8-K: Core Scientific Reports Strong Q4 and Full Year 2023 Results, Exceeds Bitcoin Mining Expectations

Core Scientific announced its fiscal fourth quarter and full year 2023 results, highlighting significant improvements in profitability and operational efficiency, and leading North America in self-mined bitcoin production.

Summary

• Core Scientific reported its financial results for the fourth quarter and full year ended December 31, 2023.
• The company mined 19,274 bitcoin in total, with 13,762 self-mined, the most by any publicly listed miner in North America.
• They operated a total hash rate of 23.2 EH/s, including 16.9 EH/s for self-mining and 6.3 EH/s for hosting.
• Core Scientific owns and manages 724 megawatts of infrastructure, the largest among publicly listed miners in North America.
• The average self-mining fleet energy efficiency improved to 27.94 joules per terahash.
• The company has an organic growth plan for more than 20 EH/s of new self-mining hash rate.
• Total revenue for the fourth quarter was $141.9 million, a $20.7 million increase compared to the same period in 2022.
• The net loss for the fourth quarter was $195.7 million, an improvement of $239.2 million year-over-year.
• Adjusted EBITDA for the fourth quarter was $57.5 million, a $51.2 million increase compared to the same period in 2022.
• Total revenue for the full year was $502.4 million, a decrease of $137.9 million compared to 2022.
• The net loss for the full year was $246.5 million, an improvement of $1.90 billion year-over-year.
• Adjusted EBITDA for the full year was $170.0 million, an increase of $180.7 million compared to 2022.
• The company has completed all 2024 payments for new bitcoin miners and is accelerating their deployment.
• Core Scientific has expanded its hosting business with a strategic, long-term contract with CoreWeave, Inc.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong operational performance, significant financial improvements, and a clear growth strategy. The company's emergence from restructuring and diversification into high-performance computing are also positive indicators. However, the company still faces risks related to market volatility and debt.

Positives

• Core Scientific is the leading bitcoin miner in North America based on self-mined bitcoin production.
• The company has the largest owned infrastructure capacity among publicly listed miners in North America.
• The company has significantly improved its financial performance, with substantial increases in adjusted EBITDA and reductions in net losses.
• The company has a clear plan for growth and is well-positioned for the upcoming bitcoin halving.
• The company has diversified its revenue streams by securing a hosting contract with CoreWeave, Inc.
• The company has improved its self-mining fleet efficiency.
• The company has a pathway to de-lever its balance sheet.

Negatives

• Total revenue for the full year 2023 decreased by $137.9 million compared to 2022.
• The company experienced a net loss of $246.5 million for the full year 2023, although this is a significant improvement from the previous year.
• The company's hosting revenue decreased due to the termination of less profitable contracts.
• The company exited the equipment sales business, which contributed to a decrease in revenue.

Risks

• The company's ability to earn digital assets profitably is subject to market conditions and network hash rate increases.
• The company's ability to raise additional capital is crucial for expansion efforts.
• The company is dependent on significant electric power and the availability of power resources.
• The company is vulnerable to physical security breaches and potential slowdowns in market and economic conditions.
• The company is exposed to price volatility of digital assets, particularly bitcoin.
• The upcoming bitcoin halving could affect the company's ability to generate revenue.
• The company is subject to regulatory changes and increasing scrutiny regarding ESG policies.
• The company has a substantial level of indebtedness and current liquidity constraints.

Future Outlook

Core Scientific is positioned for continued strong performance in 2024 based on current bitcoin prices and operating performance, with a plan for self-mining growth of more than 20 exahash and a diversified platform that includes high-performance computing hosting.

Management Comments

• In 2023, Core Scientific earned more self-mined bitcoin than any other listed miner in North America, positioning us for continued strong performance in 2024 based on current bitcoin prices and operating performance, said Adam Sullivan, Core Scientific Chief Executive Officer.
• We own and operate the largest bitcoin mining infrastructure in the industry in terms of operating megawatts, and we have demonstrated superior hash rate utilization.
• We have now emerged from our restructuring a stronger, more focused and more productive company with a plan for self-mining growth of more than 20 exahash.
• We believe our growth plan and diversified platform give us the ability to refresh our fleet with more efficient miners, scale our business with favorable economics and position ourselves well for the upcoming halving and beyond.
• Our strong momentum continued into 2024 as we recently announced the expansion of our hosting business with a strategic, long-term contract with CoreWeave, Inc.
• More importantly, this contract enhances shareholder value, added Mr. Sullivan.
• We could not be more excited at this point in Core Scientifics history, as we have secured a renewed opportunity to demonstrate the value of our platform and the strategic nature of our footprint to the future of high value compute.

Industry Context

Core Scientific's results reflect the broader trends in the bitcoin mining industry, including the importance of scale, efficiency, and diversification. The company's move into high-performance computing hosting aligns with the growing demand for AI and other compute-intensive applications.

Comparison to Industry Standards

• Core Scientific's self-mined bitcoin production of 13,762 in 2023 surpasses that of other major North American publicly listed miners such as Riot, Marathon, and Iris Energy.
• The company's hash rate utilization is consistently higher than the peer group average, indicating superior operational efficiency.
• Core Scientific's 724 MW of owned infrastructure is the largest among publicly listed miners in North America, exceeding the capacity of competitors like CleanSpark and Marathon.
• The company's cash cost per bitcoin of $14,982 is competitive within the industry, though specific comparisons to other miners' costs are not provided in the document.

Stakeholder Impact

• Shareholders will benefit from the company's improved financial performance and growth prospects.
• Employees will benefit from the company's stability and growth.
• Customers will benefit from the company's expanded hosting services and improved efficiency.
• Suppliers will benefit from the company's continued operations and growth.
• Creditors will benefit from the company's improved financial health and debt management.

Next Steps

• The company will continue to deploy new Bitmain S21 miners.
• The company will continue to expand its hosting business with CoreWeave, Inc.
• The company will continue to execute its organic self-mining growth plan for more than 20 EH/s.
• The company will continue to focus on improving its self-mining fleet efficiency.
• The company will continue to manage its debt and de-lever its balance sheet.

Key Dates

Keywords

Bitcoin mining, Digital infrastructure, Hash rate, Self-mining, Hosting, Adjusted EBITDA, Financial results, Cryptocurrency, Data centers, Core Scientific