Core Scientific to Expand its Denton, Texas Bitcoin Mining Data Center by 72 Megawatts

Rhea-AI Summary

Core Scientific, Inc. (Nasdaq: CORZ) announces a 72-megawatt expansion of its Denton, Texas bitcoin mining data center, increasing total operational infrastructure to 197 MW by Q2 2024. The company aims to optimize mining capacity, efficiency, and hash rate productivity while highlighting the strategic advantage of owning and controlling infrastructure.

Positive

• Core Scientific is expanding its Denton, Texas data center by 72 megawatts, increasing total operational infrastructure to 197 MW by the end of the second quarter of 2024.
• The company owns and controls all its infrastructure with access to ready power, allowing strategic flexibility in expanding mining capacity, deploying upgrades to proprietary mining technology, and optimizing efficiency.
• Expansion includes completing partially built structures to add 372 megawatts of capacity, aiming to deliver over 20 additional exahash of mining hash rate at an average incremental cost of approximately $200,000 per megawatt.
• Core Scientific's data centers in Texas currently operate 196 megawatts of bitcoin mining, with plans to host alternative forms of compute due to flexible facility designs and access to high bandwidth fiber telecommunications infrastructure.
• The company's completion time for converting bitcoin mining infrastructure to alternative compute hosting is estimated to be 50% faster than new construction, offering financial benefits to high-performance computing hosting clients.

Negative

• None.

Insights

Energy Industry Analyst

Core Scientific's venture into expanding its Denton, Texas data center by 72 megawatts is an ambitious move, especially considering the rapid growth of the cryptocurrency mining industry. The increase from 125 MW to 197 MW operational infrastructure at this particular site and a jump to 817 MW company-owned infrastructure overall, represents a significant scaling up. What stands out is the strategic foresight in leveraging partially built structures to keep expansion costs below industry norms, at roughly $200,000 per MW. This is a key point for investors, as it suggests a potentially more cost-effective approach to scaling as compared to new construction or acquisitions. The ability to host alternative forms of compute, not just bitcoin mining, indicates adaptability and potential for diversification of revenue streams, which could be appealing given the volatility of the crypto market. Furthermore, the proximity to major metropolitan areas and access to high-bandwidth fiber could offer competitive advantages in attracting high-performance computing clients.

Financial Analyst

The financial implications of completing the Denton Data Center expansion by Core Scientific are intriguing. The plan to deliver over 20 additional exahash of mining hash rate at an incremental cost that's claimed to be less than half the cost of new builds could position the company advantageously. From an investor's perspective, the key metric of $200,000 per MW for expansion compares favorably to the capital costs typically incurred in the industry for such projects. The company's strategy to optimize fleet efficiency and hash rate productivity is aimed at mitigating risks associated with the 'post-halving' environment—a reference to the Bitcoin halving event that reduces the reward for mining new blocks. If executed successfully, this could sustain profitability in a scenario where mining rewards are halved, but operational costs remain constant or even escalate. Also worth noting is the early completion of a recent capacity delivery. Efficiency in project execution like this can often result in cost savings and earlier than anticipated revenue streams, which are critical factors that influence a company's stock performance.

Technology Market Analyst

Core Scientific's approach to data center expansion is not just about scaling up for bitcoin mining; it's prepping for versatility in high-value computation markets. The statement that their data centers, which represent more than 60% of the company's operational bitcoin mining infrastructure, are qualified to host alternative forms of computing is particularly noteworthy. This flexibility could make them a more resilient player in the digital infrastructure domain. Conversion costs, stated to be lower than new construction and a 50% faster completion time for such conversions, are critical factors that could attract a broader array of high-performance computing clients. This is a smart hedge against the volatility of the cryptocurrency market. Investors should keep an eye on how effectively Core Scientific can cross-leverage its infrastructure for multiple compute forms. This could spell greater stability in earnings and potential for growth beyond the crypto sphere.

• Completion of partially built structures will increase total operational infrastructure at Denton data center to 197 MW, total Company-owned infrastructure to 817 MW
• Completion expected by end of second quarter 2024
• Expansion highlights strategic advantage of owning and controlling infrastructure and access to power

AUSTIN, Texas--(BUSINESS WIRE)-- Core Scientific, Inc. (Nasdaq: CORZ) ("Core Scientific" or “the Company”), a leader in bitcoin mining and application-specific digital infrastructure for emerging high-value compute, today announced the start of a project to complete a 72-megawatt expansion of the Company’s Denton, Texas data center.

Core Scientific is a leader in bitcoin mining and application-specific digital infrastructure for emerging high-value compute (Graphic: Business Wire)

“Owning and controlling all of our infrastructure with access to ready power gives us the strategic optionality to expand our mining capacity, deploy upgrades to our proprietary mining technology stack, reallocate miners to optimize for efficiency and even flex to alternative forms of compute when such opportunities arise,” said Adam Sullivan, Core Scientific’s Chief Executive Officer. “By expanding our capacity while focusing on fleet efficiency and hash rate productivity, we believe we will remain positioned for success in the post-halving environment.”

In addition to its 745-megawatts of operational infrastructure, Core Scientific owns 372 megawatts of partially built infrastructure at its two Texas data centers. The start of the Denton data center project represents the beginning of a multi-year program to complete the partially built infrastructure and expand the Company’s capacity by 372-megawatts. The goal of this expansion program is to deliver more than 20 additional exahash of mining hash rate at an average incremental cost of approximately $200,000 per megawatt, or less than half the cost of new construction or asset acquisition.

Core Scientific’s Denton, Texas data center currently operates 125 megawatts of bitcoin mining with total contracted power of approximately 300 megawatts. The Company’s Pecos, Texas data center currently operates 71 megawatts of bitcoin mining across two sites with total contracted power of 250 megawatts.

Mr. Sullivan continued, “The exceptional performance of our data center operations team recently enabled us to deliver 16 megawatts of capacity to our high-performance computing customer in Austin, Texas more than 30 days ahead of schedule. This achievement underscores our team’s ability to expand our infrastructure successfully and highlights the emerging growth opportunity in hosting alternative forms of compute.”

Core Scientific data centers representing more than 500 megawatts of operational bitcoin mining infrastructure are qualified to host alternative forms of compute, based on the Company’s flexible facility designs, their proximity to major metropolitan areas and access to high bandwidth fiber telecommunications infrastructure. The Company believes that the cost to convert some of its bitcoin mining infrastructure to alternative compute hosting is lower than for new construction and its completion time could be as much as 50% faster, delivering strong financial benefits to high-performance computing hosting clients.

ABOUT CORE SCIENTIFIC

Core Scientific is one of the largest bitcoin miners and hosting solutions providers for bitcoin mining in North America. Transforming energy into high value compute with superior efficiency at scale, we employ our own large fleet of computers (“miners”) to earn bitcoin for our own account and provide hosting services for large bitcoin mining customers at our seven operational data centers in Georgia (2), Kentucky (1), North Carolina (1), North Dakota (1) and Texas (2). We derive the majority of our revenue from earning bitcoin for our own account (“self-mining”). To learn more, visit www.corescientific.com

FORWARD LOOKING STATEMENTS AND EXPLANATORY NOTES

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors, which could include, but are not limited to, the following: risks and uncertainties relating to the Company’s ability to achieve significant cash flows from operations; the effects of the emergence from the Company’s chapter 11 cases on the Company’s liquidity, results of operations and business; the trading price and volatility of the Company’s common stock; the comparability of the Company’s post-emergence financial results to its historical results and the projections filed with the bankruptcy court in the Company’s chapter 11 cases; changes in the Company’s business strategy and performance, including as a result of changes to the Company’s board of directors or management; the possibility that the Company may be unable to achieve its business and strategic goals; the Company’s post-bankruptcy capital structure; attraction and retention of key personnel; the Company’s ability to achieve expected benefits from restructuring activities; restrictions on the Company’s operations contained in the agreements governing the Company’s indebtedness; the Company’s ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness; the impact of the halving event; actions taken by third parties, including the Company’s creditors and other stakeholders, as well as other risk factors set forth in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. These statements are provided for illustrative purposes only and are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management. These forward-looking statements are not intended to serve, and must not be relied on by any investor, as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including those identified in the Company’s reports filed with the U.S. Securities & Exchange Commission, and if any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Accordingly, undue reliance should not be placed upon the forward-looking statements.

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Source: Core Scientific, Inc.

FAQ

What is the expansion project announced by Core Scientific related to the Denton, Texas data center?

Core Scientific is expanding its Denton, Texas data center by 72 megawatts, increasing total operational infrastructure to 197 MW by the end of the second quarter of 2024.

How much additional mining hash rate does Core Scientific aim to deliver through the expansion program?

The expansion program aims to deliver over 20 additional exahash of mining hash rate at an average incremental cost of approximately $200,000 per megawatt.

What is the total contracted power of Core Scientific's Denton, Texas data center?

The Denton, Texas data center currently operates 125 megawatts of bitcoin mining with total contracted power of approximately 300 megawatts.

What are the benefits of Core Scientific's data centers being qualified to host alternative forms of compute?

Core Scientific's data centers can host alternative forms of compute due to flexible facility designs, proximity to major metropolitan areas, and access to high bandwidth fiber telecommunications infrastructure.

How does Core Scientific plan to deliver financial benefits to high-performance computing hosting clients?

The company's completion time for converting bitcoin mining infrastructure to alternative compute hosting is estimated to be 50% faster than new construction, offering financial benefits to high-performance computing hosting clients.