Core Scientific to exit bitcoin mining by year-end, pivoting to AI data centers

What happened

Core Scientific confirmed on Thursday that it will complete its exit from bitcoin mining operations during the fourth quarter of 2026, entering 2027 as a pure-play colocation and data-center provider. Chief Financial Officer Jim Nygaard and Chief Executive Officer Adam Sullivan both specified the year-end completion timeline during the company's third-quarter earnings call, according to Bitcoin Magazine and Coinpedia.

The company has already substantially wound down its mining fleet, reducing active miners by nearly 50% from year-end 2025. Bitcoin Magazine reported that self-mining revenue fell to $12.3 million in Q3, down 79% from $57.4 million in the same quarter a year earlier, while the company posted a $7.5 million gross loss on mining operations.

The transition has involved significant capital commitments. Core Scientific paid $41.9 million to terminate a bitcoin mining chip supply agreement with Block and Proto, ending future equipment deliveries. Meanwhile, colocation revenue surged to $215.4 million in Q3, up nearly 60% sequentially, with a 60% gross margin that dwarfs mining economics.

Why it matters

The economics of bitcoin mining have deteriorated significantly for large public companies. Following the April 2024 halving, which cut block rewards in half, the average production cost for miners has climbed to around $88,341 per bitcoin, according to Coinpedia. When bitcoin trades at or below $80,000, miners operate at a loss. Core Scientific recorded a $266.5 million impairment on mining-related assets earlier this year due to weakened mining conditions. By contrast, AI and high-performance computing workloads generate substantially higher returns from the same infrastructure and power. According to energy infrastructure analysis cited by Coinpedia, one megawatt of power generates approximately $1.9 million over five years from bitcoin mining compared with $7.9 million from AI data-center workloads. For companies with large power facilities already in place, redirecting capacity toward AI through long-term customer contracts represents a more profitable use of capital.

Background

Core Scientific's pivot reflects a broader shift across the bitcoin mining sector. Coinpedia noted that other major miners including Riot Platforms, MARA Holdings, and HIVE Digital have begun similar transitions. MARA Holdings sold approximately 15,133 bitcoin for roughly $1.1 billion in March and cut its workforce by 15% while redirecting resources toward balance-sheet strengthening and other opportunities. Riot Platforms signed a 20-year lease for 191 megawatts of critical IT capacity with a major AI lab, with an estimated $9.1 billion in contract revenue over the initial term. HIVE is winding down its bitcoin mining operations in Sweden while expanding AI and high-performance computing infrastructure in Canada. Coinpedia reported that at least 35 exahashes per second of computing power is scheduled to shift away from publicly listed bitcoin miners.

Core Scientific's colocation portfolio already demonstrates the scale of its infrastructure pivot. The company is billing for 485 megawatts of capacity as of September 30, up 90 megawatts in the quarter, according to Bitcoin Magazine. The remaining roughly 100 megawatts under its CoreWeave buildout was in commissioning and expected to generate revenue over subsequent months. Beyond CoreWeave's contracted 590 megawatts, Core Scientific has 530 megawatts under an AMD-backed agreement across five campuses, with initial delivery targeted for the first half of 2027 and full delivery by year-end 2028. Management expects that portfolio alone to generate $1.8 billion in average annual run-rate revenue and $1.6 billion in net operating income once fully operational.

What to watch

Core Scientific faces execution risk in completing its mining wind-down on schedule during Q4 2026 while simultaneously ramping new colocation capacity. The company ended Q3 with approximately $1.7 billion in liquidity, including roughly $800 million in cash, but has committed substantial capital to AMD site expansion and other acquisitions. Bitcoin Magazine noted that management framed the wind-down as simplifying the business toward more attractive long-term growth opportunities, with a clean P&L expected starting 2027. The critical test will be whether the AMD financing package completes in time to sustain profitability as mining revenue disappears from the balance sheet. Additionally, Core Scientific's digital asset holdings fell to $2.7 million as of September 30, down from $49.7 million three months earlier and $222 million at year-end 2025, indicating the company is liquidating its bitcoin reserves as part of the transition.

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