) | 17.6 | 19.4 | -9% | Cash Costs per Bitcoin (3 Months Ended June 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Power cost per bitcoin self-mined | $48,407 | $24,533 | $23,874 | 97.31% | | Operational costs per bitcoin self-mined | $15,962 | $5,346 | $10,616 | 198.59% | | Total cost to self-mine one bitcoin | $64,369 | $29,879 | $34,490 | 115.43% | Cash Costs per Bitcoin (6 Months Ended June 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Power cost per bitcoin self-mined | $45,099 | $19,136 | $25,963 | 135.68% | | Operational costs per bitcoin self-mined | $15,158 | $3,830 | $11,328 | 295.77% | | Total cost to self-mine one bitcoin | $60,257 | $22,966 | $37,291 | 162.30% | Cash-Based Hash Cost (3 Months Ended June 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Power cost per terahash | $0.025 | $0.025 | $0.000 | 0.00% | | Operational costs per terahash | $0.008 | $0.005 | $0.003 | 60.00% | | Total cash-based hash cost | $0.033 | $0.030 | $0.003 | 10.00% | Cash-Based Hash Cost (6 Months Ended June 30): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Power cost per terahash | $0.025 | $0.026 | $(0.001) | -3.85% | | Operational costs per terahash | $0.008 | $0.005 | $0.003 | 60.00% | | Total cash-based hash cost | $0.033 | $0.031 | $0.002 | 6.45% | - Self-mining hash rate decreased by 9% year-over-year to 17.6 EH/s as of June 30, 2025, from 19.4 EH/s in the prior year, reflecting the strategic shift to colocation[210] - The total cost to self-mine one bitcoin significantly increased by 115.4% for the three months and 162.3% for the six months ended June 30, 2025, primarily due to higher power and operational costs per bitcoin[207] Adjusted EBITDA (in thousands): | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--- | :--- | :--------- | :--------- | | Three months ended June 30 | $21,503 | $46,036 | $(24,533) | -53.29% | | Six months ended June 30 | $15,432 | $134,032 | $(118,600) | -88.49% | Key Factors Affecting Our Financial Performance Discusses the impact of bitcoin price volatility, network difficulty, the halving event, and regulatory changes on performance - Financial performance is heavily influenced by the volatile market price of digital assets, particularly bitcoin, and increases in network hash rate and difficulty, which reduce mining proceeds[176][179][180] Impact to Revenue from Key Drivers: | Driver | Increase in Driver | Decrease in Driver | | :-------------------- | :----------------- | :----------------- | | Market Price of Bitcoin | Favorable | Unfavorable | | Core Scientific Hash Rate | Favorable | Unfavorable | | Difficulty | Unfavorable | Favorable | | Transaction Fees | Favorable | Unfavorable | - The April 2024 bitcoin halving reduced block rewards by 50%, impacting self-mining revenue, though historically, network hash rate tends to decline post-halving as less efficient miners become unprofitable[186][187] - The planned growth of the Colocation operation is expected to reduce exposure to bitcoin price volatility, as colocation contracts are long-term and provide stable, predictable revenue[188] - New tariffs on imported goods, particularly for data center conversions and mining equipment, could lead to material price inflation and delivery delays, though the largest colocation customer funds most related capital expenditures[184] - Regulation of blockchain and digital assets is evolving, with new US federal and state initiatives (e.g, 'Clarity Act', Texas SB 6) potentially impacting operations, particularly large electric loads in ERCOT[202][204] Results of Operations for the Three Months Ended June 30, 2025 and 2024 Analyzes the significant decrease in revenue and shift to operating loss for the second quarter of 2025 Revenue Breakdown (3 Months Ended June 30, in thousands): | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | % of Total 2025 | % of Total 2024 | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | :-------------- | :-------------- | | Digital asset self-mining revenue | $62,424 | $110,743 | $(48,319) | -43.63% | 80% | 78% | | Digital asset hosted mining revenue from customers | $5,644 | $24,840 | $(19,196) | -77.28% | 7% | 18% | | Colocation revenue | $10,560 | $5,519 | $5,041 | 91.33% | 13% | 4% | | Total revenue | $78,628 | $141,102 | $(62,474) | -44.28% | 100% | 100% | - Total revenue decreased by 44% to $78.6 million, primarily due to a 44% decrease in digital asset self-mining revenue and a 77% decrease in hosted mining revenue, partially offset by a 91% increase in colocation revenue[230] - Self-mining revenue decline was driven by a 62% decrease in bitcoin mined (due to fewer deployed units, lower hash rate, and increased network difficulty), partially offset by a 50% increase in average bitcoin price[231][236] - Selling, general and administrative expenses increased by 81% to $56.9 million, mainly due to higher stock-based compensation, colocation segment site startup costs, payroll, and professional services[242][244] - Non-operating expense, net, increased by $99.0 million to $910.4 million, primarily driven by a $113.9 million increase in the change in fair value of warrants and contingent value rights, partially offset by a $16.0 million decrease in net interest expense[243][245] Results of Operations for the Six Months Ended June 30, 2025 and 2024 Analyzes the significant decrease in revenue and shift to operating loss for the first half of 2025 Revenue Breakdown (6 Months Ended June 30, in thousands): | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | % of Total 2025 | % of Total 2024 | | :------------------------------------------ | :--- | :--- | :--------- | :--------- | :-------------- | :-------------- | | Digital asset self-mining revenue | $129,603 | $260,702 | $(131,099) | -50.29% | 82% | 81% | | Digital asset hosted mining revenue from customers | $9,417 | $54,172 | $(44,755) | -82.62% | 6% | 17% | | Colocation revenue | $19,133 | $5,519 | $13,614 | 246.67% | 12% | 2% | | Total revenue | $158,153 | $320,393 | $(162,240) | -50.64% | 100% | 100% | - Total revenue decreased by 51% to $158.2 million, driven by a 50% decrease in digital asset self-mining revenue and an 83% decrease in hosted mining revenue, partially offset by a 247% increase in colocation revenue[256] - Self-mining revenue decline was primarily due to a 70% decrease in bitcoin mined (influenced by fewer deployed units, the April 2024 halving, lower hash rate, and increased network difficulty), partially offset by a 61% increase in average bitcoin price[257][260] - Selling, general and administrative expenses increased by 101% to $97.1 million, mainly due to higher stock-based compensation, colocation segment site startup costs, payroll, and professional services[265][268] - Non-operating expense, net, decreased by $368.8 million to $286.9 million, primarily due to a $447.4 million decrease in the change in fair value of warrants and contingent value rights and a $32.2 million decrease in net interest expense, partially offset by the absence of $111.4 million in reorganization items from the prior year[266][267][269] Liquidity and Capital Resources Details the company's sources of liquidity, capital allocation strategy, and analysis of cash flow activities - The company finances operations through debt, cash from operations (including bitcoin sales and colocation fees), equipment financing, and equity sales[278] - Management believes current liquidity sources (operating cash flows, existing cash, and debt market access) are sufficient to meet cash requirements for the next twelve months and beyond[279] Cash, Cash Equivalents and Restricted Cash (in thousands): | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------------------------------ | :------------ | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $581,345 | $836,197 | $(254,852) | -30.48% | | Restricted cash | — | $783 | $(783) | -100.00% | | Total cash, cash equivalents and restricted cash | $581,345 | $836,980 | $(255,635) | -30.54% | - Net cash used in operating activities was $6.6 million for H1 2025, a decrease from $23.4 million provided in H1 2024, primarily due to a shift in bitcoin holding strategy and lower net income, partially offset by increased deferred revenue from colocation services[285] - Net cash used in investing activities significantly increased to $213.1 million in H1 2025 (from $35.2 million in H1 2024), driven by $209.7 million in property, plant, and equipment purchases, with $180.5 million allocated to the Colocation segment[286] - Net cash used in financing activities was $36.0 million in H1 2025 (compared to $39.2 million provided in H1 2024), mainly due to $26.9 million in debt extinguishment payments and the absence of prior-year stock issuance and exit facility proceeds[288] Critical Accounting Estimates Confirms no material changes to critical accounting estimates since the last annual report - There have been no material changes to the company's critical accounting estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[291] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses the company's exposure to market risks, including bitcoin price volatility and commodity price fluctuations - The company's business is significantly exposed to the market price of bitcoin, with a hypothetical 10% increase or decrease in bitcoin price impacting net income by approximately $6.2 million for three months and $13.0 million for six months ended June 30, 2025[295][296][297] - As of June 30, 2025, the company held 1,612 bitcoin with a carrying value of $172.8 million[295] - Commodity price risk, particularly for electricity, is managed through derivative instruments like energy forward purchase contracts to mitigate future cash flow variability[298] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and procedures and notes no material changes in internal control - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[301] - There were no material changes in the company's internal control over financial reporting from January 1, 2025, through June 30, 2025[302] Part II. Other Information Contains disclosures on legal proceedings, risk factors, equity sales, and other required information Item 1. Legal Proceedings Discloses the company's involvement in various legal proceedings arising in the ordinary course of business - The company is subject to legal proceedings in the ordinary course of business, with potential losses accrued when probable and estimable[304] - Further details on material pending legal proceedings are provided in Note 9 — Commitments and Contingencies[304] Item 1A. Risk Factors Outlines significant risks related to the proposed merger with CoreWeave, including closing conditions and integration challenges - The proposed merger with CoreWeave is contingent on various conditions, including stockholder and regulatory approvals, and may face delays or abandonment, potentially requiring a $270 million termination fee[306][307] - Uncertainty surrounding the merger could adversely affect relationships with customers, suppliers, and employees, potentially leading to loss of key personnel or changes in business terms[314][318] - The consideration for Core Scientific stockholders will be a fixed number of CoreWeave Class A common stock shares, whose value will fluctuate with CoreWeave's market price, and stockholders will not be entitled to appraisal rights under Delaware law[320][321][325] - CoreWeave's multi-class stock structure concentrates voting power with its co-founders, potentially allowing them to significantly influence corporate decisions and delay or prevent changes in control[329][330][332] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports the issuance of common stock from the exercise of Tranche 1 and Tranche 2 Warrants during the quarter - 0.1 million shares of New Common Stock were issued from Tranche 1 Warrants, generating $0.3 million in cash proceeds[335] - 2.5 million shares of New Common Stock were issued from Tranche 2 Warrants, resulting in minimal cash proceeds[336] Item 3. Defaults Upon Senior Securities States that no defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[337] Item 4. Mine Safety Disclosures States that this item is not applicable to the company's operations - This item is not applicable[338] Item 5. Other Information Discloses trading plan activities by directors and officers during the quarter - No new Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter ended June 30, 2025[340] - The company's Chief Legal and Administrative Officer terminated their 10b5 Plan on June 24, 2025[340] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including merger agreements, organizational documents, and certifications - The exhibits include the Agreement and Plan of Merger with CoreWeave, Inc (dated July 7, 2025), the Fourth Amended and Restated Certificate of Incorporation, and the Third Amended and Restated Bylaws[341] - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are also filed[341]