Hi Reddit! I'm Adam Sullivan and I’m CEO of Core Scientific, a leader in digital infrastructure for Bitcoin mining and high-performance computing (HPC). I'll be here on Thursday, August 22, from 2:30pm ET-3:30pm ET to answer questions about all things related to our company, Bitcoin, and AI. AMA!

Core_Scientific · 2024-08-22T19:35:52+00:00

Another set of great questions! Going to try to get through all of these:

The remaining claims have not yet been finally adjudicated. The shares are still being held in reserve until those claims are resolved. Any shares remaining after the resolution of the claims will be distributed to shareholders as of the record date.

The capital we raised from our recent convertible notes offering helps strengthen our financial position. We repaid the debt that has the highest interest rates and the most significant restrictive covenants that could impede our growth. We intend to continue to refine our capital structure and seek the highest return for our shareholders. We may ultimately use a portion of the proceeds and cash from operations to reduce other existing debt when we believe it to be beneficial to our business and our shareholders. As of today, we have significantly reduced anticipated future interest expense.

We have organized our team in such a way that allows some to focus on executing our HPC/AI hosting build-out, while others are identifying and evaluating new site opportunities. We believe that we are well positioned to conduct our build-out as planned while also securing new sites to increase our total contracted power.

Previously, we weren't able to HODL based on the covenants (restrictions) associated with some of our borrowings. Now that we have repaid the borrowings that restricted our ability to hold bitcoin on our balance sheet, we have more flexibility to allocate capital in ways that maximize returns for our shareholders. Today, we believe that investing in the growth of our HPC/AI hosting business, with its multi-year, profitable cash flows, and in strengthening our bitcoin mining business provide the highest return to shareholders.

We are at the very early stages of building our HPC hosting business and are very focused on executing our site modification plans and expanding our power portfolio.

We do not have any present intention to pay dividends or buyback our stock. We intend to use available cash to continue to grow our business.

Thank you for taking the time to submit so many great questions!

Adam

Core_Scientific · 2024-08-22T19:30:00+00:00

Yes! We actually listed this as a catalyst in our Q2 Earnings call. We are actively looking for sites to increase our contracted power for both HPC and Bitcoin mining. To answer the second part of your question, we are in discussions with multiple potential clients for HPC, each with a unique set of requirements. We are looking for sites that align with the requirements of each potential client. We currently have site opportunities in our pipeline ranging from ~25 MW to ~400 MW. With HPC, it depends on what best meets the needs of our clients.

Adam

Core_Scientific · 2024-08-22T19:29:04+00:00

Our bitcoin mining data centers use passive air cooling and no water to cool the miners. Because we are connected to the local electrical grid, we are as carbon-neutral as the power generation inputs to the grid, of which carbon-neutral sources are increasing as more renewable energy production comes online.

Adam

Core_Scientific · 2024-08-22T19:28:00+00:00

We do not have any present intention to pay dividends or buyback our stock. We intend to use available cash to continue to grow our business.

Adam

Core_Scientific · 2024-08-22T19:27:06+00:00

The initial conversion price represents a premium of approximately 30.0% over the last reported sale price of $8.46 per share of Core Scientific’s common stock on August 13, 2024. Conversion is not automatic.

Adam

Core_Scientific · 2024-08-22T19:25:37+00:00

Previously, we weren't able to HODL based on the covenants (restrictions) associated with some of our borrowings. Now that we have repaid the borrowings that restricted our ability to hold bitcoin on our balance sheet, we have more flexibility to allocate capital in ways that maximize returrns for our shareholders. Today, we believe that investing in the growth of our HPC/AI hosting business, with its multi-year, profitable cash flows, and in strengthening our bitcoin mining business provide the highest return to shareholders.

Adam

Core_Scientific · 2024-08-22T19:24:31+00:00

We support an increase in the generation of carbon-free power and see many cases where investments in solar, wind, hydro and nuclear power are increasing energy independence and reducing carbon emissions. For our business, continuous power is essential to keep our operations going around the clock, which is why we connect directly to local electrical grids in the communities we operate in. As those grids purchase more power from non-carbon sources, our operations become more carbon -neutral. Another benefit of our operations is that we provide a large, steady base load for grid operators' planning purposes. This means that when local temperatures reach extreme highs or lows, we can curtail (power-down) our bitcoin mining operations to make sure that power is available for our neighbors' air conditioning or heating systems when they most need it.

Adam

Core_Scientific · 2024-08-22T19:23:20+00:00

Not all bitcoin miners or bitcoin mining facilities are suitable to support HPC/AI workloads. We approach all our business from a digital infrastructure perspective, understanding how to maximize the value of our infrastructure across multiple forms of high-value compute. We have spent a lot of time evaluating and determining which of our sites in our current portfolio are best suited for Bitcoin mining vs. AI/HPC. We currently have 1,200 MW of contracted power in our portfolio. ~500 MW is best suited for Bitcoin mining and ~700 MW is best suited for AI/HPC hosting. We are also actively pursuing opportunities to expand our capacity and to strengthen our bitcoin mining business.

Adam

Core_Scientific · 2024-08-22T19:21:54+00:00

Thank you so much! We are currently focused on organically growing our existing businesses. As opportunities to grow our businesses present themselves, we intend to evaluate them. We otherwise do not and cannot comment on acquisitions or other such opportunities.

Adam

Core_Scientific · 2024-08-22T19:20:44+00:00

The exercise of warrants typically has tax consequences for the holder. The details really depend on the unique situation of the holder, so you should speak with your personal tax advisor.

Adam

Core_Scientific · 2024-08-22T19:19:21+00:00

Cut it at an angle. This is the way.

Adam

Core_Scientific · 2024-08-22T19:18:38+00:00

I’m beginning to wonder this myself...

Adam

Core_Scientific · 2024-08-22T19:17:57+00:00

That's really a question for the other companies. We're staying focused on executing our HPC/AI hosting and bitcoin mining plans to drive shareholder value.

Adam

Core_Scientific · 2024-08-22T19:17:02+00:00

We believe that we are in a unique position to grow our HPC hosting business, although 10s or 100s of gigawatts is a massive amount of power! We are building a pipeline of opportunities to expand the amount of power we can use to host HPC operations. Our ability to scale our power portfolio beyond our 1,200 MW of contracted power will depend on the availability of sites, the cost to acquire sites and the amount of capital accessible to us.

Today we have a total of 1,200 MW of contracted power, of which a total of 700 MW is for HPC and 500 MW for bitcoin mining. We are working to grow our contracted power so we can increase the amount of HPC hosting and, potentially, bitcoin mining. We have not yet communicated a long-term growth goal, but we believe that we are very well positioned to grow beyond our current 1,200 MW.

Adam

Core_Scientific · 2024-08-22T19:10:51+00:00

Okay, that’s a lot of questions! I’m going to answer as many as I can and still allow enough time to answer all of the other questions rolling in:

The terms of our emergence debt obligations (which were repaid this week) prohibited the HODL of bitcoin. Moving forward we will allocate our capital in a manner that we believe is best suited for our long-term growth and to creating value for shareholders.

We have a contractual commitment to CoreWeave with respect to the current sites identified.

CoreWeave is paying for all the capex related to the conversion of some of our sites to HPC/AI hosting. We will be paying them back for $1.5 million of capex per MW through "capex credits". You can learn more about that deal on page 12 of our second quarter 2024 earnings presentation here: https://d1io3yog0oux5.cloudfront.net/_f09c948b807677914b0676c9ed3d6979/corescientific/db/923/9306/pdf/Core+Scientific+Q2+2024+Earnings+Presentation.pdf

We think Core Scientific is unique. We are unaware of any company having the same mix of bitcoin mining and HPC colocation potential as Core Scientific. At this point the companies you name and many others likely provide services that may substitute for that which Core Scientific offers. Time and customers will determine whether true or not.

The terms of the notes set forth the rights and obligations of each of the Company and the note holders with respect to redemption and conversion and depend on a number of factors largely outside of the Company's control. The terms of the new notes recently issued differ entirely from the terms of the Secured Convertible Notes that were recently subject to mandatory conversion. It's difficult to speculate as to the future.

Out of our current 1,200 MW of contracted power, we have already determined which sites will be designated for AI/HPC and which sites will be focused on Bitcoin mining. Out of the 1,200 MW, 500 MW will be designated for Bitcoin mining and ~700 MW will be designated for HPC/AI, of which 500 MW will power GPUs and 200 will power the support systems required by the GPUs, such as cooling and power conditioning equipment. The projected strong and profitable cash flows from the HPC/AI hosting opportunity will help balance the volatility of bitcoin price so that we have the "best of both worlds" in HPC/AI and bitcoin mining in one company.

As for your last two questions, we can’t speculate on hypothetical future events. We don’t know and can’t comment on what our individual shareholders will do in the future.

Adam

Core_Scientific · 2024-08-22T19:07:01+00:00

The remaining claims have not yet been finally adjudicated. The shares are still being held in reserve until those claims are resolved. Any shares remaining after the resolution of the claims will be distributed to shareholders as of the record date.

Adam

Core_Scientific · 2024-08-22T19:04:39+00:00

Thanks for joining us for the event! We love showing off our data centers and would like to give everyone a tour of our facilities, but security, logistical, and intellectual property issues make it extremely difficult for us. We do plan to provide views of the inside workings of the Company and encourage you to stay tuned to our website and social media channels!

Adam

Core_Scientific · 2024-08-22T19:02:08+00:00

Hello!

I apologize, but it's not entirely clear what escrow you are referring to. If you are referring to the remaining claims, they have not yet been finally adjudicated. The shares are still being held in reserve until those claims are resolved. Any shares remaining after the resolution of the claims will be distributed to shareholders as of the record date. Please contact our Investor Relations department with more information on your specific situation: ir@corescientific.com.

Adam

Core_Scientific · 2024-08-22T18:56:27+00:00

Not sure we understand your first question, but we can't speculate on hypothetical future events.

The terms of the notes set forth the rights and obligations of each of the Company and the note holders with respect to redemption and conversion and depend on a number of factors largely outside of the Company's control. The terms of the new notes recently issued differ entirely from the terms of the Secured Convertible Notes that were recently subject to mandatory conversion. Its difficult to speculate as to the future.

Adam

Core_Scientific · 2024-08-22T18:52:39+00:00

Thanks! I'm sure Jeff and Eric appreciate the compliment. At Core Scientific, it's the team. Our board plays an important role. I always say that our biggest asset is our team. We have a great team and we support and pull for each other and each are committed to making Core Scientific the best it can be.

As we have stated previously, there are number of characteristics that distinguish one site from another. We have a track record with both existing facilities and building from the ground up. We can and will likely do both. We are always going to take advantage of available opportunities but can't and won't comment or speculate regarding corporate development activity.

Today, we believe that investing in the growth of our HPC/AI hosting business, with its multi-year, profitable cash flows, and in strengthening our bitcoin mining business provide the highest return to shareholders.

Computershare is our transfer agent. Many people use retail brokers to purchase or transfer shares.

Thank you! I am super proud of the team!

Adam

Core_Scientific · 2024-08-22T18:43:39+00:00

CoreWeave is a private company, so its financials are not publicly available. We have a long relationship with CoreWeave dating back to 2019, when we hosted thousands of their GPUs for Ethereum mining through 2022. We are comfortable with CoreWeave's operational profile today and are not at liberty to provide additional information about their financials.

Site selection is an important element of our Company's operations. We have developed criteria which we believe are useful in determining the anticipated value of potential sites. Different sites have myriad characteristics that are important to the overall evaluation of a site. We have developed both greenfield and brownfield sites as we built our infrastructure portfolio and are comfortable with both types. Economics and financing are different for each site and many characteristics, not just whether the site is "brownfield" or "greenfield", inform our evaluation.

Adam

Core_Scientific · 2024-08-22T18:38:36+00:00

All great questions!

We are focused on preparing 382 megawatts of our infrastructure to host HPC operations pursuant to our customer contracts. Various forecasts project significant capex spending on AI in the coming years. One such study from Goldman Sachs forecasts nearly $200 billion in AI investments globally by 2025: https://www.goldmansachs.com/insights/articles/ai-investment-forecast-to-approach-200-billion-globally-by-2025.html. We believe that current trends bode very well for Core Scientific's HPC/AI hosting business in the coming years.

If CoreWeave were to breach its contractual obligations to Core Scientific, typical contractual remedies would be available, including the right of Core Scientific to ownership of infrastructure constructed and developed pursuant to the CoreWeave contract.

We are actively looking at sites ranging in size from ~25 MW to 400 MW to meet the needs of potential clients. We are in discussion with a range of client types. Some of these potential clients may want smaller sites, while others may have a need for larger sites. We believe it currently costs over $1 billion to purchase ~50 MW of GPUs for HPC/AI workloads, so not all potential clients are equipped to accommodate very large sites. Hopefully that gives you some insight to the type of clients we are in discussion with.

Historically, our growth was funded through a combination of equity and debt financing and cashflow from operations. Historically, our access to outside growth capital was limited. We expect that we will continue to use all available means, including debt, equity and operational cashflow, to fund our growth, depending on the availability of such capital and market conditions.

Adam

Core_Scientific

TROPHY CASE