Core Scientific: The $9 Billion AI Comeback Story

Welcome to the 149th Pari Passu newsletter.

Bitcoin is back in the spotlight, surging to record highs, attracting massive institutional inflows, and prompting legislative attention through the proposed GENIUS Act. Companies like Microstrategy, Tesla, and others are doubling down, buying up bitcoin to create strategic reserves as a hedge against inflation and fiat risk.

With mainstream adoption accelerating and bitcoin back in vogue, today’s newsletter explores one of the most dramatic boom-to-bust-to-boom stories in cryptocurrency – Core Scientific. Once the largest bitcoin miner in North America, the company rose to prominence during the crypto bull run, pouring billions into purpose-built data centers to support both its own mining and third-party hosting. But as bitcoin prices collapsed amid the brutal crypto winter of 2022, Core Scientific’s aggressive growth strategy quickly unraveled. This deep dive covers the company’s rise, its path through Chapter 11, and how a strategic pivot to AI infrastructure fueled one of the most surprising post-bankruptcy rebounds of the past few years.

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Overview

Core Scientific was founded in December 2017 by Michael Jeffrey Levitt and Darin Feinstein, originally as a bitcoin mining and infrastructure company. Before its bankruptcy, it operated purpose-built facilities for mining bitcoins and provided hosting services and infrastructure support to third-party miners. The company managed 814MW of capacity (enough to power around 713k homes) across eight data centers in the U.S., making it one of the largest providers of blockchain infrastructure in the country [1].

Business Model

Core Scientific operated under two main segments: “mining”, in which the company earned revenue by mining for its own bitcoin ($398mm in 2022, ~62% of revenue) and “hosting and equipment sales”, in which the company earned revenue by providing blockchain infrastructure and hosting services for customers to do their own mining and through the sale of mining equipment ($243mm, ~38% of revenue) [2].

Core Scientific’s operations were primarily based on blockchain technology and bitcoin’s mathematically controlled supply. We have covered how this system works in a previous write-up, “The Cryptocurrency Industry and Its Distressed Cycles,” but to recap, a blockchain is a decentralized digital ledger that lets people securely trade digital assets directly with each other, without needing a central authority or middleman. Since digital asset transactions are not facilitated by a central authority, there needs to be a way to implement these transactions securely. This is where miners come in – miners, which are just specialized computers, bundle the most recent transactions on the network into a “block”, and then solve complex cryptographic algorithms that validate the digital asset transactions within the block. This is known as “solving a block”, and to incentivize miners to solve blocks (which enables transactions to be processed), miners are rewarded with a set amount of bitcoin for every solved block. The reward amount started out at 50 bitcoins per solved block and is automatically halved every 210,000 solved blocks, meaning miners are rewarded with less bitcoin as more bitcoins are mined. As such, this segment's profitability is highly dependent on the price of bitcoin. Currently, the reward is 3.125 bitcoin per block [1] [2].

Core Scientific’s mining segment involved deploying a large fleet of company-owned miners across its eight data centers to solve blocks and earn bitcoin rewards. Of these facilities, three were owned and five were leased. The segment’s performance depended on mining efficiency, the size of the block reward, and most critically, the market price of bitcoin. From an accounting perspective, newly mined bitcoins were recognized as revenue under the mining segment based on the fair market value of the bitcoins at the time they were mined. The company did not immediately sell these newly mined bitcoins, and instead held a significant portion of them on its balance sheet as intangible assets with indefinite useful lives. Decisions to sell these holdings were based on bitcoin prices and the company’s liquidity or funding needs [2].

In addition to running its own mining operations, Core Scientific also offered hosting services for third-party customers. Clients would lease space in Core Scientific’s data centers and supply their own mining equipment, while Core Scientific handled all the operational aspects, including power delivery, cooling, physical security, network connectivity, monitoring, and management software. The hosting segment generated revenues through electricity-based consumption contracts, which were variable-priced and tied to the amount of power consumed by customers’ mining operations. Under these agreements, Core Scientific was not paid for any of the mined bitcoin, and only based on how much electricity was consumed.  These contracts were typically renegotiated yearly and provided a steadier, recurring stream of revenue, assuming that customers maintained their mining activity. Compared to the mining segment, the hosting segment was more insulated to factors such as mining efficiency and short-term price fluctuations of bitcoin. However, it was still susceptible to persistent conditions that might cause bitcoin mining to no longer be profitable for customers (such as a severe decline in the price of bitcoin), which would likely result in contract terminations [2].

Core Scientific’s primary cost driver across its mining and hosting segments were electricity costs. Data centers are extremely power intensive because they run thousands of servers around the clock, requiring constant electricity for both computing and cooling to maintain optimal performance and prevent overheating. For context, in FY2022, Core Scientific recorded $194mm in power consumption costs, which was ~30% of total revenue. Core Scientific sourced its electricity from large utility providers via long-term contracts, which consisted of fixed, variable, and interruptible bilateral agreements. Interruptible bilateral agreements allow the power provider to interrupt service under certain conditions, like grid stress or high demand, while the customer accepts the risk in return for cost savings [2] [4].

Core Scientific also generated revenue from equipment sales. The company leveraged its relationships with blockchain and digital asset mining equipment manufacturers to obtain equipment in advance, which were then resold to customers. This segment remained relatively small, and was mostly winded down by late 2022 [3].

Each of Core Scientific’s segments had a different margin profile. The mining segment had the most volatile margins because of how dependent it was on bitcoin prices. As we will explore later, extreme fluctuations in the price of bitcoin over 2021 and 2022 drastically impacted the profitability of the mining segment. Under the hosting and equipment sales segment, hosting services generated gross margins of 5-10%, and were a lower margin, but stabler stream of revenue. Lastly, equipment sales generated gross margins of 15-25%, and were a reflection of Core Scientific’s ability to sell purchased equipment at a markup [2].

Expansion and Growth

Early on, Core Scientific generated a majority of its revenues from its hosting services and mining activities. In 2019, the company generated $60mm in revenue, with 91% coming from hosting services and the remaining 9% from its mining operations [3]. 

Starting in 2020, Core Scientific began expanding through revenue diversification, strategic acquisitions, and significant capex investment. That year, the company began generating revenue from equipment sales, contributing to a total of $60mm in revenue. Of this amount, 69% from hosting, 21% came from equipment sales, and 10% from mining [3].

The following year, Core Scientific began expanding its mining operations. In June 2021, the company had 22k self-miners and 43k hosted miners deployed. A month later, Core Scientific, still private, completed the acquisition of Blockcap, a private bitcoin mining company and one of the company’s largest hosting customers at the time, in a $1.2bn all-stock deal. Through the acquisition, Core Scientific acquired 42k miners, which would be deployed for the company’s own mining operations. The new miners contributed $43mm in revenue in 2021 ($85mm on a full year basis), signaling Core Scientific’s strategic shift towards the higher margin mining business. [2] [3] [5] [24].

Inclusive of the acquired miners from Blockcap, as of July 2021, Core Scientific had entered into contracts to procure 120k+ self-miners and 52k+ hosted miners over the next sixteen months. The company’s 2021 financial results reflected these expansion moves –  excluding the revenue impact from Blockcap, the company generated $502mm of revenue in 2021 (pro forma revenue of $544mm), representing 730% of organic growth from the previous year [2] [3] [5].

In January 2022, Core Scientific went public via a merger with SPAC Power & Digital Infrastructure Acquisition Corp. (“XPDI”). The de-SPAC transaction valued the combined company at pro forma enterprise value of ~$4.3bn, which represented a 7.9x multiple of 2021 revenue of $544mm and a 21.5x multiple of 2021 adjusted EBITDA of $200mm. As a result of the transaction, Core Scientific received ~$195mm in net cash proceeds, which was used to fund purchases of mining equipment and build out data center infrastructure [1].

Revenue continued to grow in 2022, increasing by 18% to $640mm. Management did not slow down reinvestment into the business either, investing $384mm in capex in 2022, about 60% of total revenue, to continue growing its data center capacity and mining operations. From December 2021 to December 2022, the company’s data center power capacity nearly doubled from 457MW to 814MW, and the company reached a total of 234k deployed miners, consisting of 153k self-miners and 81k hosted miners. Also note that Core Scientific’s share of self-miners to hosted miners changed dramatically over time, from 10% in 2020 to 60% in 2022, reflecting the company’s shift in strategy, from a bitcoin infrastructure provider to a bitcoin miner. Mining revenues grew to $398mm in 2022, accounting for 62% of total revenue [1] [2].

Prepetition Financials

Despite its rapid growth, Core Scientific never achieved consistent profitability.

Core Scientific was cash flow negative for every year from 2019 to 2022, and for each quarter of 2022. However, two periods stand out – 2021 and Q1 2022. During these two periods, the company achieved adjusted EBITDA margins of 37% and 35%, respectively, in stark contrast to the other periods. This outperformance was primarily driven by a major rally in bitcoin prices from late 2020 to late 2021. Between 2019 and late 2020, bitcoin prices generally hovered in the $7k-$12k range. However, in October 2020, bitcoin prices began to rise, peaking at $63.5k in April 2021, and again at $68.8k in November 2021. Throughout this elevated period, bitcoin’s average price remained in the $40k-$50k range. The price rally significantly increased the profitability of Core Scientific’s mining operations. It also drove higher demand for mining equipment, which boosted the company’s equipment sales, growing from $13mm in 2020 to $248mm in 2021, a nineteen-fold increase [9].

However, notice that the average price of bitcoin steadily declined through 2022. This will come into play in the next section, where we discuss the key events that led to Core Scientific’s eventual bankruptcy.

Events Leading to Distress

Crypto Winter

In the years leading up to the 2021 bitcoin rally, Core Scientific consistently operated with negative adjusted EBITDA. The rally provided much needed reprieve for the company, enabling it to achieve $200mm and $67mm of adjusted EBITDA for 2021 and Q1 2022, respectively, on over 35% margins. While cash flow remained negative during these periods as the company continued to invest aggressively via growth capex, Core Scientific was actually cash flow positive net of capex. However, as we will see, a confluence of poor macroeconomic conditions and flawed judgement by management ultimately pushed Core Scientific over the edge and into bankruptcy.

Following its peak in November 2021, the price of bitcoin began a steady decline, primarily due to fears of a weaker economy as the Fed was preparing to aggressively raise rates to combat inflation. The following year, the Fed raised rates by 25bps and 50bps in March and May, respectively, with more raises to come, and by May 1st, the price of bitcoin had fallen to $38k. However, the worst was yet to come [1] [9].

May 2022 would mark the beginning of the 2022 crypto winter, a prolonged crash in cryptocurrency prices triggered by the collapse of major crypto projects, leading to over $2tr in lost value, bankruptcies, and a sharp decline in market confidence. We covered this event in detail in our previous write-up on the cryptocurrency market, but to recap, the crypto winter began with the collapse of the algorithmic stablecoin TerraUSD (UST). A stablecoin is a type of cryptocurrency designed to keep a stable value by being tied to a real-world asset like the U.S. dollar or gold. In early May, UST lost its peg to the U.S. dollar, which triggered a rapid selloff as holders rushed to exit before further losses. The selloff rendered both Terra and its sister token, LUNA, whose value was tied to that of UST, effectively worthless [11].

Terra’s collapse was the first domino in a broader chain reaction – it spooked the fragile crypto market, and a vicious chain reaction of panicked selling ensued. In the days following the Terra crash, bitcoin plunged 27% over an eight-day span. The ensuing market turmoil triggered a wave of major crypto bankruptcies. In June, crypto hedge fund Three Arrows Capital with $18bn AUM filed for bankruptcy, followed by retail crypto broker Voyager Digital and crypto lending platform Celsius in July. In November, major crypto exchange FTX and crypto lender BlockFi both filed for Chapter 11. On November 9, 2022, the price of bitcoin dropped below $16k, over a 77% decrease from just a year ago [1] [11].

For Core Scientific, this was bad, bad news. As previously discussed, the company had invested heavily in shifting its focus to bitcoin mining, with mining revenue growing from 10% of total revenue in 2020 to 68% in the first half of 2022, before most of the crypto winter damage. However, this strategic pivot occurred just as bitcoin mining was becoming less profitable – the average price of bitcoin declined from $47k in 2021 to $28k in 2022, a drop of 41%. Although Core Scientific mined significantly more bitcoins in 2022 than in 2021 (14,436 vs. 3,948), the decline in bitcoin prices offset much of the growth in mining volume [2].

Additionally, the company overextended itself by investing heavily in new data center development in early 2022, as management misjudged the general trajectory of the crypto markets (with the crypto winter only making things much worse). In February, Core Scientific opened a seventh facility in Denton, Texas, with an initial capacity of 22MW and plans to expand to a maximum capacity of 300MW. That same month, the company entered into an agreement with the Muskogee City-County Port Authority to develop a new 500MW data center in Muskogee, Oklahoma. These expansion efforts required significant capital – the company spent $238mm on capex (67% of revenue) in the first half of 2022, and, as of December 2022, was committed to over $200mm in additional future construction costs. While these investments were intended to drive growth and profitability, they were poorly timed as falling bitcoin prices pushed the company further into the red [1] [5] [9].

Celsius Bankruptcy

The crypto winter also caused negative secondary effects to Core Scientific’s business. Crypto lending platform Celsius, one of the companies that filed for Chapter 11 bankruptcy during the crypto winter, was a major customer of Core Scientific’s hosting business. Core Scientific hosted approximately ~38k of Celsius’s miners, which represented 46% of Core Scientific’s total hosted miners. As a reminder, hosting services represented 25% of total revenue in 2022. Due to Celsius’s Chapter 11 filing, not only did Core Scientific lose a major customer, Celsius refused to pay Core Scientific approximately $7mm in increased power costs due to elevated energy prices (remember that Core Scientific’s hosting contracts were based on electricity consumption, so customers were liable to pay higher prices if electricity became more expensive). The dispute resulted in drawn-out litigation from both sides, and remained unresolved as of the petition date in December 2022 [1] [2].

Energy Prices

Turmoil in the crypto markets was not the only macroeconomic factor that pushed Core Scientific into bankruptcy. Through 2022, the company was also impacted by significantly higher power costs, driven by elevated energy prices.

A majority of Core Scientific’s electricity was generated by natural gas, making its energy costs highly sensitive to natural gas prices, especially since the company did not hedge against energy price fluctuations. Starting in the spring of 2022, natural gas prices rose sharply following Russia’s invasion of Ukraine. As a major global supplier of oil and natural gas, Russia’s exports were disrupted by economic sanctions imposed by Western countries, leading to global supply shortages. The average price of natural gas rose from ~$2/MMBtu in 2020 to $6.5/MMBtu in 2022, peaking at ~$9/MMBtu in August [1] [12].

Core Scientific’s mining segment was the most exposed to higher energy prices. While its hosting segment was relatively insulated by electricity consumption-based contracts, allowing higher power costs to be passed on to customers, and its equipment sales segment remained largely unaffected, the mining segment absorbed the full impact of increased energy expenses. In 2021, mining gross margin was 77%, but by Q3 and Q4 2022, it had fallen significantly due to a combination of lower revenue and higher costs per each mined bitcoin. Furthermore, Core Scientific spent $194mm on power costs in 2022, compared to $65mm in 2021, which represented 31% and 21% of total COGS, respectively. Additionally, some of Core Scientific’s power providers imposed usage restrictions at certain data centers, which reduced the efficiency of the company’s mining operations. These factors, combined with the crypto winter aftermath and falling bitcoin prices, decimated the profitability of the mining segment [1] [2] [6] [7] [8].

Prepetition Initiatives

Although Core Scientific only had $42mm of unsecured notes maturing in mid-2023, by Q2 2022, it was simply not generating any type of cash flow. Through 2022, thanks to the challenges explained above, Core Scientific continued to burn cash at an unsustainable rate – an estimated $317mm through the first three quarters. The company would soon be unable to make interest payments, continue funding its construction commitments, or even just maintain adequate working capital. Beginning in Q3 2022, management began implementing measures to conserve cash, including cutting costs, scaling back capital expenditures, and prioritizing hosting revenue growth to improve liquidity. Capex fell to just $5mm in Q3 (3% of revenue), compared to $133mm and $105mm in the first two quarters of the year (over 60% of revenue) [1].

In October 2022, Core Scientific engaged PJT Partners and AlixPartners to explore restructuring solutions. The company announced that it was considering a potential restructuring and delaying interest payments on certain equipment and other financings. Its stock fell on the news, with market cap decreasing from $350mm to $70mm in a week. Raising new money from the equity capital markets was no longer an option. By the end of October, the company had ~$32mm in cash and equivalents and 62 bitcoins. Including the bitcoin, valued at ~$20.5k per bitcoin at the time, the company’s total liquidity amounted to ~$33mm [1] [14].

Around this time, one of Core Scientific’s equipment lenders accelerated the repayment of its loan, likely in response to the company’s earlier decision to delay equipment financing interest payments, which was an action that may have breached the loan’s terms. This triggered a cross default on the company’s secured convertible notes. This escalation further tightened the company’s liquidity and increased pressure to pursue a formal restructuring [1].

Shortly thereafter, Core Scientific and its advisors began negotiating with an ad hoc group of over two-thirds of the combined convertible notes (the “Ad Hoc Group”), which retained Moelis & Company. Negotiations also began with B. Riley, the lender of the Unsecured Bridge Notes, equipment finance lenders, construction contract counterparties, and potential third-party financing providers. Three potential solutions emerged: 1) an out-of-court restructuring involving new money provided by B. Riley and a roll-up of its unsecured notes; 2) a pre-arranged Chapter 11 case outlined in an RSA with DIP financing provided by the Ad Hoc Group; and 3) a Chapter 11 case with DIP financing provided by a third-party [1].

Core Scientific initially favored an out-of-court restructuring, recognizing it as a less costly and less disruptive alternative to Chapter 11. However, its urgent need for liquidity to meet debt obligations and sustain operations limited its options. B. Riley was the only party willing to inject new capital outside of court, but its proposal lacked a comprehensive path to long-term deleveraging and was primarily structured to protect its own interests. Additionally, negotiations with equipment lenders, including the lenders that accelerated their loan repayment, proved to be fruitless. Faced with these constraints, Core Scientific pivoted to an in-court restructuring, ultimately choosing to implement a pre-arranged Chapter 11 case with an Ad Hoc Group-funded DIP [1].

On December 21, 2022, Core Scientific filed for Chapter 11 bankruptcy in the Southern District of Texas. At the time of the filing, the company had just $4mm in remaining liquidity [1].

Prepetition Capital Structure

Before we get into Core Scientific’s Chapter 11, let’s take a look at its capital structure as of the petition date.

Core Scientific had a total of $552mm in secured convertible notes (issued in $234mm in April 2021 and $318mm in August 2021) outstanding going into Chapter 11. Both the April and August Convertible Notes were convertible into shares of common stock at a conversion price of $8.00/share. Also, a substantial portion of Core Scientific’s secured debt was in the form of mining equipment financing. Since 2020, the company has entered into a number of equipment financing agreements and leases to purchase mining equipment. Approximately 91k of Core Scientific’s 150k self-mining bitcoin miners were collateral or leased under eight equipment financing arrangements. Counterparties under these agreements held first lien security interests against the 91k miners. However, as of the petition date, the approximately $284mm in equipment financing was largely undersecured as its collateral (the miners) was believed to be worth less than $90mm. The company also had $42mm in bridge loans provided by B. Riley [1] [2].

Chapter 11 Filing

Replacement DIP Facility

Core Scientific entered into Chapter 11 with an Ad Hoc Group-supported RSA. Key terms of the RSA included an original DIP facility of up to $75mm in new money loans, equitization of the convertible notes in exchange for 97% of the post-reorg equity, and the issuance of new second lien notes and miner equipment takeback debt. However, the original DIP facility placed numerous obligations on Core Scientific, including commitment to the RSA, a 1:1 roll-up of the convertible notes of the original DIP lenders of up to $75mm, achieving certain milestones during the Chapter 11 case, and more [15].

Because of the restrictive nature of the original DIP facility, at the outset of the Chapter 11 cases, Core Scientific announced that it would seek to replace it in order to free itself of the facility’s obligations. As such, the company and its advisors began a marketing process to find alternative DIP financing to fund its Chapter 11 process and replace the original DIP facility. A month later, in January, the company filed a motion requesting approval of the replacement DIP facility and the repayment of the original DIP facility. Shortly thereafter, Core Scientific terminated the RSA, paid $52.4mm to repay the original DIP facility, and received approval for its new replacement DIP facility [15]. 

The replacement DIP facility was a non-amortizing super-priority senior secured term loan facility in principal amount of up to $70mm with an interest rate of 10.0%, provided by B. Riley. Although the facility was super-priority, it was non-priming – Core Scientific was able to provide the DIP lender with a first-priority lien on unencumbered real property assets while providing the convertible noteholders and equipment lenders with adequate protection in the form of replacement junior liens. Proceeds from the facility primarily went towards 1) repaying the original DIP facility and 2) funding Core Scientific’s working capital and general liquidity needs. Compared to the original DIP facility, the replacement facility included more favorable exit terms, a lower cost of capital, and did not bind Core Scientific to any particular Chapter 11 Plan. With this, the company had successfully obtained sufficient funding for its Chapter 11 process while maintaining a higher level of restructuring flexibility [1] [15] [16].

Plan Treatments

April Secured Convertible Notes: The April Secured Convertible Noteholders received a combination of new debt and post-reorg equity. Specifically, the class received its pro rata share of 1) the New Secured Notes (more on this below), 2) the New Secured Convertible Notes (more on this below), 3) $300mm of post-reorg equity. The April Converts received an estimated recovery of 100% [17].

August Convertible Notes: The August Convertible Noteholders received their pro rata share 1) the New Secured Convertible Notes and 2) $300mm of post-reorg equity. The August Converts received an estimated recovery of 100% [17].

Miner Equipment Lenders: Recall that the miner equipment financing was largely undersecured, meaning most equipment lenders held deficiency claims, which is the portion of their debt that exceeded the value of the collateral. These lenders were offered three options: A) takeback debt equivalent to the secured portion of its claim and a general unsecured claim in amount equal to its deficiency claim, B) full equitization of the secured portion of its claim with no recovery on the deficiency claim, or C) takeback debt equivalent to the secured portion of its claim with no recovery on the deficiency claim. The majority of the miner equipment lenders opted for option B, fully equitizing their secured claim [17].

Rights Offering: Core Scientific also conducted an equity rights offering in which prepetition shareholders could participate and purchase up to $55mm in post-reorg equity at a 30% discount to the plan equity value, which was estimated at $795mm [17].

Exit Capital Structure: The plan established a leaner capital structure that de-levered the company from 3.9x to 2.7x debt to projected 2024 adjusted EBITDA of $227mm. This figure is quite optimistic, and as we will see, it grossly overestimated Core Scientific’s performance immediately post-bankruptcy. The plan provided for an $80mm Exit Term Loan Facility ($61mm outstanding at emergence), $150mm in New Secured Notes, $260mm in New Secured Convertible Notes, and $53mm in Mining Equipment Take-Back Debt [15] [18].

Aftermath

Core Scientific emerged from Chapter 11 bankruptcy on January 23rd, 2024. The company relisted its common shares on the Nasdaq under the symbol CORZ with a market cap of $606mm at emergence [19].

Since emerging from bankruptcy, Core Scientific pivoted its business strategy to capitalize on the AI and data center boom. In recent years, the rapid growth of artificial intelligence has created soaring demand for high-performance computing (HPC) infrastructure, prompting a wave of investment in data centers equipped to handle AI workloads. Core Scientific was uniquely positioned to capitalize on this shift, leveraging its expansive data center campuses originally designed for bitcoin mining. Crucially, the company already had stable power contracts in place and fully built-out infrastructure, including advanced cooling systems, robust network connectivity, and other essential services, making its facilities well-suited for HPC applications [19].

In May 2024, Core Scientific entered into an agreement with CoreWeave, an AI hyperscaler closely aligned with Nvidia that provides cloud computing capacity, to deliver approximately 200 MW of digital infrastructure to support CoreWeave’s HPC workloads. In the following months, CoreWeave exercised additional contract options, bringing the total infrastructure provided to 502 MW by October 2024. Under the twelve-year agreement, Core Scientific expected to earn ~$8.7bn in revenue. The market reacted strongly to the company’s strategic pivot and the CoreWeave partnership, with its shares soaring from $3.46 at emergence to a peak of $18.23 in November 2024, an increase of over 420% [20] [22].

There was more big news to come, though. In July 2025, CoreWeave announced its acquisition of Core Scientific in an all-stock transaction valued at $9bn. The deal values Core Scientific at $20.40/share, representing a 66% premium to the stock’s closing price when the deal was announced. Core Scientific shareholders will receive 0.1235 newly issued CoreWeave shares for each share they own. The deal will help CoreWeave eliminate ~$10bn in future lease obligations over the next twelve years that it owed to Core Scientific stemming from its infrastructure agreement. With the deal slated to close in Q4 2025, the market largely views it as a strategic move that streamlines CoreWeave’s cost structure and helps it gain firm control over key data center infrastructure. For Core Scientific shareholders, time will tell whether the deal will deliver lasting value or simply mark the end of a short-lived rebound driven by AI infrastructure hype [23].

Key Takeaways

Regardless of how the CoreWeave acquisition plays out, Core Scientific executed a significant turnaround by pivoting its operations toward providing AI infrastructure, a move that generated strong returns for post-reorg equity holders amid widespread investor enthusiasm for AI. As of Q1 2025, LTM revenue and adjusted EBITDA was $410mm and $63mm, respectively, compared 2022 prepetition figures of $640mm and ($19mm). In short, since emergence, the company has been able to achieve better profitability despite lower topline revenue because of its shift in business model [20] [31] [32] [33].

From a bankruptcy standpoint, Core Scientific is a great example of the appeal in receiving post-reorg equity as a form of creditor recovery. While it does not offer immediate value like cash does, or contractual fixed repayments like debt does, post-reorg equity offers the possibility of substantial upside, particularly when tied to companies with strong underlying assets that faced temporary setbacks. Post-reorg is especially attractive because it is typically issued at a low valuation relative to the company’s long-term intrinsic value, giving creditors great upside (of course, with significant risk). Ultimately, Core Scientific’s emergence from bankruptcy and subsequent market resurgence illustrates how strategic repositioning, an improved capital structure, and responsiveness to shifting industry trends can drive a successful turnaround.

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