10-K: Core Scientific Shifts to AI/HPC Colocation, Reports 2025 Loss

Core Scientific, Inc. reports a net loss of $288.6 million for 2025, driven by a strategic pivot from digital asset self-mining to high-density colocation services for AI and HPC workloads, despite increased colocation revenue.

Summary

• Net loss was $288.6 million in 2025, a significant improvement from $1,437.9 million in 2024.
• Total revenue decreased to $319.0 million in 2025 from $510.7 million in 2024, primarily due to lower digital asset self-mining and hosted mining revenue.
• Colocation revenue increased to $65.4 million in 2025 from $24.4 million in 2024, reflecting the strategic shift.
• Digital asset self-mining revenue decreased to $229.2 million in 2025 from $408.7 million in 2024, impacted by reduced deployed fleet and Bitcoin halving.
• Digital asset hosted mining revenue decreased to $24.4 million in 2025 from $77.6 million in 2024, due to the shift towards colocation.
• Operating loss increased to $245.6 million in 2025 from $142.1 million in 2024.
• Adjusted EBITDA decreased to $(29.7) million in 2025 from $157.4 million in 2024.
• The company is strategically converting its entire portfolio to high-density colocation (HDC) infrastructure over the next three years, focusing on AI and HPC workloads.
• A material weakness in internal control over financial reporting was identified related to accounting for demolition of assets during facility conversion, leading to a restatement of previously issued financial statements.
• The merger agreement with CoreWeave, Inc. was terminated on October 30, 2025, following stockholder rejection, incurring $21.6 million in related advisory and legal fees.
• Bitcoin mined decreased by 65% to 2,276 in 2025 from 6,595 in 2024.
• The average price of Bitcoin increased by 54% to $101,639 in 2025 from $65,894 in 2024.
• Self-mining hash rate decreased by 18% to 15.7 EH/s in 2025 from 19.1 EH/s in 2024.
• As of December 31, 2025, the company held 2,537 bitcoin with a carrying value of $222.0 million.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging transitional period. While the strategic shift to colocation shows promise with increased revenue and improved gross margin in that segment, the overall financial performance for 2025, including significant declines in total revenue, gross profit, and a negative Adjusted EBITDA, indicates substantial headwinds. The identified material weakness in internal controls and high capital expenditure requirements add to the operational and financial risks.

Positives

• Colocation revenue significantly increased by $41.0 million (168%) to $65.4 million in 2025, indicating successful initial execution of the strategic shift.
• Gross margin for the Colocation segment improved substantially from 11% in 2024 to 30% in 2025.
• Net loss significantly reduced from $1,437.9 million in 2024 to $288.6 million in 2025, primarily due to a lower change in fair value of warrants and contingent value rights.
• Cash provided by operating activities increased to $278.3 million in 2025 from $42.9 million in 2024, driven by deferred revenue associated with colocation services.
• Successfully repaid five higher-interest debt facilities totaling approximately $26.6 million in principal during 2025.
• Entered into a long-term power supply arrangement in January 2026, securing firm utility power capacity beginning in 2028.
• A Presidential executive order in July 2025 aims to streamline permitting and environmental review for large-scale AI data center projects, potentially benefiting future expansion.

Negatives

• Total revenue decreased by $191.7 million (37.5%) in 2025, primarily due to reduced digital asset self-mining and hosted mining revenue.
• Operating loss increased to $245.6 million in 2025 from $142.1 million in 2024.
• Adjusted EBITDA decreased significantly to $(29.7) million in 2025 from $157.4 million in 2024.
• Gross profit decreased by $83.2 million (68.7%) to $37.9 million in 2025.
• Digital asset self-mining gross profit decreased by $84.1 million (89.1%) to $10.3 million in 2025.
• Digital asset hosted mining gross profit decreased by $16.2 million (67.4%) to $7.8 million in 2025.
• The high-density colocation business is currently highly dependent on a single customer, CoreWeave, which accounts for 100% of the Colocation segment revenue.
• Incurred $21.6 million in advisory, legal, and other professional fees related to the terminated merger agreement with CoreWeave.
• A material weakness was identified in internal control over financial reporting, leading to the restatement of prior financial statements.
• Selling, general and administrative expenses increased by $45.5 million to $159.2 million in 2025.
• Cash used in investing activities increased substantially to $740.8 million in 2025 from $95.2 million in 2024, reflecting high capital expenditures for colocation expansion.
• Cash used in financing activities was $63.1 million in 2025, compared to $819.6 million provided in 2024.

Risks

• Delays in the expansion or modification of existing facilities or the construction of new facilities, or significant cost overruns, could materially adversely affect the business.
• The high-density colocation business is highly dependent on a single customer, CoreWeave, which accounts for 100% of Colocation segment revenue.
• The increased focus on high-density colocation may not be successful and depends on the continuing development and computational requirements of AI/HPC applications.
• The business is capital intensive and failure to obtain necessary additional capital when needed will force delays, limits, or termination of expansion efforts.
• Significant electric power requirements and limited availability of electrical power, coupled with public sentiment regarding high volume electrical use and climate change, could increase costs and limit demand.
• Any failure in critical systems, facilities, or services could lead to disruptions, harm reputation, and result in financial penalties and legal liabilities.
• Vulnerability to physical security breaches could disrupt operations and have a material adverse effect.
• The ability to mine Bitcoin profitably is challenged by increases in total network hash rate, which could reduce competitive position.
• A slowdown in market and economic conditions, particularly impacting cloud computing, machine learning, and AI industries, could adversely affect the business.
• A material weakness in internal control over financial reporting has resulted in the ineffectiveness of controls and procedures, leading to restatement of prior financial statements.
• Cash needs for high-density colocation growth initiatives will limit digital asset holdings, preventing recognition of gains from appreciation.
• Changes in interpretive positions of the SEC or its staff with respect to digital asset mining firms could have a material adverse effect.
• U.S. federal and state laws and regulations of digital assets and intermediaries may increase compliance costs and adversely impact the market for digital assets.
• Increasing scrutiny and changing expectations from government regulators, investors, lenders, customers, and other market participants with respect to Environmental, Social and Governance (ESG) policies may impose additional costs or expose the company to additional risks.
• Digital assets, and Bitcoin in particular, are subject to price volatility, which could materially adversely affect the business.
• The halving of rewards on the Bitcoin network, or reduction of rewards on other networks, could negatively impact revenue and reduce incentives for miners.
• Ineffective compliance and risk management methods could adversely affect reputation, operating results, and financial condition.
• Inadequate sources of recovery if digital assets held by the company are lost, stolen, or destroyed due to third-party digital asset services.
• Physical risks and regulatory changes relating to climate change may impact costs, access to materials and resources, and demand for cryptocurrencies.
• Compromised information technology systems or data could lead to adverse consequences, including regulatory investigations, litigation, and reputational harm.
• Stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, and industry standards related to data privacy and security.
• Inability to keep pace with rapid technological changes could make current or future technologies less competitive or obsolete.
• Inability to adequately protect intellectual property rights and other proprietary rights.
• Risk of infringing on third-party intellectual property rights.
• Dependence on the ability of the management team and the ability to attract, develop, motivate, and retain other well-qualified employees.
• Impact of social, political, economic, and other events and circumstances in the United States and in countries outside of the United States, particularly Asian and other non-Western countries.
• Global conflicts (e.g., Russia-Ukraine, Israel-Hamas) could negatively impact business, results of operations, and financial conditions.
• Changes in tariffs or import restrictions could have a material adverse effect on the business.
• Requirement to record long-lived asset impairment charges, which could result in a significant charge to earnings.
• Losses relating to the business may be uninsured, or insurance may be limited, and digital assets are not subject to FDIC or SIPC protections.
• High dependence on a small number of digital asset mining equipment suppliers.
• Reliance on third-party mining pool service providers for earned mining reward payouts.
• Significant changes to the method of validating blockchain transactions (e.g., shift from proof-of-work to proof-of-stake) could reduce demand for digital assets.
• Operating in a rapidly developing industry with an evolving business model and limited history of generating revenue from new services increases complexity and makes future prospects difficult to evaluate.
• Inability to compete effectively against current and future competitors.
• Difficulties in establishing relationships with banks, leasing companies, insurance companies, and other financial institutions.
• Interactions with a blockchain may expose the company to specially designated nationals (SDN) or blocked persons or cause violations of laws that did not contemplate distributed ledger technology.
• Regulatory changes or interpretations requiring registration as a money services business (MSB) or money transmitter (MT) could incur significant compliance costs.
• Risk of being deemed an investment company under the Investment Company Act of 1940.
• Uncertain and evolving regulation of digital assets, including the absence of a single unifying standard for determining whether a digital asset is a security.
• Risks associated with misleading and/or fraudulent disclosure or use by the creators of digital assets.
• Changes in accounting standards and interpretations for crypto assets could materially affect financial statements and results of operations.
• Incurring additional indebtedness to execute the long-term growth strategy may reduce profitability.
• Inability to raise the funds necessary to repurchase convertible notes or pay any cash amounts due upon conversion.
• Provisions in indentures could delay or prevent an otherwise beneficial takeover.
• The conditional conversion feature of the notes, if triggered, may adversely affect financial condition and results of operations.
• The ability to use some or all of net operating loss and capital loss carryforwards and other tax attributes to offset future income may be limited.
• The IRS and certain states have taken the position that digital assets are property for income tax purposes, and changes to tax laws could have a material adverse effect.
• An investment in the company's securities is highly speculative, and the trading price may be volatile.
• Future sales and issuances of capital stock or rights to purchase capital stock could result in additional dilution.
• The market price and trading volume of securities could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research.
• The company does not intend to pay dividends for the foreseeable future.
• Actual financial results after emergence from bankruptcy may not be comparable to projections filed with the Bankruptcy Court.
• The ability to attract and retain key personnel is critical to the success of the business and may be affected by emergence from bankruptcy.
• Digital asset transactions are irrevocable and, if incorrectly transferred, digital assets may be irretrievable.
• Digital assets, including Bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times.
• Latency in confirming transactions on a network could result in a loss of confidence in the network.
• Malicious actors or botnets may obtain control of more than 50% of the processing power on the Bitcoin or other network.
• Intellectual property rights claims may adversely affect the operation of any or all networks.
• A soft or hard fork on a network could have a material adverse effect on the business.

Future Outlook

Core Scientific expects to rapidly increase revenue from high-density colocation (HDC) services as capacity is delivered to existing and future customers. The company intends to convert its entire portfolio to HDC infrastructure over the next three years, while continuing digital asset mining only to meet existing power commitments or honor limited hosting commitments. It is actively evaluating opportunities to acquire new sites to expand its data center footprint. The company anticipates monetizing substantially all of its Bitcoin holdings during 2026, primarily in Q1, to enhance liquidity and fund planned capital expenditures and other cash requirements.

Management Comments

• We believe leveraging our existing infrastructure for high-density colocation services will provide more stable and predictable revenue streams, and represents substantially less risk over time than our traditional hosted bitcoin mining or self-mining operations.
• We intend to convert every megawatt in our portfolio to high-density colocation infrastructure over the next three years.
• We are also actively evaluating opportunities to acquire new sites, including land and power capacity, to expand our data center footprint beyond our current portfolio.
• We will continue to mine digital assets and manage our self-mining fleet with a focus on power expense coverage and cash generation while we convert our data centers for alternative high-density colocation service business opportunities.
• We expect to increase revenue derived from high-density colocation (HDC) services as capacity gets delivered to our current end customer as well as when we sign and begin generating revenue from new colocation customers.
• We do not expect to further expand our Digital Asset Hosted Mining operations in 2026 and future years and may not derive consequential digital asset hosting revenue in future periods.
• Aside from the miners received in 2025 and those expected from Block, we do not anticipate entering into new large-scale bitcoin mining equipment procurement agreements as we continue to shift capital allocation toward HDC infrastructure.
• We expect to incur future impairments of PP&E at the point at which the assets become committed to demolition, which is generally expected to occur at the time of colocation customer contract execution.
• We have assessed our current and expected operating and capital expenditure requirements and our current and expected sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of December 31, 2025, that our available liquidity, including cash and cash equivalents and expected operating cash flows and customer funding related to our colocation arrangements, will be sufficient to satisfy our cash requirements for at least the next twelve months.

Industry Context

StockSavvy.ai notes that Core Scientific's strategic pivot towards high-density colocation for AI and HPC aligns with broader industry trends of increasing demand for specialized data center infrastructure driven by generative AI adoption. The shift away from pure digital asset mining mitigates exposure to Bitcoin price volatility and network hash rate increases, which have historically impacted profitability for miners. The company's existing large-scale power infrastructure and experience in high-power density workloads position it to capitalize on this trend, competing with established data center providers and other former crypto miners also converting facilities. The termination of the CoreWeave merger, while costly, allows the company to pursue its colocation strategy independently, potentially diversifying its customer base beyond a single major client.

Comparison to Industry Standards

• Many competitors in the high-density colocation (HDC) market are more established, have better brand recognition, are well capitalized, and are organized to take advantage of certain tax benefits for their investors, lowering their external cost of capital.
• Competitors in the HDC market include Aligned Data Centers, Compass Datacenters, Equinix, Inc., Digital Realty Trust, NTT, QTS, Switch, Inc., Vantage Data Centers, and CyrusOne Inc.
• Other digital asset miners converting existing facilities into HDC facilities, and thus competitors, include Applied Digital Corporation, Cipher Mining Inc., Galaxy Digital, Hut 8 Corp., IREN, and Terawulf, Inc.
• The company believes its experienced data center and engineering leadership team, proven ability to rapidly deliver scalable, purpose-built data centers, combined with cutting-edge, energy-efficient technologies, will enable it to compete favorably within the HDC market.
• Digital asset self-mining operations compete globally with other mining operations on the basis of total number of miners, consistently generated hash rate, size and skill of the mining pool, and efficiency of miner and mining operations.
• Hosting activities compete with a large number of other hosting operations based on ability to supply hosting space and power, performance with respect to installation, operation and repair of customer equipment, ability to obtain replacement parts, value of service offering, and availability of mining equipment.
• The company competes with other operations and participants for equity and debt financing due to its capital-intensive business.

Management Changes

Corporate Governance

Legal Proceedings

• Purported Shareholder Class Action (Pang): Plaintiff Mei Pang filed a class-action complaint alleging violations of the Securities Act and Exchange Act. The Bankruptcy Court sustained the company's objection to the filed class proof of claim and dismissed the plaintiff's appeal of the Plan of Reorganization. The plaintiff refiled the complaint in June 2024, which was subsequently referred to the Bankruptcy Court in March 2025 for determination of issues raised by the company's motion to dismiss. Motions for reconsideration are pending.
• Shareholder Class Action (Ihle): Plaintiff Brad Ihle filed a class action complaint against certain officers and directors of Power & Digital Infrastructure Acquisition Corp. (the former name of the current corporate entity) alleging breach of fiduciary duties. This matter was settled during the quarter ended December 31, 2025, with the company's payment in satisfaction of its existing indemnification obligation.
• Patent Infringement Claim (Malikie Innovations Ltd and Key Patents Innovations Ltd.): Malikie filed suit alleging infringement of U.S. Patent Nos. 8,788,827; 10,284,370; 8,666,062; 7,372,960; and 8,532,286 in the company's bitcoin mining business. Malikie later filed a motion to amend the complaint to add allegations of infringement of U.S. Patent No. 8,712,039 by both the bitcoin mining and high-performance computing businesses, and reasserted infringement of patent 8,532,286 against the high-performance computing business. Motions to dismiss and transfer are pending, and a trial date is set for January 25, 2027.

Related Party Transactions

• No related party transactions occurred during the years ended December 31, 2025 and 2024.
• For the year ended December 31, 2023, the company recognized $10.1 million in digital asset hosted revenue from various entities managed and invested in by individuals who were directors and executives of the company.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances, continued volatility in the stock price, and no anticipated dividends in the foreseeable future. The identified material weakness in internal controls and the restatement of prior financial statements could impact investor confidence.
• Customers, particularly high-density colocation clients like CoreWeave, are central to the company's strategic shift and benefit from infrastructure development, but the high dependence on a single customer creates concentration risk.
• Employees are impacted by the strategic shift, with the Incentive Plan designed to attract and retain talent. Changes in management roles and responsibilities are ongoing.
• Creditors and lenders are exposed to the company's indebtedness and liabilities, with convertible notes having specific repurchase and conversion features that could affect liquidity. The company has repaid some higher-interest debt.
• Suppliers of digital asset mining equipment and long-lead-time electrical/mechanical equipment are critical to the company's operations and expansion, with potential impacts from supply chain disruptions and advance deposit requirements.

Next Steps

• Convert every megawatt in the portfolio to high-density colocation infrastructure over the next three years.
• Actively evaluate opportunities to acquire new sites, including land and power capacity, to expand the data center footprint.
• Monetize substantially all Bitcoin holdings during 2026, primarily in Q1, to enhance liquidity and fund planned capital expenditures.
• Increase capital expenditures in 2026 relative to 2025 to support the strategic shift to colocation services.
• Implement additional training for accounting personnel on evaluating novel transactions related to property, plant, and equipment.
• Implement additional levels of management review and oversight, including consultation with external technical accounting resources, over significant accounting conclusions related to property, plant, and equipment.
• The Public Utility Commission of Texas is required to review and potentially revise the methodology for allocating wholesale transmission charges to large-load customers by December 31, 2026.
• The trial date for the Malikie patent infringement case is set for January 25, 2027.
• The next Bitcoin halving is anticipated to occur sometime in 2028.

Key Dates

Recommendation

Core Scientific is undergoing a significant strategic transformation from volatile digital asset mining to the high-growth high-density colocation market for AI/HPC. While the colocation segment shows promising revenue growth and improved margins, the overall financial performance for 2025 was weak, with declining total revenue, increased operating losses, and negative Adjusted EBITDA. The identified material weakness in internal controls and the high capital expenditure requirements for the transition present execution risks. The company's heavy reliance on a single colocation customer (CoreWeave) is also a notable concentration risk. Given the early stage of the strategic pivot and the associated risks, a 'hold' recommendation is appropriate, allowing investors to monitor the successful execution of the colocation strategy and remediation of internal control issues before making further investment decisions.

Keywords

Core Scientific, CORZ, Annual Report, 10-K, High-Density Colocation, AI, HPC, Digital Asset Mining, Bitcoin Mining, Data Centers, Strategic Shift, Financial Results, Net Loss, Adjusted EBITDA, Internal Controls, Material Weakness, Convertible Notes, Capital Expenditures, CoreWeave, Cryptocurrency, Blockchain, Nasdaq, Risk Management, Corporate Governance, ESG, Regulation