Core Scientific, Inc 10-Q for FY2025 Q1
Core Scientific, Inc. (CORZ)
10-Q
2025-05-07
For: 2025-03-31
View Original
Added on
April 09, 2026
About this 10-Q
Core Scientific, Inc filed this 10-Q on May 7, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $79.53M
- down 55.6% from $179.29M a year earlier
- Net income
- $580.69M
- up 175.6% from net income of $210.69M a year earlier
- Diluted EPS
- $1.25
- up 60.3% from $0.78 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 001-40046
Core Scientific, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices)
(Zip Code)
(512 ) 402-5233
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
As of May 2, 2025, 297,821,835 shares of Common Stock, par value $0.00001, were outstanding.
TABLE OF CONTENTS
| Page | ||||||||
3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including, without limitation, statements under Part I. Item 2. — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Forward-looking statements may be identified by the use of words such as “ability,” “aim,” “assume,” “estimate,” “plan,” “possible,” “project,” “forecast,” “goal,” “opportunity,” “intend,” “will,” “expect,” “anticipate,” “believe,” “enable,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, estimates and forecasts of revenue and other financial and performance metrics, projections of market opportunity and expectations, the Company’s ability to scale and grow its business, the advantages and expected growth of the Company and the Company’s ability to source and retain talent. These statements are provided for illustrative purposes only and are based on various assumptions, whether or not identified in this Quarterly Report on Form 10-Q, 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 not guarantees of future performance and are subject to risks, uncertainties and assumptions, known or unknown, that could cause actual results to vary materially from those indicated or anticipated. These risks, assumptions and uncertainties include those described in Part I. Item 1A. — “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. There may be additional risks that the Company could not presently know or that the Company currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q and should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q. The Company anticipates that subsequent events and developments will cause the Company’s assessments to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.
4
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
5
Core Scientific, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets | (Unaudited) | ||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable | |||||||||||
| Digital assets | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total Current Assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Other noncurrent assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Deficit | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities, current portion | |||||||||||
| Finance lease liabilities, current portion | |||||||||||
Notes payable, current portion | |||||||||||
Contingent value rights, current portion | |||||||||||
| Total Current Liabilities | |||||||||||
| Operating lease liabilities, net of current portion | |||||||||||
Convertible and other notes payable, net of current portion | |||||||||||
Contingent value rights, net of current portion | |||||||||||
Warrant liabilities | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total Liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
| Stockholders’ Deficit: | |||||||||||
Preferred stock; $ | |||||||||||
Common stock; $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total Stockholders’ Deficit | ( | ( | |||||||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | |||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
Core Scientific, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
Digital asset self-mining revenue | $ | $ | |||||||||||||||||||||
Digital asset hosted mining revenue from customers | |||||||||||||||||||||||
Colocation revenue | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
Cost of digital asset self-mining | |||||||||||||||||||||||
Cost of digital asset hosted mining services | |||||||||||||||||||||||
Cost of Colocation services | |||||||||||||||||||||||
Total cost of revenue | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Change in fair value of digital assets | |||||||||||||||||||||||
Gain from sales of digital assets | ( | ||||||||||||||||||||||
Change in fair value of energy derivatives | |||||||||||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Operating (loss) income | ( | ||||||||||||||||||||||
Non-operating expenses (income), net: | |||||||||||||||||||||||
Loss on debt extinguishment | |||||||||||||||||||||||
Interest (income) expense, net | ( | ||||||||||||||||||||||
Change in fair value of warrants and contingent value rights | ( | ( | |||||||||||||||||||||
| Reorganization items, net | ( | ||||||||||||||||||||||
Other non-operating expense, net | |||||||||||||||||||||||
Total non-operating income, net | ( | ( | |||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | $ | $ | |||||||||||||||||||||
Net income per share (Note 11) | |||||||||||||||||||||||
Basic | $ | $ | |||||||||||||||||||||
Diluted | $ | $ | |||||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Certain prior year amounts have been reclassified for consistency with the current year presentation.
See accompanying notes to unaudited condensed consolidated financial statements.
7
Core Scientific, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
For the Three Months Ended March 31, 2025
(in thousands)
(Unaudited)
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ (Deficit) Equity | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
Balance at December 31, 2024 | ( | ( | |||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
| Restricted stock awards issued, net of shares withheld for tax withholding obligations | — | ( | — | ( | |||||||||||||||||||||||||
Exercise of warrants | $ | — | — | ||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
8
Core Scientific, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
For the Three Months Ended March 31, 2024
(in thousands)
(Unaudited)
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
| — | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2023, adjusted | ( | ( | |||||||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation | — | — | ( | — | ( | ||||||||||||||||||||||||
Cancellation of common stock in connection with emergence | ( | ( | — | ||||||||||||||||||||||||||
Issuance of new common stock in connection with emergence | — | ||||||||||||||||||||||||||||
Issuance of new common stock under the Equity Rights Offering | — | — | |||||||||||||||||||||||||||
Issuance of new common stock for the Equity Rights Offering backstop commitment | — | — | |||||||||||||||||||||||||||
Issuance of new common stock for Bitmain obligation | — | — | |||||||||||||||||||||||||||
Conversion premium on the issuance of the New Secured Convertible Notes | — | — | — | ||||||||||||||||||||||||||
Issuance of warrants | — | — | ( | — | ( | ||||||||||||||||||||||||
| Exercise of stock options | — | — | |||||||||||||||||||||||||||
Restricted stock awards issued, net of tax withholding obligations | — | ( | — | ( | |||||||||||||||||||||||||
| Restricted stock awards forfeited | ( | — | — | — | — | ||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
9
Core Scientific, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Losses on exchange or disposal of property, plant and equipment | |||||||||||
| Amortization of operating lease right-of-use assets | |||||||||||
| Stock-based compensation | ( | ||||||||||
| Digital asset self-mining and shared hosting revenue | ( | ( | |||||||||
| Proceeds from sale of digital assets generated by self-mining and shared hosting revenues1 | |||||||||||
| Change in fair value of digital assets | |||||||||||
| Gain from sale of digital assets | ( | ||||||||||
| Change in fair value of energy derivatives | ( | ||||||||||
| Change in fair value of warrant liabilities | ( | ( | |||||||||
| Change in fair value of contingent value rights | ( | ||||||||||
Loss on debt extinguishment | |||||||||||
| Amortization of debt discount | |||||||||||
| Non-cash reorganization items | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses and other | ( | ||||||||||
Deferred revenue from colocation services | |||||||||||
| Deferred revenue from hosted mining services | ( | ||||||||||
| Other noncurrent assets and liabilities, net | ( | ||||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash flows from Investing Activities: | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Purchase of equity investments | ( | ||||||||||
| Investments in internally developed software | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from Financing Activities: | |||||||||||
| Principal repayments of finance leases | ( | ( | |||||||||
| Principal payments on debt | ( | ( | |||||||||
| Proceeds from exercise of warrants | |||||||||||
| Proceeds from issuance of new common stock | |||||||||||
| Proceeds from draw from exit facility | |||||||||||
| Restricted stock tax holding obligations | ( | ||||||||||
| Proceeds from exercise of stock options | |||||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash—beginning of period | |||||||||||
Cash, cash equivalents and restricted cash—end of period | $ | $ | |||||||||
Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
Certain prior year amounts have been reclassified for consistency with the current year presentation.
See accompanying notes to unaudited condensed consolidated financial statements.
1 Proceeds from digital assets received as noncash revenue consideration liquidated nearly immediately after receipt as a routine operating activity.
10
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Core Scientific, Inc. (“Core Scientific” or the “Company”) is a leader in digital infrastructure for high-density colocation services and digital asset mining of bitcoin. We operate dedicated, purpose-built facilities for digital asset mining and are a premier provider of digital infrastructure, software solutions and services to our third-party customers. We employ our own large fleet of computers (“miners”) to earn digital assets for our own account. We provide hosting services for large bitcoin mining customers and are in the process of allocating and converting a significant portion of our ten data centers in Alabama (1 ), Georgia (2 ), Kentucky (1 ), North Carolina (1 ), North Dakota (1 ), Oklahoma (1 ), and Texas (3 ) to support artificial intelligence-related workloads under a series of contracts that entail the modification of certain of our data centers to deliver next generation colocation services. We derive the majority of our revenue from earning bitcoin for our own account (“self-mining”).
The Company has historically focused on designing, developing and operating digital infrastructure to engage in digital asset mining for its own account and providing hosting solutions for third-party digital asset miners. Beginning on March 6, 2024, we announced a series of new contractual agreements with CoreWeave, Inc., a third-party provider of high-performance computing (“HPC”) operations for customers using specialized graphics processing units (“GPUs”). These new agreements leverage the Company’s existing digital infrastructure and expertise in third-party hosting solutions.
We currently operate in three segments: “Digital Asset Self-Mining,” consisting of digital asset mining for our own account, “Digital Asset Hosted Mining,” consisting of our digital infrastructure and third-party hosting services for digital asset mining, and “Colocation,” consisting of providing high-density colocation services to third parties for GPU-based HPC operations. Prior to April 1, 2024, we operated only in the Digital Asset Self-Mining and Digital Asset Hosted Mining segments. During fiscal year 2024, our “Colocation” segment was referred to as “HPC Hosting.”
Our digital asset hosted mining business provides a full suite of services to our digital asset mining customers. We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary for our customers to operate, maintain and efficiently mine digital assets.
Our high-density colocation services provide space, power, cooling, facilities operations, security and other services to third-party HPC customers to support workloads for machine learning and artificial intelligence. The extension of our business into the Colocation segment involves significant risk, including risks involving facility construction, supply chain and the risk of nonperformance by our single customer, as disclosed further in Part I, Item 1A. — “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the consolidated financial statements.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Some of the more significant estimates include assumptions used in the valuation of digital assets, property, plant and equipment, the initial measurement
11
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
of lease liabilities, stock-based compensation, the fair value of derivative liabilities, and income taxes. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from management’s estimates.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less from the date of acquisition. As of March 31, 2025 and December 31, 2024, the Company had cash and cash equivalents of $697.9 million and $836.2 million, respectively, substantially all of which exceeded Federal Deposit Insurance Corporation insured limits. Cash equivalents included $672.6 million and $832.2 million of highly liquid money market funds as of March 31, 2025 and December 31, 2024, respectively, which are classified as Level 1 within the fair value hierarchy. Restricted cash consists of a deposit held at a lender’s bank in accordance with the terms of a note agreement.
Digital Assets
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income (loss). The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024, with early adoption permitted.
The Company’s digital assets are within the scope of ASU 2023-08 and the Company elected to early adopt the new standard prospectively effective January 1, 2024. The transition guidance requires a cumulative-effect adjustment as of the beginning of the current fiscal year for any difference between the carrying amount of the Company’s digital assets and fair value. The early adoption did not have a material impact on the Company’s consolidated financial statements.
The Company intends to optimize cash received from bitcoin mining which may entail, subject to market conditions, holding bitcoin for future sale at any particular point in time. Digital assets are classified as current assets on the Company’s Consolidated Balance Sheets, reflecting management's current intent and expectation to convert these assets to cash within the next year. The classification of digital assets is evaluated regularly, and any change in management's intent or expectations regarding the timing of conversion to cash could result in a reclassification of these assets. Sales of digital assets awarded to the Company through its self-mining activities are classified as cash flows from operating activities if sold nearly immediately. The Company does not have any off-balance sheet holdings of digital assets and does not safeguard digital assets for third parties. The Company tracks its cost basis of digital assets in accordance with the first-in-first-out method of accounting.
12
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s digital assets have active markets with observable prices and their fair value measurements are considered Level 1. The following table presents a roll-forward of total digital assets for the three months ended March 31, 2025, and the three months ended March 31, 2024 (under the prospectively adopted ASU 2023-08 fair value model) (in thousands):
| March 31, 2025 | March 31, 2024 | ||||||||||
Digital assets, beginning of period | $ | $ | |||||||||
Cumulative effect of ASU 2023-08, adopted January 1, 20241 | |||||||||||
Digital assets, beginning of period, as adjusted | |||||||||||
Digital asset self-mining revenue, net of receivables2 | |||||||||||
Mining revenue from shared hosting | |||||||||||
Proceeds from sales of digital assets and shared hosting | ( | ||||||||||
Change in fair value of digital assets | ( | ||||||||||
| Gain from sales of digital assets | |||||||||||
Payment of board fee | ( | ||||||||||
Digital assets, end of period | $ | $ | |||||||||
1 Reflects the impact of the Company’s adoption of Accounting Standards Update (“ASU”) 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) effective January 1, 2024.
2 As of March 31, 2025 and December 31, 2024, there was $0.6 million and $0.9 million, respectively, of digital asset receivable included in prepaid expenses and other current assets on the consolidated balance sheets.
The following table presents the Company’s bitcoin holdings (in thousands, except for quantity):
Quantity | Cost Basis | Fair Value | |||||||||||||||
| March 31, 2025 | $ | $ | |||||||||||||||
| December 31, 2024 | $ | $ | |||||||||||||||
Deferred Revenue
The Company records contract liabilities in Deferred revenue on the Consolidated Balance Sheets when cash payments are received in advance of performance and recognizes them as revenue when the performance obligations are satisfied. The Company’s total deferred revenue balance as of March 31, 2025 and December 31, 2024, was $60.9 million and $18.1 million, respectively.
During the three months ended March 31, 2025, the Company recognized $0.3 million of revenue that was included in the deferred revenue balance as of the beginning of the year.
During the three months ended March 31, 2024, the Company recognized $6.4 million of revenue that was included in the deferred revenue balance as of the beginning of the year.
Advanced payments are typically recognized in the following month for hosted mining services and are generally recognized within 30 months of license order commencement for colocation services.
Revenue From Contracts With Customers - Digital Asset Self-Mining Revenue
The Company recognizes revenue in accordance with ASC 606, Revenue Recognition (“ASC 606”).
One of the Company’s ongoing major or central operations is to provide a service of performing hash calculations to third-party pool operators alongside collectives of third-party bitcoin miners (such collectives, “mining pools”) as a participant. The Company considers the third-party mining pool operators to be its customers under Topic 606. Contract inception and our enforceable right to consideration begins when we commence providing hash calculation services to the mining pool operators. Each party to the contract has the unilateral right to terminate the contract at any time without any compensation to the other party for such termination. As such, the duration of a contract is less than a day and may be continuously renewed multiple times throughout the day. The implied renewal
13
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
option is not a material right because there are no upfront or incremental fees in the initial contract and the terms, conditions, and compensation amount for the renewal options are at the then market rates.
The Company is entitled to non-cash compensation based on the Full-Pay-Per-Share (“FPPS”) model of the mining pool it is a participant in. FPPS pools pay block rewards and transaction fees, less mining pool fees, and the participants are entitled to non-cash consideration even if a block is not successfully validated by the mining pool operator. The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a 24-hour period beginning mid-night UTC and ending 23:59:59 UTC on a daily basis. The non-cash consideration that we are entitled to for providing hash calculations to the pool operator under the FPPS payout method is made up of block rewards and transaction fees less pool operator expenses determined as follows:
•The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated on the Bitcoin Network for the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula: the daily hash calculations that we provided to the pool operator as a percent of the Bitcoin Network’s implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin Network block rewards expected to be generated for the same daily period.
•The non-cash consideration in the form of transaction fees paid by transaction requestors is based on the share of total actual fees paid over the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula: total actual transaction fees generated on the Bitcoin Network during the 24-hour period as a percent of total block rewards the Bitcoin Network actually generated during the same 24-hour period, multiplied by the block rewards we earned for the same 24-hour period noted above.
•The block reward and transaction fees earned by the Company is reduced by mining pool fees charged by the operator for operating the pool based on a rate schedule per the mining pool contract. The mining pool fee is only incurred to the extent we perform hash calculations and generate revenue in accordance with the pool operator’s payout formula during the same 24-hour period beginning mid-night UTC daily.
The above non-cash consideration is variable, since the amount of block reward earned depends on the amount of hash calculations we perform; the amount of transaction fees we are entitled to depends on the actual Bitcoin Network transaction fees over the same 24-hour period; and the operator fees for the same 24-hour period are variable since it is determined based on the total block rewards and transaction fees in accordance with the pool operator’s agreement. While the non-cash consideration is variable, the Company has the ability to estimate the variable consideration at contract inception with reasonable certainty without the risk of significant revenue reversal. The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.
The Company measures the non-cash consideration using the spot rate for Bitcoin as quoted on Coinbase Global, Inc., the Company’s principal market. The Company recognizes non-cash consideration on the same day that control of the contracted service is transferred to the pool operator, which is the same day as the contract inception.
Direct expenses associated with providing hash calculation services to a third-party operated mining pool, such as electricity costs and employee compensation, are recorded as cost of revenues. Depreciation and amortization expenses on fixed and right-of-use assets, including digital asset mining equipment used to provide the services, are also recorded as a component of cost of revenues.
Revenue From Contracts With Customers - Digital Asset Hosted Mining Services
The Company generates revenue from contracts with customers from digital asset hosted mining services. The Company generally recognizes revenue when the promised service is performed. Revenue excludes any amounts collected on behalf of third parties, including sales and indirect taxes.
Hosting Services
The Company regularly enters contracts that include hosting services, for which revenue is recognized as services are performed on a variable basis. The Company performs hosting services that enable customers to run blockchain and other high-performance computing operations. The Company’s performance obligation related to these services is satisfied over time. The Company recognizes revenue for services that are performed on a consumption basis, such as the amount of electricity used in a period, based on the customer’s use of such resources. The Company recognizes variable consumption usage hosting revenue each
14
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
month as the uncertainty related to the consideration is resolved, hosting services are provided to our customers, and our customers utilize the hosting services (the customer simultaneously receives and consumes the benefits of the Company’s performance). The Company generally bills its customers in advance based on estimated consumption under the contract. The Company recognizes revenue based on actual consumption in the period and invoices adjustments in subsequent periods or retains credits toward future consumption. The term between invoicing and when payment is due typically does not exceed 30 days.
Revenue Recognition - Colocation Revenue
Our Colocation segment generates revenue by leasing data center space to our customer under licensing agreements. These arrangements contain lease components for the right to use data center space and nonlease components for power delivery, physical security, and maintenance services. We have elected the practical expedient available under ASC Topic 842, Leases, to combine the nonlease revenue components that have the same pattern of transfer as the related operating lease components into a single combined component. The single combined component is accounted for under ASC Topic 842 as an operating lease if the lease components are the predominant components and is accounted for under ASC Topic 606 if the nonlease components are the predominant components. The lease components are the predominant components in our current licensing arrangements and the single combined component in these arrangements are accounted for under the operating lease guidance of ASC Topic 842.
We have concluded that it is probable that substantially all of the payments will be collected over the term of the arrangements and recognize the total combined component license payments under the agreements on a straight-line basis over the non-cancellable term. Straight-line license revenue represents the difference in revenue recognized during the period and the license payments due pursuant to the underlying arrangement as deferred revenue in the consolidated balance sheets. Certain arrangements include options to extend the term. These extension options are not reasonably certain to be exercised and are excluded from the lease term and calculation of lease payments at lease commencement.
Certain licensing arrangements provide for variable payments for power delivery services and maintenance services on customer assets and reimbursements for lessor costs such as taxes. Payments for physical security and other routine maintenance services are included in the fixed lease payments. Power delivery services represent a stand ready obligation to make power available to the customer over the coterminous lease term and have the same pattern of transfer as the related operating lease components. Customers may request and the Company may provide maintenance services on customer assets during the coterminous lease term. Customers are charged monthly for fees incurred on these maintenance services delivered and actual power costs incurred at current utility or fuel cost rates. These payments from customers for power delivery and maintenance services are recognized as variable lease payments in accordance with the practical expedient elected. Variable lease payments are presented on a gross basis and are included in in the Consolidated Statements of Operations.
Performance Obligation Commitments
The Company’s performance obligation commitments relate to digital asset hosted mining services. The Company has performance obligations associated with commitments in customer digital asset hosted mining contracts for future services that have not yet been recognized in the financial statements. As of March 31, 2025, for contracts with original terms that exceed one year (ranging from 15 to 24 months), we expect to recognize approximately $5.4 million of revenue in the future related to performance obligations associated with existing hosted mining contracts. The Company expects to recognize approximately 100 % of this amount over the next 12 months.
Income Taxes
The Company is subject to income taxes mainly in the jurisdictions in which it provides various infrastructure, technology and hosting services. The Company’s tax position requires significant judgment in order to properly evaluate and quantify tax positions and to determine the provision for income taxes.
The Company uses the assets and liabilities method to account for income taxes, which requires that deferred tax assets and deferred tax liabilities be determined based on the differences between the financial statement and tax basis of assets and liabilities, using enacted tax rates in effect for the years in which the differences are expected to be reversed. The Company estimates its actual current tax expense, including permanent charges and benefits, and the temporary differences resulting from differing treatment of items, for tax and financial accounting purposes.
The Company assesses whether it is more likely than not that its deferred tax assets will be realized by considering both positive and negative evidence. If the Company believes that recovery of these deferred tax assets is not more likely than not, the
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Company establishes a valuation allowance. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considered all available evidence, including recent operating results, projections of future taxable income, the reversal of taxable temporary differences, and the feasibility of tax planning strategies.
GAAP sets forth a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are included within Income Tax Expense. Accrued interest and penalties are included in the related tax liability line in the Company’s Consolidated Balance Sheets.
The Company adjusts its reserves for tax positions in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate based on new facts or changes in tax laws. To the extent that the final tax outcome of these matters is different than the amounts recorded, the differences are recorded as adjustments to the provision for income taxes in the period in which such determination is made. The provision (benefit) for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.
The Company’s future effective tax rates could be adversely affected by changes in the valuation of the Company’s deferred tax assets or liabilities, or changes in tax laws, regulations, accounting principles or interpretations thereof. In addition, the Company is subject to examination of income tax returns by various tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provisions for income taxes.
Recently Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). Under this ASU, public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).” The amendments in ASU 2023-09 will be applied on a prospective basis and are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 as of January 1, 2025 and will reflect the required disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025. The adoption of ASU 2023-09 affects annual income tax disclosures only and does not impact interim reporting.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The amendment should be applied prospectively; however, retrospective application is also permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s unaudited consolidated financial statements.
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
3. PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment, net as of March 31, 2025 and December 31, 2024 consist of the following (in thousands):
| March 31, 2025 | December 31, 2024 | Estimated Useful Lives | |||||||||||||||
Land and improvements1 | $ | $ | |||||||||||||||
Building and improvements | |||||||||||||||||
Mining and network equipment | |||||||||||||||||
Electrical equipment2 | |||||||||||||||||
Other property, plant and equipment3 | |||||||||||||||||
Total | |||||||||||||||||
Less: accumulated depreciation and amortization4 | |||||||||||||||||
Total | |||||||||||||||||
Add: Construction in progress | |||||||||||||||||
Property, plant and equipment, net | $ | $ | |||||||||||||||
1 Estimated useful life of improvements. Land is not depreciated.
2 Includes finance lease assets of $8.5 million and $8.5 million at March 31, 2025 and December 31, 2024, respectively.
3 Includes finance lease assets of $0.4 million and $0.4 million at March 31, 2025 and December 31, 2024, respectively.
4 Includes accumulated amortization for assets under finance leases of $3.2 million and $3.0 million at March 31, 2025 and December 31, 2024, respectively.
4. LEASES
Lessee Accounting
The components of operating and finance leases are presented on the Company’s Consolidated Balance Sheets as follows (in thousands):
| Financial statement line item | March 31, 2025 | December 31, 2024 | ||||||||||||||||||
| Assets: | ||||||||||||||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | $ | ||||||||||||||||||
| Finance lease right-of-use assets | $ | |||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Operating lease liabilities, current portion | Operating lease liabilities, current portion | $ | ||||||||||||||||||
| Operating lease liabilities, net of current portion | Operating lease liabilities, net of current portion | $ | ||||||||||||||||||
| Finance lease liabilities, current portion | Finance lease liabilities, current portion | $ | ||||||||||||||||||
| Finance lease liabilities, net of current portion | Other noncurrent liabilities | $ | ||||||||||||||||||
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The components of lease expense were as follows (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||
| Financial statement line item | 2025 | 2024 | ||||||||||||||||||
| Operating lease expense | Cost of Colocation services | $ | $ | |||||||||||||||||
| Operating lease expense | Cost of digital asset self-mining | |||||||||||||||||||
| Operating lease expense | Cost of digital asset hosted mining services | |||||||||||||||||||
| Operating lease expense | Selling, general and administrative expenses | |||||||||||||||||||
| Short-term lease expense | Cost of digital asset self-mining | |||||||||||||||||||
Variable lease expense | Cost of Colocation services | |||||||||||||||||||
| Finance lease expense: | ||||||||||||||||||||
| Amortization of right-of-use assets | Cost of digital asset self-mining | |||||||||||||||||||
| Interest on lease liabilities | Interest expense, net | |||||||||||||||||||
| Total finance lease expense | ||||||||||||||||||||
| Total lease expense | $ | $ | ||||||||||||||||||
Information relating to the lease term and discount rate is as follows:
| March 31, 2025 | March 31, 2024 | ||||||||||
| Weighted Average Remaining Lease Term (Years) | |||||||||||
| Operating leases | |||||||||||
| Finance leases | |||||||||||
| Weighted Average Discount Rate | |||||||||||
| Operating leases | % | % | |||||||||
| Finance leases | % | % | |||||||||
Information relating to lease payments is as follows (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Lease Payments | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Operating cash flows from finance leases | $ | $ | |||||||||
| Financing cash flows from finance leases | $ | $ | |||||||||
| Supplemental Noncash Information | |||||||||||
Decrease in operating right-of-use assets due to lease modification | $ | ( | $ | ||||||||
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s minimum payments under noncancelable operating and finance leases having initial terms and bargain renewal periods in excess of one year are as follows at March 31, 2025, and thereafter (in thousands):
Operating Leases | Finance Leases | ||||||||||
Remaining 2025 | $ | $ | |||||||||
| 2026 | |||||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| Thereafter | |||||||||||
| Total lease payments | |||||||||||
| Less: imputed interest | |||||||||||
| Total | $ | $ | |||||||||
Lessor Accounting
We generate revenue by leasing property to a customer under licensing agreements. The manner in which we recognize these transactions in our financial statements is described in Note 2 — Summary of Significant Accounting Policies, Revenue Recognition — Colocation Revenue. There was no lease revenue during the three months ended March 31, 2024.
The components of lease revenue were as follows (in thousands):
| Three Months Ended March 31, 2025 | |||||||||||
Lease Revenue | |||||||||||
Operating lease revenue | $ | ||||||||||
Variable lease revenue | |||||||||||
Total lease revenue | $ | ||||||||||
The following table represents the maturity analysis of commenced minimum operating lease payments expected to be received at March 31, 2025, and thereafter (in thousands):
Operating Leases(1) | |||||
Remaining 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
5. CONVERTIBLE AND OTHER NOTES PAYABLE
Notes payable as of March 31, 2025 and December 31, 2024, consists of the following (in thousands):
Stated Interest Rate | Effective Interest Rates | Maturities | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
Convertible Notes: | ||||||||||||||||||||||||||
| 2031 Convertible Notes | 2031 | |||||||||||||||||||||||||
| 2029 Convertible Notes | 2029 | |||||||||||||||||||||||||
Equipment and Settlement: | ||||||||||||||||||||||||||
| Bremer loan | 2027 | |||||||||||||||||||||||||
| Didado note | 2027 | |||||||||||||||||||||||||
| HMC note | 2026 | |||||||||||||||||||||||||
| Harper note | 2026 | |||||||||||||||||||||||||
| Trilogy note | 2026 | |||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||
| ACM note | 2025 | |||||||||||||||||||||||||
| Other | 2025 | |||||||||||||||||||||||||
Notes payable | ||||||||||||||||||||||||||
Less: Unamortized discounts | ||||||||||||||||||||||||||
| Total notes payable, net | ||||||||||||||||||||||||||
Less: current portion | ||||||||||||||||||||||||||
Convertible and other notes payable, net of current portion | $ | $ | ||||||||||||||||||||||||
Interest expense on the 2029 Convertible Notes and 2031 Convertible Notes (together “Convertible Notes”) was as follows (in thousands):
| Three Months Ended March 31, 2025 | |||||
Coupon interest | $ | ||||
Amortization of debt discount and issuance costs | |||||
Total | $ | ||||
Maturities on convertible and other notes payable, gross of unamortized discounts, are as follows (in thousands):
| Convertible Notes | Other Notes Payable | ||||||||||
Remaining 2025 | $ | $ | |||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
2029 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ | |||||||||
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Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
6. CONTINGENT VALUE RIGHTS AND WARRANT LIABILITIES
Contingent Value Rights Agreement
On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into the Contingent Value Rights Agreement and recorded the liabilities at fair value as of the Effective Date. Pursuant to the Contingent Value Rights Agreement, the Company issued 51,783,625 CVRs to holders of the Company’s Convertible Notes (in such capacity, the “Payees”) who received common stock, par value $0.00001 per share (the “New Common Stock”) in an aggregate amount of 51,783,625 shares of New Common Stock (the “Corresponding New Common Stock”). The CVRs require the Company to make payments to each Payee, of:
•(i) at the first testing date, cash equal to such Payee’s pro rata share (the “Year 1 Contingent Payment Obligation”) of the lesser of (a) $43,333,333.33 and (b) the difference between (1) $260,000,000 and (2) the fair market value of the Corresponding New Common Stock (the “First Anniversary Payment Amount”); provided that the Year 1 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $260,000,000 with respect to the first testing date. On January 23, 2025, the first testing date, the fair market value of the Corresponding New Common Stock was in excess of $260,000,000 and the Year 1 Contingent Payment Obligation was extinguished.
•(ii) at the second testing date, January 23, 2026, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 2 Contingent Payment Obligation”) of the lesser of (a) $43,333,333.33 and (b) the difference between (1) $260,000,000 minus the First Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Second Anniversary Payment Amount”); provided that the Year 2 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $260,000,000 minus the First Anniversary Payment Amount, if any, with respect to the second testing date. As of March 31, 2025, the estimated fair value of the Year 2 Contingent Payment Obligation was approximately $5.5 million.
•(iii) at the third testing date, January 23, 2027, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 3 Contingent Payment Obligation”) of the lesser of (a) $43,333,333.33 and (b) the difference between (1) $260,000,000 minus the sum of the First Anniversary Payment Amount and the Second Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Third Anniversary Payment Amount”); provided that the Year 3 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $260,000,000 minus (1) the First Anniversary Payment amount, if any and (2) the Second Anniversary Payment Amount, if any, with respect to the third testing date. As of March 31, 2025, the estimated fair value of the Year 3 Contingent Payment Obligation was approximately $11.6 million.
Warrant Agreement
On the Effective Date, pursuant to the Plan of Reorganization and the confirmation order entered into on January 16, 2024 by the United States Bankruptcy Court for the Southern District of Texas, which, among other things, confirmed the Plan of Reorganization, the Company entered into a warrant agreement (the “Warrant Agreement”) providing for the issuance of 98,313,313 warrants, each exercisable for one share of New Common Stock at an exercise price of $6.81 per share (the “Tranche 1 Warrants”), and 81,927,898 warrants, each exercisable for one share of New Common Stock at an exercise price of $0.01 per share (the “Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”). The Tranche 1 Warrants expire on January 23, 2027, and the Tranche 2 Warrants expire on January 23, 2029.
During the three months ended March 31, 2025, 0.1 million Tranche 1 Warrants were exercised, which resulted in cash receipts of $0.5 million. As of March 31, 2025, there were 97.6 million unexercised Tranche 1 Warrants.
During the three months ended March 31, 2025, 3.4 million Tranche 2 Warrants were exercised, which resulted in immaterial cash receipts. As of March 31, 2025, there were 17.6 million unexercised Tranche 2 Warrants.
21
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
7. FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
During the three months ended March 31, 2025, an increase in fair value of CVRs of $12.8 million was included in Change in fair value of warrant and contingent value rights on the Company’s Consolidated Statements of Operations.
During the three months ended March 31, 2025, a decrease in fair value of Warrants of $634.3 million was included in Change in fair value of warrant and contingent value rights on the Company’s Consolidated Statements of Operations.
The following presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 (in thousands):
Fair Value Hierarchy | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Fair value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Digital assets | |||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
| Contingent value rights | $ | $ | $ | $ | |||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Total liabilities measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
The following presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (in thousands):
Fair Value Hierarchy | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Fair value | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Digital assets | |||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
| Contingent value rights | $ | $ | $ | $ | |||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Total liabilities measured at fair value on a recurring basis | $ | $ | $ | $ | |||||||||||||||||||
22
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Financial Instruments Not Carried at Fair Value
The Convertible Notes are recorded at amortized cost in the condensed consolidated balance sheets. The fair value is disclosed for informational purposes only in accordance with ASC 825-10, Financial Instruments. The following tables present the carrying amounts and estimated fair values of the Convertible Notes as of March 31, 2025 and December 31, 2024 (in thousands):
March 31, 2025
Carrying Amount | Fair Value | Fair Value Hierarchy | ||||||||||||||||||
| 2029 Convertible Notes | $ | $ | Level 1 | |||||||||||||||||
| 2031 Convertible Notes | $ | $ | Level 1 | |||||||||||||||||
December 31, 2024
Carrying Amount | Fair Value | Fair Value Hierarchy | ||||||||||||||||||
| 2029 Convertible Notes | $ | $ | Level 1 | |||||||||||||||||
| 2031 Convertible Notes | $ | $ | Level 1 | |||||||||||||||||
Nonrecurring Fair Value Measurements
The Company’s non-financial assets, including property, plant and equipment, are measured at estimated fair value on a nonrecurring basis and are adjusted only upon impairment or when held for sale. During the three months ended March 31, 2025, the Company did not recognize any impairment or other fair value adjustments related to non-financial assets measured at fair value on a nonrecurring basis.
No non-financial assets were classified as Level 3 as of March 31, 2025 or December 31, 2024.
8. COMMITMENTS AND CONTINGENCIES
Commitments
As of March 31, 2025, the Company was contractually committed for and on behalf of our high-density colocation customer for approximately $1.25 billion of capital expenditures, primarily related to infrastructure modifications, equipment procurement, and labor associated with the conversion of a significant portion of its data centers to deliver high-density colocation services to customers. Of this amount, $906.2 million will be passed through to the Company’s customer as invoiced and $314.8 million will be funded by the customer as prepaid base license fees for the Collocation segment. These capital expenditures are expected to occur within the next 12 to 24 months.
Legal Proceedings
The Company is subject to legal proceedings arising in the ordinary course of business. The Company accrues losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued and could materially adversely affect the Company’s business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, the Company is unable to estimate reasonably possible losses in excess of any amounts accrued.
Purported Shareholder Class Action (“Pang”)
On November 14, 2022, Plaintiff Mei Pang filed a purported class-action complaint against Core Scientific, Inc., its former chief executive officer, Michael Levitt, and others in the United States District Court, Western District (Austin) of Texas asserting that the Company violated the Securities Act and Exchange Act by allegedly failing to disclose to investors that among other things the
23
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Company was vulnerable to litigation given its decision to pass power costs to its customers, that certain clients had breached their contracts, and that this impacted the Company’s profitability and ability to continue as a going concern. The complaint seeks monetary damages. Core filed a notice of suggestion of bankruptcy stating that its petition for bankruptcy—filed on December 21, 2022—operates as a stay to the continuation of this matter. Plaintiff subsequently withdrew its claims against Core. A lead plaintiff was appointed in April 2023 and proofs of claim were filed in the Company’s Chapter 11 Cases. After the Company filed its motion to dismiss and a subsequent motion for consideration with respect to remaining claims not dismissed, all remaining claims in the complaint against the individual defendants were subsequently dismissed without prejudice in April 2024.
On December 7, 2023, the United States Bankruptcy Court for the Southern District of Texas in Houston, sustained the Company’s objection to the filed class proof of claim without prejudice to re-file a proof of claim on an individual basis by December 20, 2023; and denied plaintiff’s Motion for Class Treatment under Fed. R. Bankr. P. 7023. No individual proof of claim was filed by any of the class representatives of the purported class action by December 20, 2023, and a separately filed objection to confirmation of Debtors’ Fourth Amended Chapter 11 Plan and Disclosure Statement was overruled by the Bankruptcy Court on January 16, 2024. On January 29, 2024, plaintiff filed a notice of appeal of the order confirming the Company’s Plan of Reorganization.
On June 7, 2024, Plaintiff refiled its complaint asserting that the individual defendants violated the Securities Exchange Act by allegedly failing to disclose to investors that among other things the Company failed to disclose known trends or uncertainties that would have an impact on the Company’s financial performance. The Company’s motion to dismiss the refiled complaint is pending with the United States District Court in Austin, Texas.
On March 7, 2025, the United States District Court for the Western District (Austin) of Texas referred Plaintiff's complaint to the United States Bankruptcy Court for the Southern District of Texas in Houston for determination of the issues raised by the Company's motion to dismiss, dismissed without prejudice Company's motion to dismiss as moot and administratively closed the case. On March 19, 2025, the United States Bankruptcy Court Southern District of Texas Houston Division dismissed Plaintiff's appeal of the order confirming the Company's Plan of Reorganization as it related to the Plaintiffs as moot in light of the administrative closure of the securities case brought by the Plaintiffs in the United States District Court Western District of Texas. On April 2, 2025, the Plaintiff's filed a Motion for Reconsideration of the orders entered in each of the United States District Court for the Southern District of Texas Houston Division and the United States District Court for the Western District of Texas (Austin) and the Company filed its motions opposing each of Plaintiff’s motions for reconsideration.
Purported Shareholder Class Action (“Ihle”)
On July 24, 2023, Plaintiff Brad Ihle filed a purported class action complaint against certain officers and directors of Power & Digital Infrastructure Acquisition Corp. (the former name of the current corporate entity operating our business, or “XPDI”) and XMS Sponsor LLC et al, in the Court of Chancery State of Delaware. The complaint alleges breach of fiduciary duties arising out of the merger of XPDI and the entity that conducted our business operations prior to the merger (“Legacy Core”) and the marketing and solicitation of shareholders pursuant to that merger agreement dated July 20, 2021. Certain of the defendants have notified the Company of their intention to seek defense and indemnification in this matter pursuant to Delaware law and the Company’s bylaws.
Employment Claim
On September 30, 2022, Harlin Dean, a former executive of Blockcap, Inc. (n/k/a Core Scientific Acquired Mining, LLC) sent a demand letter to the Company, seeking approximately $9.8 million. Along with the demand letter, Mr. Dean enclosed a complaint that had been filed in the 419th Judicial District Court, Travis County, Texas, which asserted the following causes of action: (1) breach of employment agreement; (2) quantum meruit; (3) promissory estoppel; (4) conversion; (5) declaratory relief; (6) equitable relief/specific performance; (7) imposition of constructive trust; (8) accounting; and (9) attorneys’ fees and costs. According to Mr. Dean, the Company failed to honor the terms of his employment agreement upon his resignation.
Following the Company’s filing of the Chapter 11 Cases, Mr. Dean filed proofs of claim in the Chapter 11 Cases alleging the Company breached Mr. Dean’s employment agreement and various equity award agreements. Mr. Dean seeks a total recovery of approximately $8 million. The Debtors filed an objection to Mr. Dean’s proofs of claim on September 19, 2023. Mr. Dean filed a reply in support of his claim and moved for summary judgment on October 19. As a general unsecured creditor under the Plan of Reorganization, any amount determined to be owed to plaintiff will be paid in common shares of the Company as provided in the Plan of Reorganization.
On January 24, 2025, the Company and Mr. Dean resolved Mr. Dean's proofs of claim and filed with the Bankruptcy Court a Stipulation and Agreed Order providing for an Allowed General Unsecured Claim, payable pursuant to the Plan of Reorganization in
24
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Contract Claims
GEM Mining 1, LLC, GEM Mining 2, LLC, GEM Mining 2B, LLC, and GEM Mining 4, LLC (together “GEM”) have filed proofs of claim in the Chapter 11 Cases alleging the Company breached its hosting agreements with GEM and are seeking to recover approximately $4.1 million. The Debtors filed an initial objection to GEM’s proofs of claim on May 4, 2023, and filed a supplemental objection on May 6, 2023. GEM filed a response in opposition to Debtors’ objections on September 6, 2023. Additionally, GEM 1 and GEM 4 filed proofs of claim in the Chapter 11 Case asserting approximately $8 million in rejection damages. The Debtors are currently preparing an objection to these claims along with a reply to GEM’s response to the Debtors’ earlier filed objections. As a general unsecured creditor under the Plan of Reorganization, any amount determined to be owed to plaintiff will be paid in common shares of the Company as provided in the Plan of Reorganization.
On January 28, 2025, the Company resolved GEM’s proofs of claim and filed with the Bankruptcy Court a Stipulation and Agreed Order providing for an Allowed General Unsecured Claim, payable pursuant to the Plan of Reorganization in 817,775 shares of New Common Stock issued by the Company to GEM from the New Common Stock reserved for disputed claims as described in Note 12 — Stockholders’ Deficit to our consolidated financial statements in Item 8 of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and do not represent a new issuance of shares.
As of March 31, 2025 and December 31, 2024, there were no
Leases—See Note 4 — Leases for additional information.
9. INCOME TAXES
Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.
The income tax expense and effective income tax rate for the three months ended March 31, 2025 and 2024 were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Income tax expense | $ | $ | |||||||||||||||||||||
Effective income tax rate | % | % | |||||||||||||||||||||
For the three months ended March 31, 2025, the Company recorded $0.2 million of income tax expense which consisted of discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0 %, compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance 2.6 %, state taxes 0.0 %, non-deductible loss on warrant and contingent liabilities (24.4 )% and other items 0.8 %. The Company has a full valuation allowance on its net deferred tax asset as the evidence indicates that it is not more likely than not expected to realize such asset.
25
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
10. STOCK-BASED COMPENSATION
Incentive Plan
The Company adopted an equity-based management incentive plan on April 26, 2024 (the “Incentive Plan”). Under the Incentive Plan, certain executives have been granted market condition restricted stock units (“MSUs”) which are subject to the achievement of market-based share price goals and the executives’ continued service until the relevant vesting date. The number of shares which vest as of the end of each measurement period on each vesting date are conditioned on the highest 20 -day volume weighted average price of the Company's share price achieved during the tranche’s measurement vesting period since grant. The MSU vesting schedule is proportionate over a three-year service period where such proportions are identified as tranches with separate service conditions and measurement periods for the market conditions. If certain market-based share price goals are not met during certain tranche measurement periods, the ability to satisfy such goals apply in subsequent measurement periods and permit vesting if such market conditions are then met (and the service conditions are then satisfied). The following table presents additional information relating to each MSU award:
Share Price Goal | Incremental Units | Tranche Cumulative Units | ||||||||||||
December 31, 2025 Vesting: | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
December 31, 2026 Vesting: | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
| $ | ||||||||||||||
Stock-Based Compensation
A summary of RSU and MSU activity for the three months ended March 31, 2025, is as follows (amounts in thousands, except per share amounts):
Restricted Stock Units | Market Condition Restricted Stock Units | ||||||||||||||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
Unvested - December 31, 2024 | |||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Vested | ( | ||||||||||||||||||||||
Forfeited | ( | ( | |||||||||||||||||||||
Unvested - March 31, 2025 | $ | $ | |||||||||||||||||||||
As of March 31, 2025, the Company had approximately $104.5 million of unrecognized stock-based compensation expense related to RSUs, which is expected to be recognized over a weighted average time period of 2.3 years, and an additional $6.0 million of unrecognized stock-based compensation expense related to MSUs for which some or all of the requisite service has been provided
26
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
under the service conditions but had market conditions that had not yet been achieved. The unrecognized stock-based compensation expense related to MSUs is expected to be recognized over a weighted average time period of 1.7 years.
Stock-based compensation expense for the three months ended March 31, 2025 and 2024, is included in the Company’s Consolidated Statements of Operations as follows (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Cost of revenue | $ | $ | |||||||||||||||||||||
| Selling, general and administrative | ( | ||||||||||||||||||||||
Stock-based compensation expense, net of amounts capitalized1 | ( | ||||||||||||||||||||||
Capitalized stock-based compensation2 | |||||||||||||||||||||||
Total stock-based compensation cost | $ | $ | ( | ||||||||||||||||||||
1 The three months ended March 31, 2024, includes the reversal of stock-based compensation expense due to $6.1 million in forfeitures incurred during the period.
2 Represents the amounts of stock-based compensation capitalized to property, plant, and equipment.
11. NET INCOME PER SHARE
Basic earnings per share (“EPS”) is measured as the income or loss available to common stockholders divided by the weighted average common shares outstanding for the period. Upon exercise of the Tranche 2 Warrants, shares are issuable for little or no consideration, sometimes referred to as “penny warrants”. Under ASC 260-10-45-13, those issuable shares are considered outstanding in the computation of basic EPS whether or not related warrants have been exercised. At March 31, 2025, approximately 17.6 million shares of common stock remain issuable upon the exercise of the Tranche 2 Warrants and are included in the number of outstanding shares used for the computation of basic EPS for the three months then ended. Additionally, the basic EPS numerator includes an adjustment to eliminate the changes in fair value that have been recognized in Net income.
Diluted EPS includes and presents the dilutive effect on EPS from the potential issuance of shares from unvested restricted stock units, conversion of convertible securities, or the exercise of options and/or warrants. The potentially dilutive effect of convertible securities are calculated using the if-converted method. The potentially dilutive effect of options or warrants are computed using the treasury stock method. When potentially dilutive securities have an anti-dilutive effect (i.e., increase income per share or decrease loss per share), they are excluded from the diluted EPS calculation.
27
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net income per share (in thousands, except per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
Add: Change in fair value of Tranche 2 Warrants | ( | ||||||||||||||||||||||
Basic net income | |||||||||||||||||||||||
Add: Interest expense related to convertible notes, net of tax | |||||||||||||||||||||||
Diluted net income | $ | $ | |||||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average shares outstanding - basic | |||||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||
| Convertible notes | |||||||||||||||||||||||
| Tranche 1 Warrants | |||||||||||||||||||||||
| RSUs | |||||||||||||||||||||||
| MSUs | |||||||||||||||||||||||
| Weighted average shares outstanding - diluted | |||||||||||||||||||||||
Net income per share - basic | $ | $ | |||||||||||||||||||||
Net income per share - diluted | $ | $ | |||||||||||||||||||||
Potentially dilutive securities include securities excluded from the calculation of diluted EPS because to do so would be anti-dilutive. Shares which may be issued from potentially dilutive securities are as follows (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Convertible Notes | |||||||||||||||||||||||
RSUs | |||||||||||||||||||||||
Stock options | |||||||||||||||||||||||
MSUs | |||||||||||||||||||||||
Tranche 1 Warrants | |||||||||||||||||||||||
Total shares issuable from potentially dilutive securities | |||||||||||||||||||||||
12. SEGMENT REPORTING
The Company’s operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics and have similar business activities.
The Company now has three operating segments: “Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account; “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining; and “Colocation”, consisting of providing high-density colocation services to third parties for GPU-based HPC operations. The Company’s Colocation operations met the criteria to be considered a new segment during the second quarter of 2024. During fiscal year 2024, our “Colocation” segment was referred to as “HPC Hosting.” The Digital Asset Self-Mining segment generates revenue from operating owned digital infrastructure and computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks. In exchange for these services, the Company receives digital assets. The Digital Asset Hosted Mining business generates revenue through the sale of consumption-based contracts for its digital asset hosted mining services which are recurring in nature. The Colocation business generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis.
28
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”). The CODM uses gross profit to evaluate performance and allocate resources. Gross profit is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast. Gross profit is also used in deciding how profits and cash flows will be reinvested or otherwise deployed. The CODM does not evaluate performance or allocate resources based on segment asset or liability information; accordingly, the Company has not presented a measure of assets by segment. The segments’ accounting policies are the same as those described in the summary of significant accounting policies. The Company excludes certain operating expenses and other expenses from the allocations to operating segments.
29
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
Digital Asset Self-Mining Segment | (in thousands, except percentages) | ||||||||||||||||||||||
Digital asset self-mining revenue | $ | $ | |||||||||||||||||||||
| Cost of digital asset self-mining: | |||||||||||||||||||||||
| Power fees | |||||||||||||||||||||||
| Depreciation expense | |||||||||||||||||||||||
| Employee compensation | |||||||||||||||||||||||
| Facility operations expense | |||||||||||||||||||||||
| Other segment items | |||||||||||||||||||||||
| Total cost of digital asset self-mining | |||||||||||||||||||||||
Digital Asset Self-Mining gross profit | $ | $ | |||||||||||||||||||||
| Digital Asset Self-Mining gross margin | % | % | |||||||||||||||||||||
Digital Asset Hosted Mining Segment | |||||||||||||||||||||||
| Digital asset hosted mining revenue from customers | $ | $ | |||||||||||||||||||||
| Cost of digital asset hosted mining services: | |||||||||||||||||||||||
| Power fees | |||||||||||||||||||||||
| Depreciation expense | |||||||||||||||||||||||
| Employee compensation | |||||||||||||||||||||||
| Facility operations expense | |||||||||||||||||||||||
| Other segment items | |||||||||||||||||||||||
| Total cost of digital asset hosted mining services | |||||||||||||||||||||||
Digital Asset Hosted Mining gross profit | $ | $ | |||||||||||||||||||||
| Digital Asset Hosted Mining gross margin | % | % | |||||||||||||||||||||
Colocation Segment | |||||||||||||||||||||||
Colocation revenue: | |||||||||||||||||||||||
License fees | $ | $ | |||||||||||||||||||||
Maintenance and other | ( | ||||||||||||||||||||||
Licensing revenue | |||||||||||||||||||||||
Power fees passed through to customer | |||||||||||||||||||||||
Total Colocation revenue | |||||||||||||||||||||||
Cost of Colocation services: | |||||||||||||||||||||||
| Depreciation expense | |||||||||||||||||||||||
Employee compensation | |||||||||||||||||||||||
| Facility operations expense | |||||||||||||||||||||||
| Other segment items | |||||||||||||||||||||||
Cost of licensing revenue | |||||||||||||||||||||||
Power fees passed through to customer | |||||||||||||||||||||||
Total cost of Colocation services | |||||||||||||||||||||||
Colocation gross profit | $ | $ | |||||||||||||||||||||
Colocation licensing gross margin | % | % | |||||||||||||||||||||
Colocation gross margin | % | % | |||||||||||||||||||||
| Consolidated | |||||||||||||||||||||||
| Consolidated total revenue | $ | $ | |||||||||||||||||||||
Consolidated cost of revenue | $ | $ | |||||||||||||||||||||
Consolidated gross profit | $ | $ | |||||||||||||||||||||
| Consolidated gross margin | % | % | |||||||||||||||||||||
30
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
A reconciliation of the reportable segment gross profit to income before income taxes included in the Company’s Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024, is as follows (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
Reportable segment gross profit | $ | $ | |||||||||||||||||||||
| Change in fair value of digital assets | |||||||||||||||||||||||
Gain from sales of digital assets | ( | ||||||||||||||||||||||
Change in fair value of energy derivatives | |||||||||||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
| Operating (loss) income | ( | ||||||||||||||||||||||
| Non-operating expenses (income), net: | |||||||||||||||||||||||
Loss on debt extinguishment | |||||||||||||||||||||||
Interest (income) expense, net | ( | ||||||||||||||||||||||
| Change in fair value of warrants and contingent value rights | ( | ( | |||||||||||||||||||||
| Reorganization items, net | ( | ||||||||||||||||||||||
| Other non-operating expense, net | |||||||||||||||||||||||
Total non-operating income, net | ( | ( | |||||||||||||||||||||
Income before income taxes | $ | $ | |||||||||||||||||||||
Concentrations of Revenue and Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, in order to limit the exposure to credit risk. As of March 31, 2025 and December 31, 2024, all of the Company’s fixed assets were located in the United States. For the three months ended March 31, 2025 and 2024, all of the Company’s revenue was generated in the United States. For the three months ended March 31, 2025 and 2024, 84 one
For the three months ended March 31, 2025, and 2024, the concentration of customers comprising 10% or more of the Company’s Digital Asset Self-Mining, Digital Asset Hosted Mining, and Colocation segment revenue were as follows:
| Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||||||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Percent of Digital Asset Self-Mining segment revenue: | Percent of Digital Asset Hosted Mining segment revenue: | Percent of Colocation segment revenue: | |||||||||||||||||||||||||||||||||
Customer | |||||||||||||||||||||||||||||||||||
F | — | % | — | % | % | % | — | % | — | % | |||||||||||||||||||||||||
G | % | % | — | % | — | % | — | % | — | % | |||||||||||||||||||||||||
H | — | % | — | % | — | % | % | — | % | — | % | ||||||||||||||||||||||||
I | — | % | — | % | — | % | % | — | % | — | % | ||||||||||||||||||||||||
J | — | % | — | % | — | % | — | % | % | % | |||||||||||||||||||||||||
K | — | % | — | % | % | — | % | — | % | — | % | ||||||||||||||||||||||||
31
Core Scientific, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
13. SUPPLEMENTAL CASH FLOW AND NONCASH INFORMATION
The following table presents supplemental cash flow and non-cash information for the periods presented (in thousands):
Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Supplemental disclosure of other cash flow information: | |||||||||||
| Cash paid for interest | |||||||||||
Income tax payments (refunds) | ( | ||||||||||
Cash paid for reorganization items | |||||||||||
| Supplemental disclosure of noncash investing and financing activities: | |||||||||||
Purchases of PP&E in accounts payable and accrued expense | ( | ||||||||||
| Noncash exercise of warrants | |||||||||||
| Reclass of other current and non-current assets to plant, property, and equipment | |||||||||||
| Reduction in plant, property, and equipment basis related to Bitmain purchase | ( | ||||||||||
| Decrease in right-of-use assets due to lease termination | ( | ||||||||||
| Increase in right-of-use assets due to lease commencement | |||||||||||
| Increase in lease liability due to lease commencement | |||||||||||
| Extinguishment of convertible notes upon emergence | ( | ||||||||||
| Extinguishment of accounts payable, accrued expenses, finance lease liability, and notes payable upon emergence | ( | ||||||||||
| Cancellation of common stock in connection with emergence | ( | ||||||||||
| Issuance of new common stock in connection with emergence | |||||||||||
| Issuance of new common stock for Bitmain obligation | |||||||||||
| Issuance of new common stock for the Equity Rights Offering backstop commitment | |||||||||||
| Issuance of contingent value rights | |||||||||||
| Issuance of warrants | |||||||||||
| Issuance of New Secured Convertible Notes | |||||||||||
| Issuance of Secured Notes, net of discount | |||||||||||
Issuance of Exit Credit Agreement including $ | |||||||||||
| Issuance of miner equipment lender facility loans | |||||||||||
Issuance of notes related to settlement | |||||||||||
| Cumulative effect of adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets | |||||||||||
32
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” “Core Scientific,” or “Core” refer to Core Scientific, Inc. and its subsidiaries.
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to promote understanding of the results of operations and financial condition of the Company. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes to unaudited condensed financial statements (Part I, Item 1 of this Form 10-Q) as well as the financial and other information included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025. This section generally discusses the results of operations for the three months ended March 31, 2025, compared to March 31, 2024.
As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025.
Overview
Core Scientific, Inc. (“we,” “us,” “our,” the “Company,” “Core Scientific,” or “Core”) is a leader in designing, building and operating digital infrastructure for high-density colocation services and digital asset mining of bitcoin. Since our inception in 2018, we have been a premier provider and operator of dedicated, purpose-built facilities and software solutions for digital asset mining for ourselves and our third-party customers, and, during 2024, we announced the arrangements at multiple sites for the provision of high-density digital infrastructure colocation services to a third party engaged in high-performance computing (“HPC”).
We believe that using our existing infrastructure for high-density colocation services will provide more consistent dollar-based revenue and represents substantially less risk than our traditional hosted bitcoin mining or our bitcoin self-mining operations. As a result, we intend to focus our business development and marketing efforts on expanding our high-density colocation customer base. As a result, we initiated a significant strategic transition from bitcoin mining to colocation services for customers employing HPC workloads such as artificial intelligence-related applications.
We are substantially engaged in constructing, refurbishing, reallocating or converting a substantial portion of our ten facilities in Alabama (1), Georgia (2), Kentucky (1), North Carolina (1), North Dakota (1), Oklahoma (1), and Texas (3) to support artificial intelligence related workloads, primarily for our one existing HPC customer, but also to support our commitment to meeting the growing demand for high-density colocation solutions and diversifying our revenue streams.
Currently, the vast majority of our revenue is from mining bitcoin for our own account (“self-mining”). We remain committed to maintaining the efficiency of our digital asset mining business while capitalizing on the opportunities presented by the growing high-density colocation services business.
We had billable power load of approximately 870 megawatts (“MW”) as of March 31, 2025. We had gross power of approximately 1,320 MW as of March 31, 2025.
Our average self-mining fleet energy efficiency for the three months ended March 31, 2025 was 24.4 joules per terahash, compared to 24.7 joules per terahash for the three months ended December 31, 2024. Self-mining fleet energy efficiency is a measure of our fleet’s average actual energy efficiency over the period presented.
Our total revenue was $79.5 million and $179.3 million for the three months ended March 31, 2025 and 2024, respectively. We generated an operating loss of $42.6 million for the three months ended March 31, 2025 and operating income of $55.2 million for the three months ended March 31, 2024. We generated net income of $580.7 million and $210.7 million for the three months ended March 31, 2025 and 2024, respectively. Our adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $(6.1) million and $88.0 million for the three months ended March 31, 2025 and 2024, respectively. Adjusted EBITDA is a non-GAAP financial measure. See “Key Business Operating Metrics and Non-GAAP Financial Measures” below for our definition of, and additional information related to Adjusted EBITDA.
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On January 23, 2024, the Company emerged from bankruptcy when the conditions to the effectiveness of the Fourth Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc. and its Debtor Affiliates (with Technical Modifications) (the “Plan of Reorganization”) were satisfied or waived. For more detailed information regarding our emergence from bankruptcy, refer to Notes 3 — Chapter 11 Filing and Emergence from Bankruptcy, 8 — Convertible and Other Notes Payable, 9 — Contingent Value Rights and Warrant Liabilities and 12 — Stockholders' Deficit to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024.
Developments During 2025
On February 26, 2025, the Company announced a new agreement with CoreWeave, Inc. to deliver an additional approximately 70 MW of infrastructure at the Company’s Denton, Texas facility.
Our Business Model
Business Overview
As a large-scale owner and operator of high-power digital infrastructure for digital asset mining and high-density colocation services, we believe that we are well positioned to continue to effectively mine digital assets and serve an expanding market for HPC operations. As noted in the “Business Strategy” section below, we believe that opportunities for growth exist in various applications of our data centers for third-party customers focused on cloud computing as well as machine learning and artificial intelligence, which has driven our recent expansion into providing high-density colocation services. Furthermore, we believe that the adoption and mainstream use of bitcoin and the blockchain technology on which it is based has accelerated the demand for bitcoin and other digital currencies.
We focus primarily on contracting our digital infrastructure for high-density colocation services, including allocating a significant portion of our current and future data centers to support other forms of third-party HPC operations, in connection with our short-, medium- and long-term strategic plan.
Our digital asset mining operation is focused on earning bitcoin by solving complex cryptographic algorithms to validate transactions on specific bitcoin blockchains, which is commonly referred to as “mining.” Our digital asset self-mining activity competes with myriad mining operations throughout the world to complete new blocks on the blockchain and earn the reward in the form of bitcoin.
Business Strategy
Our business strategy is to grow our revenue and profitability by expanding our large-scale data center infrastructure portfolio configured for specialized computers performing specific, high-value applications such as cloud computing, machine learning and artificial intelligence, and maximizing the portion of our infrastructure portfolio contracted for high-density colocation services. We intend to continue to strategically develop and make operational the infrastructure necessary to support our existing contractual commitments to our existing HPC customer and to support expected customer growth and additional demand by leveraging our data center expertise and capabilities. We intend to seek additional opportunities and to engage additional customers in the high-density colocation services (“Colocation”) segment to expand our business into these areas using our knowledge, expertise, existing and future infrastructure where favorable market opportunities exist.
Our strategy is focused on hyperscale cloud-based providers and enterprises, including potential customers we believe have significant data center infrastructure needs that have not yet been outsourced or will require additional data center space and power to support their growth and their increasing reliance on technology infrastructure in their operations. We believe our capabilities for serving the needs of large hyperscale providers and enterprises will continue to enable us to capitalize on the growing demand for outsourced data center facilities in our markets and in new markets where our customers are located or plan to be located in the future.
Segments
We have three operating segments: “Digital Asset Self-Mining,” consisting of performing digital asset mining for our own account, “Digital Asset Hosted Mining,” consisting of providing hosting services to third parties for digital asset mining, and “Colocation,” consisting of providing high-density colocation services to third parties for GPU-based HPC operations. Prior to April 1, 2024, we operated only in the Digital Asset Self-Mining and Digital Asset Hosted Mining segments. During fiscal year 2024, our “Colocation” segment was referred to as “HPC Hosting.”
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Our Digital Asset Self-Mining operation segment generates revenue from the deployment and operation of our own large fleet of miners within our owned digital infrastructure as part of a pool of users that process transactions conducted on one or more blockchain networks. In exchange for this activity, we receive digital assets in the form of bitcoin.
Our Digital Asset Hosted Mining operation segment generates revenue through the sale of electricity-based consumption contracts for our hosting services, which are recurring in nature. Our Digital Asset Hosted Mining operation segment provides a full suite of services to our digital asset mining customers. We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary for our customers to operate, maintain and efficiently mine digital assets. We do not expect to further expand our Digital Asset Hosted Mining operations in 2025 and future years.
Our Colocation operation segment generates revenue by providing colocation, cloud and connectivity services to customers in exchange for a fee. Our Colocation operation segment provides space, power, cooling, facilities operations, security and other services to third-party HPC customers to support workloads for machine learning and artificial intelligence.
Mining Equipment
We own and host specialized computers (“miners”) configured for the purpose of validating transactions on multiple digital asset network blockchains (referred to as, “mining”), predominantly the Bitcoin network. Substantially all of the miners we own and host were manufactured by Bitmain Technologies Limited (“Bitmain”) and incorporate application-specific integrated circuit (“ASIC”) chips specialized to solve blocks on the bitcoin blockchains using the 256-bit secure hashing algorithm (“SHA-256”) in return for bitcoin digital asset rewards.
We have entered into and facilitated agreements with vendors to supply mining equipment for our digital asset mining operations. The majority of our purchases are made on multi-month contracts with installment payments due in advance of scheduled deliveries. Delivery schedules have ranged from one month to 12 months.
The tables below summarize the total number of self- and hosted miners in operation as of March 31, 2025, December 31, 2024 and March 31, 2024 (miners in thousands):
| Bitcoin Miners in Operation as of March 31, 2025 | |||||||||||
| Mining Equipment | Hash rate (EH/s) | Number of Miners | |||||||||
| Self-miners | 18.1 | 156.0 | |||||||||
| Hosted miners | 1.0 | 7.3 | |||||||||
| Total mining equipment | 19.1 | 163.3 | |||||||||
| Bitcoin Miners in Operation as of December 31, 2024 | |||||||||||
| Mining Equipment | Hash rate (EH/s) | Number of Miners | |||||||||
| Self-miners | 19.1 | 164.0 | |||||||||
| Hosted miners | 1.0 | 7.1 | |||||||||
| Total mining equipment | 20.1 | 171.1 | |||||||||
| Bitcoin Miners in Operation as of March 31, 2024 | |||||||||||
| Mining Equipment | Hash rate (EH/s) | Number of Miners | |||||||||
| Self-miners | 19.3 | 172.8 | |||||||||
| Hosted miners | 6.2 | 51.1 | |||||||||
| Total mining equipment | 25.5 | 223.9 | |||||||||
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Summary of Digital Asset Activity
Activity related to our digital asset balances for the three months ended March 31, 2025 and 2024, were as follows (in thousands):
| March 31, 2025 | March 31, 2024 | ||||||||||
| Digital assets, beginning of period | $ | 23,893 | $ | 2,284 | |||||||
Cumulative effect of ASU 2023-08, adopted January 1, 20241 | — | 24 | |||||||||
Digital assets, beginning of period, as adjusted | 23,893 | 2,308 | |||||||||
Digital asset self-mining revenue, net of receivables2 | 67,441 | 149,644 | |||||||||
| Mining proceeds from shared hosting | — | 8,371 | |||||||||
| Proceeds from sales of digital assets | — | (160,777) | |||||||||
| Change in fair value of digital assets | (10,688) | — | |||||||||
Gain from sale of digital assets | — | 543 | |||||||||
| Payment of board fee | — | (89) | |||||||||
Other | — | — | |||||||||
| Digital assets, end of period | $ | 80,646 | $ | — | |||||||
1 Reflects the impact of the Company’s adoption of Accounting Standards Update (“ASU”) 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) effective January 1, 2024.
2 As of March 31, 2025 and December 31, 2024, there was $0.6 million and $0.9 million, respectively, of digital asset receivable included in prepaid expenses and other current assets on the consolidated balance sheets.
Performance Metrics
Hash Rate
Miners perform computational operations in support of digital asset blockchains measured in “hash rate” or “hashes per second.” A “hash” is the computation run by mining hardware in support of the blockchain; therefore, a miner’s “hash rate” refers to the rate at which it is capable of solving such computations. The equipment originally employed for mining bitcoin used the central processing unit (“CPU”) of a computer to mine various forms of digital assets. Due to performance limitations, CPU mining was rapidly replaced by the GPU, which offers significant performance advantages over CPUs. General purpose chipsets like CPUs and GPUs have since been replaced as the standard in the mining industry by ASIC chips such as those found in the miners we and our customers use to mine bitcoin (although they continue to have uses in other industries). These ASIC chips are designed specifically to maximize the rate of hashing operations.
Network Hash Rate
In digital asset mining, hash rate is a measure of the processing speed at which a mining computer operates in its attempt to secure a specific digital asset. A participant in a blockchain network’s mining function has a hash rate equivalent to the total of all its miners seeking to mine a specific digital asset. System-wide, the total network hash rate reflects the sum total of all miners seeking to mine each specific type of digital asset. A participant’s higher total hash rate relative to the system-wide total hash rate generally results in a corresponding higher success rate in digital asset rewards over time as compared to mining participants with relatively lower total hash rates.
However, as the relative market price for a digital asset, such as bitcoin, increases, more users are incentivized to mine for that digital asset, which increases the network’s overall hash rate. As a result, a mining participant must increase its total hash rate in order to maintain its relative possibility of solving a block on the network blockchain. Achieving greater hash rate power by deploying increasingly sophisticated miners in ever greater quantities has become one of the bitcoin mining industry’s great sources of competition. Our goal is to deploy a powerful fleet of self- and hosted-miners, while operating as energy-efficiently as possible.
Key Factors Affecting Our Financial Performance
Market Price of Digital Assets
Our Digital Asset Self-Mining segment is heavily dependent on the spot price of bitcoin. The prices of digital assets, specifically bitcoin, have experienced substantial volatility, meaning that high or low prices may have little or no relationship to
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identifiable market forces, may be subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors, manipulation, and media reporting. Bitcoin (as well as other digital assets) may have value based on various factors, including their acceptance as a means of exchange by consumers and others, scarcity, and market demand.
Our financial performance and continued growth depend in large part on our ability to mine for digital assets profitably and to attract customers for our digital asset hosted mining services. Increases in power costs, inability to mine digital assets efficiently and to sell digital assets at favorable prices will reduce our operating margins, impact our ability to attract customers for our services, may harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations. Over time, we have observed a positive trend in the total market capitalization of digital assets, which suggests increased adoption. However, historical trends are not indicative of future adoption, and it is possible that the adoption of digital assets and blockchain technology may slow, take longer to develop, or never be broadly adopted, which would negatively impact our business and operating results.
Network Hash Rate
Our business is not only impacted by the volatility in digital asset prices, but also by increases in the competition for digital asset production. For bitcoin, this increased competition is described as the network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the bitcoin blockchain, and the difficulty index associated with the secure hashing algorithm employed in solving the blocks.
Difficulty
The increase in bitcoin’s network hash rate results in a regular increase in the cryptographic complexity associated with solving blocks on its blockchain, or its difficulty. Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires bitcoin miners to upgrade their mining equipment to remain profitable and compete effectively with other miners. Similarly, a decline in network hash rate results in a decrease in difficulty, increasing mining proceeds.
Transaction Fees
Bitcoin miners receive a transaction fee in the form of a portion of bitcoin for validating transactions on the Bitcoin network. The transaction fee can vary in value over time, with higher fees prioritizing certain transactions over those with lower fees. An increase in Bitcoin network transaction fees increases mining proceeds.
The table below provides a summary of the impact to revenue from the increase or decrease in the market price of bitcoin, difficulty and our hash rate. The impact to revenue in each scenario assumes only one driver increases or decreases and all others are held constant.
| Impact to Revenue | ||||||||||||||
| Driver | Increase in Driver | Decrease in Driver | ||||||||||||
| Market Price of Bitcoin | Favorable | Unfavorable | ||||||||||||
Core Scientific Hash Rate | Favorable | Unfavorable | ||||||||||||
| Difficulty | Unfavorable | Favorable | ||||||||||||
| Transaction Fees | Favorable | Unfavorable | ||||||||||||
Tariffs
Beginning on February 1, 2025, the United States government has announced a series of additional tariffs on goods imported to the United States raising concerns about material price inflation and delivery delays with respect to equipment and materials needed for our high-density colocation data center conversions and also with respect to parts, machinery and hardware used in our digital asset mining business. To date, tariffs have had no material impact on our costs or business operations, but we continue to analyze the impact of these tariffs on our business and actions we can take to minimize any future impact. Our agreement with our largest high- density colocation customer is funded almost entirely by our customer and our financial contribution is capped at a fixed dollar amount limiting the overall potential impact of tariffs on our existing and future capital expenditures. Tariffs, however, could have additional material and yet unforeseen impacts on our results of operations in fiscal year 2025 and future years.
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Halving
Further affecting the industry, and particularly for the bitcoin blockchain, the digital asset reward for solving a block is subject to periodic incremental halving. Halving is a process designed to control the overall supply and reduce the risk of inflation in digital assets using a proof-of-work consensus algorithm. At a predetermined block, the mining reward is reduced by half, hence the term “halving.” A reduction in the number of bitcoins rewarded per block would result in a reduction of revenue to those mining bitcoin, barring any increase in the spot price of bitcoin or decrease in Bitcoin network hash rate or difficulty. Historically, the network hash rate has tended to decline, for a period of time, post-halving as less efficient mining servers become less profitable to operate and their operators discontinue or limit their use.
For bitcoin, our most significant digital asset to which our mining power is devoted, the reward was initially set at 50 bitcoin rewards per block. The bitcoin blockchain has undergone halving four times since its inception, as follows: (1) on November 28, 2012, at block 210,000; (2) on July 9, 2016 at block 420,000; (3) on May 11, 2020 at block 630,000; and (4) on April 19, 2024 at block 840,000, when the reward was reduced to its current level of 3.125 bitcoin per block. The next halving for the bitcoin blockchain is anticipated to occur in 2028 at block 1,050,000. This process will repeat until the total amount of bitcoin rewards issued reaches 21 million and the theoretical supply of new bitcoin is exhausted, which is expected to occur around the year 2140. Many factors influence the price of bitcoin and the other digital assets we may mine for, and potential increases or decreases in prices in advance of or following a future halving are unknown.
Business Mix Shift to High-Density Colocation Services
The planned growth of our Colocation business, through increased investment in conversion of several of our bitcoin mining sites to Colocation business sites over the next several years, should gradually reduce our overall exposure to volatility in the spot price of bitcoin as our Colocation segment begins to account for a comparatively larger percentage of our financial results. The Colocation business is characterized by implementation of long-term contracts with customers spanning several years with terms and conditions outlining and resulting in stable, predictable revenue and cash flows over each period.
Electricity Costs
Electricity cost is the major operating cost for the mining fleet, as well as for the hosting services provided to customers. The cost and availability of electricity are affected primarily by changes in seasonal demand, with peak demand during the summer months driving higher costs and increased curtailments to support grid operators. Severe winter weather can increase the cost of electricity and the frequency of curtailments when it results in damage to power transmission infrastructure that reduces the grid’s ability to deliver power. Geopolitical and macroeconomic factors, such as overseas military or economic conflict between states, can adversely affect electricity costs by raising the cost of power generation inputs such as natural gas. Other events out of our control can also impact electricity costs and availability. In certain power markets, financial hedging can be employed to protect buyers from the financial impact of significant increases in power prices.
Equipment Costs
Increases in the market value of digital assets increases the demand for new miners, which can result in a scarcity in the supply of, and increases in the price of, those miners. Declines in the market value of digital assets can result in excess supply of miners and a general decline in their prices. As a result, the cost of new miners can be unpredictable and could be significantly different than our historical cost for new miners.
Our Competition and Customers
In addition to factors underlying our mining business growth and profitability, the success of our Colocation business greatly depends on our ability to retain and develop opportunities with our existing customers, secure additional infrastructure and attract new customers.
Our business environment is constantly evolving. However, digital asset mining is now dominated by large-scale, industrial miners operating large dedicated facilities around the world, including sovereign nation states with vast resources who mine directly or support mining operations through their sovereign wealth funds, all of whom compete to solve new blocks, acquire new and used miners, and purchase and consume energy and supplies to build mining facilities. We face significant competition in every aspect of our business, including, but not limited to, the acquisition of new miners, the ability to raise capital, obtaining low-cost electricity, obtaining access to sites with reliable sources of high power, and evaluating new technology developments in the industry.
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Presently, the information concerning the activities of digital asset miners may not be readily available as most of the participants in this sector do not publish information publicly, or the information may be unreliable. Published sources of information include “bitcoin.org” and “blockchain.info;” however, the reliability of that information and its continued availability cannot be assured.
Based on available data, we believe that an increase in the scale and sophistication of competition in the digital asset mining industry has continued to increase network hash rate, with new entrants and existing competitors increasing the number of miners mining for bitcoin.
Despite this trend, we believe we have continued to maintain a competitive hash rate capacity among both public and private bitcoin miners. However, remaining competitive in our evolving industry, both against new entrants into the market and existing competitors, will require the expansion of our existing miner fleet by purchasing new and available used miners, as well as innovating to develop and implement new technologies and mining solutions.
In our Colocation business, we compete with other providers of high-power data center capacity, such as major data center real estate investment trusts (“REITs”), developers of data centers, hyperscalers and bitcoin miners with capacity suitable for high-density colocation services. This competition focuses primarily on the identification and acquisition of new, high-power sites, but also includes competition for the capital required to build or modify existing sites to support high-density colocation. Additionally, the modification of some of our data centers to accommodate our Colocation business involves the procurement of critical equipment, technologies and skilled labor, which are in high demand from other entities seeking to address the same market opportunity, thereby putting us into competition with many other organizations for those resources.
We believe that because of our operational high-power data center capacity and the experience, knowledge, capabilities and relationships of our data center development and operations team, we are uniquely qualified to address the current strong demand for high-power data center capacity to support HPC applications successfully.
Differentiation, Innovation and Expansion of Our Platform
Our investments in research and development drive differentiation of our service offerings, core technology innovation and our ability to bring new products to market.
We believe that we differentiate ourselves by offering premium products and services, including our ability to manage our power sourcing and construct proprietary, passively-cooled digital asset mining data centers at scale. Our operational digital asset mining facilities leverage our specialized design and construction proficiency by employing high-density, low-cost engineering and power designs. Our proprietary thermodynamic solution manages heat and airflow to deliver best-in-class uptime and, ultimately, increases mining rewards to us and to our hosted mining customers. We design our facilities to maximize both the efficiency and lifespan of our mining equipment. We have developed expertise in the installation, operation, optimization and repair of digital mining equipment. We continue to refine and develop our data center design and technology solutions to optimize our operations with the knowledge gained from our considerable digital asset mining experience, including optimizing the location of miners in our data centers to increase profitability. Our approach to data center design enables us to deliver efficiency at scale.
We believe we possess unique knowledge of data center design principles and systems integration architectures, as well as extensive experience designing, constructing and operating data centers that differentiates and informs our plans for modifying digital asset mining data centers to support our Colocation business, and for developing new data centers designed to support future high-value computing requirements. This knowledge includes designs for higher rack energy densities than currently offered in the legacy data center market to satisfy emerging requirements for advanced technologies supporting emerging workloads such as artificial intelligence.
We develop proprietary hardware and software solutions that support our current operations and represent potential future growth opportunities. We intend to continue to invest judiciously in research and development activities to extend our platform management and software solutions in order to manage our infrastructure and mining fleet more efficiently and productively.
Regulation
Due to the relatively short history of digital assets, and their emergence as a new asset class, government regulation of blockchain and digital assets is constantly evolving, with increased interest expressed by U.S. and internal regulators. In October 2020,
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the Cyber-Digital Task Force of the U.S. Department of Justice published a report entitled “Cryptocurrency: An Enforcement Framework” that detailed the Department’s view with respect to digital assets and the tools at the Department’s disposal to deal with threats posed by digital assets. In February 2021, representatives of the government of Inner Mongolia, China announced plans to ban digital asset mining within the province due to the energy and rare earth mineral demands of the industry. In March 2021, the nominee for Chair of the SEC expressed the need for investor protection along with promotion of innovation in the digital asset space. In March 2022, former President Biden signed an Executive Order outlining an “whole-of-government” approach to addressing the risks and harnessing the potential benefits of digital assets and its underlying technology. The executive order lays out a national policy for digital assets over six highlighted priorities. In January 2023, the U.S. House of Representatives created a new congressional subcommittee focused on digital assets, the Subcommittee of Digital Assets, Financial Technology and Inclusion, operating under the House Financial Services Committee. Most recently, in January 2025, the Acting SEC Chairman announced the launch of a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets, in contrast to the SEC’s prior reliance on enforcement actions to regulate cryptocurrencies. The extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and they may not be ascertainable in the near future.
In addition to the activities of the United States federal government and its various agencies and regulatory bodies, government regulation of blockchain and digital assets is also under active consideration by similar entities in other countries and transnational organizations, such as the European Union. State and local regulations within the United States also may apply to our activities and other activities in which we may participate in the future. Other governmental or semi-governmental regulatory bodies have shown an interest in regulating or investigating companies engaged in blockchain or digital asset businesses. For instance, the SEC has taken an active role in regulating the use of public offerings of proprietary coins (so-called “initial coin offerings”) and has made statements and official promulgations as to the status of certain digital assets as “securities” subject to regulation by the SEC.
Key Business Operating Metrics and Non-GAAP Financial Measures
In addition to our financial results, we use the following business operating metrics and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. For a definition of these key business operating metrics, see the sections titled “Self-Mining Hash Rate,” and “Cost of Self-Mining One Bitcoin and Hash Cost,” (below), and for non-GAAP financial measures, see the section titled “Adjusted EBITDA” (below).
| March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Self-Mining Hash rate (Exahash per second) | 18.1 | 19.3 | |||||||||
| Adjusted EBITDA (in millions) | $ | (6.1) | $ | 88.0 | |||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Cash Costs per Bitcoin | |||||||||||||||||||||||
Power cost per bitcoin self-mined | $ | 42,178 | $ | 15,925 | |||||||||||||||||||
Operational costs per bitcoin self-mined1 | 14,449 | 2,928 | |||||||||||||||||||||
Total cost to self-mine one bitcoin2 | $ | 56,627 | $ | 18,853 | |||||||||||||||||||
Cash-Based Hash Cost3 | |||||||||||||||||||||||
Power cost per terahash | $ | 0.024 | $ | 0.028 | |||||||||||||||||||
Operational costs per terahash1 | 0.008 | 0.005 | |||||||||||||||||||||
Total cash-based hash cost3 | $ | 0.032 | $ | 0.033 | |||||||||||||||||||
1 Includes personnel and related costs, software, telecommunications, security, etc. Amount excludes stock-based compensation and depreciation.
2 Represents our direct cash costs of power and operational costs based on our self-mining/hosting mix divided by total bitcoin self-mined during the periods presented.
3 Represents the cash expense of power and facilities operation cost divided by our self-mining fleet hash rate, in terahash.
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Self-Mining Hash Rate
We operate mining hardware which performs computational operations in support of the blockchain measured in “hash rate” or “hashes per second.” A “hash” is the computation run by mining hardware in support of the blockchain; therefore, a miner’s “hash rate” refers to the rate at which the hardware is capable of solving such computations. Our hash rate represents the hash rate of our miner fleet, which drives the digital asset rewards that will be earned by our fleet. We calculate and report our hash rate in exahash per second (“EH/s”). One exahash equals one quintillion hashes per second.
We measure the hash rate produced by our mining fleet through our management software MinderTM, which consolidates the reported hash rate from each miner. The method by which we measure our hash rate may differ from how other operators present such a measure.
Generally, miners with a greater hash rate relative to the global Bitcoin network hash rate at a given time will over time, have a greater chance of earning a bitcoin, as compared to miners with relatively lower total hash rates. Further, with the increase in demand for bitcoin contributing to an increase in computational resources for digital asset mining, the global network hash rate has increased, and we expect it to continue to increase. As such, our self-mining hash rate provides useful information to investors because it demonstrates our capacity, and our competitive advantage, for mining bitcoin, which contributes to our digital asset self-mining revenue. Management uses our self-mining hash rate to monitor our performance and competitive advantage in mining bitcoin as global competition also increases.
Our self-mining hash rate was 18.1 EH/s and 19.3 EH/s as of March 31, 2025 and 2024, respectively, representing a 6% decrease year over year.
Our combined self-mining and customer and related party hosting hash rate decreased 25%, to 19.1 EH/s as of March 31, 2025, from 25.5 EH/s as of March 31, 2024.
Cost of Self-Mining One Bitcoin and Hash Cost
Our profitability with respect to self-mining is heavily dependent upon our cost to mine a bitcoin, calculated during a particular period as the actual cash expense for power and other mining facility operations cash expenditures attributable to bitcoin self-mined, divided by the total bitcoin self-mined during the period presented. Our cost efficiency with respect to solving computations on the Bitcoin network to mine bitcoin is reflected in our cash-based hash cost, which is calculated as the actual cash expense for power and other mining facility operations cash expenditures attributable to bitcoin self-mined, divided by our self-mining hash rate, in terahash. The Company excludes stock-based compensation and depreciation from calculations of these operating metrics.
Cash Costs per Bitcoin and Cash-Based Hash Cost are key business operating metrics. The cost of self-mining one bitcoin metric provides useful information to investors as it demonstrates our capacity to profitably mine bitcoin when comparing it to the price of bitcoin, particularly given volatility in energy prices as well as in the price of bitcoin. Management uses this metric to monitor both our cost efficiency in mining bitcoin as compared to our past performance and the performance of competitors, as well as our continued ability to profitably mine bitcoin. Similarly, the hash cost provides useful information to investors as it demonstrates our cost efficiency in solving computations on the Bitcoin network to mine bitcoin. Management uses this information to monitor our cost efficiency in mining bitcoin as compared to our past performance and the performance of our competitors.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure defined as our net income, adjusted to eliminate the effect of (i) interest income, interest expense, and other income (expense), net; (ii) provision for income taxes; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) Reorganization items, net; (vi) unrealized fair value adjustment on energy derivatives; (vii) change in fair value of warrant and contingent value rights; (viii) Colocation segment organizational startup costs which are not reflective of the ongoing costs incurred after startup, (ix) post-emergence bankruptcy advisory costs incurred related to reorganization which are not reflective of the ongoing costs incurred in post-emergence operations, and (x) certain additional non-cash items that do not reflect the performance of our ongoing business operations. For additional information, including the reconciliation of net income to Adjusted EBITDA, please refer to the table below. We believe Adjusted EBITDA is an important measure because it allows management, investors, and our Board of Directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making the adjustments described above. In addition, it provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business, as it removes the effect of net interest expense, taxes, certain non-cash items, variable charges and
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timing differences. Moreover, we have included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic and financial planning.
The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature or because the amount and timing of these items are not related to the current results of our core business operations which renders evaluation of our current performance, comparisons of performance between periods and comparisons of our current performance with our competitors less meaningful. However, you should be aware that when evaluating Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating this measure. Our presentation of this measure should not be construed as an inference that its future results will be unaffected by unusual items. Further, this non-GAAP financial measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). We compensate for these limitations by relying primarily on GAAP results and using Adjusted EBITDA on a supplemental basis. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because not all companies calculate this measure in the same fashion. You should review the reconciliation of net income to Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table presents a reconciliation of net income to Adjusted EBITDA for the three months ended March 31, 2025 and 2024 (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||
Net income | $ | 580,693 | $ | 210,691 | |||||||||||||||||||
Adjustments: | |||||||||||||||||||||||
| Interest (income) expense, net | (2,187) | 14,087 | |||||||||||||||||||||
Income tax expense | 205 | 206 | |||||||||||||||||||||
| Depreciation and amortization | 19,731 | 28,996 | |||||||||||||||||||||
| Stock-based compensation expense | 16,185 | (1,060) | |||||||||||||||||||||
| Unrealized fair value adjustment on energy derivatives | — | (797) | |||||||||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | 6 | 3,820 | |||||||||||||||||||||
Loss on debt extinguishment | — | 50 | |||||||||||||||||||||
Post-emergence bankruptcy advisory costs | 603 | 1,687 | |||||||||||||||||||||
| Reorganization items, net | — | (111,439) | |||||||||||||||||||||
Change in fair value of warrants and contingent value rights | (621,464) | (60,114) | |||||||||||||||||||||
| Other non-operating expense, net | 157 | 1,746 | |||||||||||||||||||||
Other | — | 123 | |||||||||||||||||||||
Adjusted EBITDA | $ | (6,071) | $ | 87,996 | |||||||||||||||||||
Components of Results of Operations
Revenue
Our revenue consists primarily of digital asset self-mining income, and fees from our digital asset hosting and high-density colocation operations. The Company’s Colocation operations began during the second quarter of 2024.
•Digital asset self-mining revenue. We operate a digital asset self-mining operation using specialized computers equipped with ASIC chips (known as “miners”) to solve complex cryptographic algorithms in support of the bitcoin blockchain (in a process known as “solving a block”) in exchange for digital asset rewards (primarily bitcoin). The Company participates in “mining pools” organized by “mining pool operators” in which we share our mining power (known as “hash rate”) with the hash rate generated by other miners participating in the pool to earn digital asset rewards. The mining pool operator provides a service that coordinates the computing power of the independent mining enterprises participating in the mining pool. The pool uses software that coordinates the pool members’ mining power, identifies new block rewards, records how much hash rate each participant contributes to the pool, and assigns digital asset rewards earned by the pool among its participants in
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proportion to the hash rate each participant contributed to the pool in connection with solving a block. Revenues from digital asset self-mining are impacted by volatility in bitcoin prices, as well as increases in the bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the bitcoin blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks.
•Digital asset hosted mining revenue from customers. Digital asset hosted mining revenue from customers is based on electricity-based consumption contracts with our customers. Most contracts are renewable, and our customers are generally billed on a fixed and recurring basis each month for the duration of their contract, which vary from one to three years in length. During the second quarter of 2023, we initiated our first new digital asset hosted mining customer contracts based on proceed sharing. Under these new contracts, customers pay for the cost of digital asset hosting and infrastructure, and we share the proceeds that are generated.
•Colocation revenue. Colocation revenue is generated by leasing data center space and providing related services to licensees at our Austin, Texas high-density data center. These licensing agreements and orders include lease components, nonlease components (such as power delivery, physical security, maintenance and other billable expenses), as well as noncomponent elements such as taxes. Under these contracts, customers pay fixed payments (based on electric capacity) and variable payments on a recurring basis. Colocation power fees are passed through to the customer without markup and are included on a gross basis in Colocation revenue.
Cost of revenue
The Company’s cost of digital asset self-mining and digital asset hosted mining services, primarily consist of electricity costs, salaries, stock-based compensation, depreciation of property, plant and equipment used to perform mining operations and hosting services and other related costs. Cost of Colocation relates to our Austin, Texas data center, and primarily consists of facility operations expense, which includes maintenance and lease expense, power fees, payroll and benefits expense and stock-based compensation expense. Colocation power fees are passed through to the customer without markup and are included on a gross basis in Cost of Colocation services.
Change in fair value of digital assets
The Company adopted ASU 2023-08 effective January 1, 2024. Under ASU 2023-08, the Company measures digital assets at fair value with the changes in fair value during the reporting period recognized in change in fair value of digital assets.
Gain from sales of digital assets
Prior to the adoption of ASU 2023-08, Gain from sales of digital assets was recorded when realized upon sale(s). In determining the gain to be recognized upon sale, we calculated the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
Change in fair value of energy derivatives
Change in fair value of energy derivatives represents changes in the fair value of the derivative liability related to the energy forward purchase contract to fix a specified component of the energy price related to forecasted energy purchases at our Cottonwood 1 facility from November 2023 through May 2024.
Losses on exchange or disposal of property, plant and equipment
Losses on exchange or disposal of property, plant and equipment are measured as the differences between the carrying value of the property, plant and equipment disposed of and fair value of the consideration received upon disposal.
Selling, general and administrative
Selling, general and administrative expenses includes compensation, benefits, and other personnel-related expenses, stock-based compensation, rent, Colocation segment organizational and site startup costs, post-emergence bankruptcy advisor fees related to the reorganization, professional fees, business insurance, auditor fees, bad debt, amortization of intangibles, franchise taxes, and bank fees. Colocation segment organizational startup costs were primarily consulting costs that were specifically incurred preparing for and
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entering into the Colocation business and are not expected to be incurred in the ongoing operations of the Colocation business. Colocation segment site startup costs are indirect costs associated with the administration of converting and building of future Colocation operating sites, and include compensation and other personnel-related expenses, including stock-based compensation. Similar costs will be incurred in the future operations of the Colocation segment sites.
Non-operating expenses (income), net:
Non-operating expenses (income), net includes loss (gain) on debt extinguishment, interest expense, net, reorganization items, net, fair value adjustments of convertible notes, warrants and contingent value rights, and other non-operating (income) expenses, net. Reorganization items, net consists of costs directly associated with the reorganization during the bankruptcy period, including professional fees (including reimbursed third-party professional fees) and other bankruptcy related costs, negotiated settlements, satisfaction of allowed claims, and debtor-in-possession finance fees.
Income tax expense
Income tax expense consists of U.S. federal and state income taxes. We maintain a full valuation allowance against our U.S. federal and state net deferred tax assets as realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain and therefore have concluded it is not more likely than not that we will realize our net deferred tax assets.
Income tax expense consists of federal and state tax expense on our operating activity, and changes to our deferred tax asset and deferred tax liability.
Deferred income tax expense consists of income taxes recorded using the asset and liability method. Under this method, deferred tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial reporting and tax bases of existing assets and liabilities. These differences are measured using the enacted tax rates that are expected to be in effect when these differences are anticipated to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized.
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Results of Operations for the Three Months Ended March 31, 2025 and 2024
The following table sets forth our selected Consolidated Statements of Operations for each of the periods indicated (in thousands).
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
Digital asset self-mining revenue | $ | 67,179 | $ | 149,959 | $ | (82,780) | |||||||||||||||||
Digital asset hosted mining revenue from customers | 3,773 | 29,332 | (25,559) | ||||||||||||||||||||
Colocation revenue | 8,573 | — | 8,573 | ||||||||||||||||||||
| Total revenue | 79,525 | 179,291 | (99,766) | ||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
Cost of digital asset self-mining | 61,170 | 81,564 | (20,394) | ||||||||||||||||||||
Cost of digital asset hosted mining services | 2,036 | 20,081 | (18,045) | ||||||||||||||||||||
Cost of Colocation services | 8,106 | — | 8,106 | ||||||||||||||||||||
| Total cost of revenue | 71,312 | 101,645 | (30,333) | ||||||||||||||||||||
Gross profit | 8,213 | 77,646 | (69,433) | ||||||||||||||||||||
Change in fair value of digital assets | 10,688 | — | 10,688 | ||||||||||||||||||||
Gain from sales of digital assets | — | (543) | 543 | ||||||||||||||||||||
Change in fair value of energy derivatives | — | 2,218 | (2,218) | ||||||||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | 6 | 3,820 | (3,814) | ||||||||||||||||||||
Selling, general and administrative | 40,115 | 16,924 | 23,191 | ||||||||||||||||||||
Operating (loss) income | (42,596) | 55,227 | (97,823) | ||||||||||||||||||||
Non-operating expenses (income), net: | |||||||||||||||||||||||
Loss on debt extinguishment | — | 50 | (50) | ||||||||||||||||||||
Interest (income) expense, net | (2,187) | 14,087 | (16,274) | ||||||||||||||||||||
Change in fair value of warrants and contingent value rights | (621,464) | (60,114) | (561,350) | ||||||||||||||||||||
| Reorganization items, net | — | (111,439) | 111,439 | ||||||||||||||||||||
| Other non-operating expense, net | 157 | 1,746 | (1,589) | ||||||||||||||||||||
Total non-operating income, net | (623,494) | (155,670) | (467,824) | ||||||||||||||||||||
Income before income taxes | 580,898 | 210,897 | 370,001 | ||||||||||||||||||||
Income tax expense | 205 | 206 | (1) | ||||||||||||||||||||
Net income | $ | 580,693 | $ | 210,691 | $ | 370,002 | |||||||||||||||||
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Revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
Digital asset self-mining revenue | $ | 67,179 | $ | 149,959 | $ | (82,780) | |||||||||||||||||
Digital asset hosted mining revenue from customers | 3,773 | 29,332 | (25,559) | ||||||||||||||||||||
Colocation revenue | 8,573 | — | 8,573 | ||||||||||||||||||||
| Total revenue | $ | 79,525 | $ | 179,291 | $ | (99,766) | |||||||||||||||||
Percentage of total revenue: | |||||||||||||||||||||||
| Digital asset self-mining revenue | 84 | % | 84 | % | |||||||||||||||||||
| Digital asset hosted mining revenue from customers | 5 | % | 16 | % | |||||||||||||||||||
| Colocation revenue | 11 | % | — | % | |||||||||||||||||||
Total revenue | 100 | % | 100 | % | |||||||||||||||||||
Total revenue decreased by $99.8 million or 56%, to $79.5 million for the three months ended March 31, 2025, from $179.3 million for the three months ended March 31, 2024, as a result of the factors described below.
Digital asset self-mining revenue decreased by $82.8 million or 55%, to $67.2 million for the three months ended March 31, 2025, from $150.0 million for the three months ended March 31, 2024. The year over year decrease in self-mining revenue was driven primarily by:
•a 75% decrease in bitcoin mined to 719 for the three months ended March 31, 2025, compared to 2,825 for the three months ended March 31, 2024, driven primarily by:
◦an approximate net decrease of 16,800 deployed mining units due primarily to the operational shift to our Colocation business;
◦a 50% decrease in block rewards as a result of the April 2024 halving;
◦a 6% decrease in self-mining hash rate to 18.1 EH/s for the three months ended March 31, 2025, from 19.3 EH/s for the same period in the prior year; and
◦a 39% increase in network difficulty driven by a 58% increase in the twelve-month average network hash rate over prior year.
This decrease in self-mining revenue was partially offset by:
•a 74% increase in the average price of bitcoin to $93,443 for the three months ended March 31, 2025, compared to $53,579 for the three months ended March 31, 2024; and
•an increase in our average self-mining hash rate fleet mix and efficiency to 24.4 joules per terahash.
Total digital asset hosted mining revenue from customers decreased by $25.6 million or 87%, to $3.8 million for the three months ended March 31, 2025, from $29.3 million for the three months ended March 31, 2024. The decrease in hosted mining revenue from customers was primarily driven by our shift to our Colocation operations.
Total Colocation revenue was $8.6 million for the three months ended March 31, 2025, compared to nil for the same period in the prior year due to the initiation of Colocation operations at our Austin, Texas data center during the quarter ended June 30, 2024.
Cost of revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
Cost of revenue | $ | 71,312 | $ | 101,645 | $ | (30,333) | |||||||||||||||||
Gross profit | 8,213 | 77,646 | (69,433) | ||||||||||||||||||||
Gross margin | 10 | % | 43 | % | |||||||||||||||||||
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Cost of revenue decreased by $30.3 million or 30%, to $71.3 million for the three months ended March 31, 2025, from $101.6 million for the three months ended March 31, 2024. As a percentage of total revenue, cost of revenue totaled 90% and 57% for the three months ended March 31, 2025 and 2024, respectively. The decrease in cost of revenue was primarily attributable to:
•a $26.8 million decrease in power costs from lower rates and usage;
•a $9.3 million decrease in depreciation expense driven by the increase in the number of miners becoming fully depreciated; and
•a $2.6 million decrease in proceed sharing costs.
This decrease in cost of revenue was partially offset by:
•a $8.1 million increase in Colocation segment costs, primarily rent, power, and payroll and benefits incurred during the current fiscal year with no comparable activity for the same period in fiscal 2024; and
•a $1.3 million increase in payroll and benefits due to increases in bonuses and salaries driven primarily by an increase in employee headcount.
Change in fair value of digital assets
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
Change in fair value of digital assets | $ | 10,688 | $ | — | $ | 10,688 | |||||||||||||||||
Percentage of total revenue | 13 | % | — | % | |||||||||||||||||||
Change in fair value of digital assets was $10.7 million for the three months ended March 31, 2025, and reflects the decrease in the price of bitcoin held during the three months ended March 31, 2025.
Change in fair value of energy derivatives
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
Change in fair value of energy derivatives | $ | — | $ | 2,218 | $ | (2,218) | |||||||||||||||||
Percentage of total revenue | — | % | 1 | % | |||||||||||||||||||
Change in fair value of energy derivatives was nil for the three months ended March 31, 2025, compared to $2.2 million for the three months ended March 31, 2024. Change in fair value of energy derivative was related to the change in fair value of the energy forward purchase contract entered into in November 2023 which expired during the second quarter 2024.
Losses on exchange or disposal of property, plant and equipment
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | $ | 6 | $ | 3,820 | $ | (3,814) | |||||||||||||||||
Percentage of total revenue | — | % | 2 | % | |||||||||||||||||||
Losses on exchange or disposal of property, plant and equipment decreased by $3.8 million to a nominal amount for the three months ended March 31, 2025, from $3.8 million for the three months ended March 31, 2024. The losses for the three months ended March 31, 2024 were primarily due to the write-off of leasehold improvements and disposal of containers and other mining equipment.
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Selling, general and administrative
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
Selling, general and administrative | $ | 40,115 | $ | 16,924 | $ | 23,191 | |||||||||||||||||
Percentage of total revenue | 50 | % | 9 | % | |||||||||||||||||||
Selling, general and administrative expenses increased $23.2 million or 137%, to $40.1 million for the three months ended March 31, 2025, from $16.9 million for the three months ended March 31, 2024. The increase was driven primarily by:
•a $13.9 million increase in stock-based compensation expense;
•a $7.2 million increase in Colocation segment site startup costs which primarily include payroll, benefits, and stock-based compensation for activities related to the startup of our Colocation segment sites that have transitioned from digital asset site operations and administration; and
•a $2.5 million increase in payroll and benefits expense due to increases in bonuses and salaries driven primarily by an increase in employee headcount; partially offset by
•a $1.1 million decrease in in post-emergence bankruptcy advisor fees and a $1.0 million decrease in rent expenses.
Non-operating income, net
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Non-operating expenses (income), net: | |||||||||||||||||||||||
Loss on debt extinguishment | $ | — | $ | 50 | $ | (50) | |||||||||||||||||
| Interest (income) expense, net | (2,187) | 14,087 | (16,274) | ||||||||||||||||||||
Change in fair value of warrants and contingent value rights | (621,464) | (60,114) | (561,350) | ||||||||||||||||||||
| Reorganization items, net | — | (111,439) | 111,439 | ||||||||||||||||||||
| Other non-operating expense, net | 157 | 1,746 | (1,589) | ||||||||||||||||||||
Total non-operating income, net | $ | (623,494) | $ | (155,670) | $ | (467,824) | |||||||||||||||||
Total non-operating income, net increased by $467.8 million, to $623.5 million for the three months ended March 31, 2025, from total non-operating income, net of $155.7 million for the three months ended March 31, 2024. The increase in total non-operating income, net was primarily driven by:
•During the three months ended March 31, 2025, we incurred a $621.5 million decrease in Change in fair value of warrant and contingent value rights due to the decrease in the Company’s stock price to $7.24 per share as of March 31, 2025, from $14.05 per share as of December 31, 2024. The decrease in stock price resulted in a $634.3 million decrease in the fair value of the warrant liabilities during the three months ended March 31, 2025, partially offset by a $12.8 million increase in fair value of contingent value rights; and
•a $16.3 million decrease in Interest expense, net driven primarily by an $8.7 million decrease in interest expense due to lower interest rates during the three months ended March 31, 2025, and a $7.9 million increase in proceeds from money market funds.
This decrease was partially offset by $111.4 million in Reorganization items, net incurred during the three months ended March 31, 2024 with no related activity during the same period in the current year. Reorganization items, net consisted of costs directly associated with the reorganization during the bankruptcy period, including professional fees (including reimbursed third-party professional fees) and other bankruptcy related costs, negotiated settlements, satisfaction of allowed claims, and debtor-in-possession finance fees.
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Segment Total Revenue and Gross Profit
The following table presents total revenue and gross profit by reportable segment for the periods presented (in thousands, except percentages):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Digital Asset Self-Mining Segment | |||||||||||||||||||||||
Digital asset self-mining revenue | $ | 67,179 | $ | 149,959 | $ | (82,780) | |||||||||||||||||
| Cost of digital asset self-mining: | |||||||||||||||||||||||
| Power fees | 30,319 | 44,983 | (14,664) | ||||||||||||||||||||
| Depreciation expense | 19,259 | 27,478 | (8,219) | ||||||||||||||||||||
| Employee compensation | 7,335 | 4,680 | 2,655 | ||||||||||||||||||||
| Facility operations expense | 3,280 | 2,950 | 330 | ||||||||||||||||||||
| Other segment items | 977 | 1,473 | (496) | ||||||||||||||||||||
| Total cost of digital asset self-mining | 61,170 | 81,564 | (20,394) | ||||||||||||||||||||
| Digital Asset Self-Mining gross profit | $ | 6,009 | $ | 68,395 | $ | (62,386) | |||||||||||||||||
| Digital Asset Self-Mining gross margin | 9 | % | 46 | % | (37) | % | |||||||||||||||||
| Digital Asset Hosted Mining Segment | |||||||||||||||||||||||
| Digital asset hosted mining revenue from customers | $ | 3,773 | $ | 29,332 | $ | (25,559) | |||||||||||||||||
| Cost of digital asset hosted mining services: | — | ||||||||||||||||||||||
| Power fees | 1,367 | 13,494 | (12,127) | ||||||||||||||||||||
| Depreciation expense | 145 | 1,270 | (1,125) | ||||||||||||||||||||
| Employee compensation | 332 | 1,404 | (1,072) | ||||||||||||||||||||
| Facility operations expense | 148 | 885 | (737) | ||||||||||||||||||||
| Other segment items | 44 | 3,028 | (2,984) | ||||||||||||||||||||
| Total cost of digital asset hosted mining services | 2,036 | 20,081 | (18,045) | ||||||||||||||||||||
| Digital Asset Hosted Mining gross profit | $ | 1,737 | $ | 9,251 | $ | (7,514) | |||||||||||||||||
| Digital Asset Hosted Mining gross margin | 46 | % | 32 | % | 14 | % | |||||||||||||||||
| Colocation Segment | |||||||||||||||||||||||
| Colocation revenue: | |||||||||||||||||||||||
| License fees | $ | 5,995 | $ | — | $ | 5,995 | |||||||||||||||||
| Maintenance and other | (8) | — | (8) | ||||||||||||||||||||
Licensing revenue | 5,987 | — | 5,987 | ||||||||||||||||||||
| Power fees passed through to customer | 2,586 | — | 2,586 | ||||||||||||||||||||
| Total Colocation revenue | 8,573 | — | 8,573 | ||||||||||||||||||||
| Cost of Colocation services: | |||||||||||||||||||||||
| Depreciation expense | 67 | — | 67 | ||||||||||||||||||||
Employee compensation | 1,295 | — | 1,295 | ||||||||||||||||||||
| Facility operations expense | 3,852 | — | 3,852 | ||||||||||||||||||||
| Other segment items | 306 | — | 306 | ||||||||||||||||||||
| Cost of licensing revenue | 5,520 | — | 5,520 | ||||||||||||||||||||
Power fees passed through to customer | 2,586 | — | 2,586 | ||||||||||||||||||||
| Total cost of Colocation services | 8,106 | — | 8,106 | ||||||||||||||||||||
| Colocation gross profit | $ | 467 | $ | — | $ | 467 | |||||||||||||||||
| Colocation licensing gross margin | 8 | % | — | % | 8 | % | |||||||||||||||||
| Colocation gross margin | 5 | % | — | % | 5 | % | |||||||||||||||||
| Consolidated | |||||||||||||||||||||||
| Consolidated total revenue | $ | 79,525 | $ | 179,291 | $ | (99,766) | |||||||||||||||||
| Consolidated cost of revenue | $ | 71,312 | $ | 101,645 | $ | (30,333) | |||||||||||||||||
| Consolidated gross profit | $ | 8,213 | $ | 77,646 | $ | (69,433) | |||||||||||||||||
| Consolidated gross margin | 10 | % | 43 | % | (33) | % | |||||||||||||||||
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Digital Asset Self-Mining
For the three months ended March 31, 2025, gross profit in the Digital Asset Self-Mining segment decreased by $62.4 million compared to the three months ended March 31, 2024, reflecting a Digital Asset Self-Mining segment gross margin of 9% for the three months ended March 31, 2025, compared to 46% for the three months ended March 31, 2024. The decrease in the Digital Asset Self-Mining segment gross profit was primarily due to a 55% decrease in self-mining revenue driven by:
•a 75% decrease in bitcoin mined to 719 for the three months ended March 31, 2025, compared to 2,825 for the three months ended March 31, 2024, driven primarily by:
◦an approximate net decrease of 16,800 deployed mining units due primarily to the operational shift to Colocation;
◦a 50% decrease in block rewards as a result of the April 2024 halving;
◦a 6% decrease in our self-mining hash rate to 18.1 EH/s for the three months ended March 31, 2025, compared to 19.3 EH/s for the three months ended March 31, 2024; and
◦an 39% increase in network difficulty driven by a 58% increase in the twelve-month average network hash rate over prior year; partially offset by
•a 74% increase in the average price of bitcoin to $93,443 for the three months ended March 31, 2025, compared to $53,579 for the three months ended March 31, 2024;
This decrease in the digital asset self-mining revenue was partially offset by:
•a $20.4 million or 25% decrease in the total cost of digital asset self-mining driven by:
◦a $14.7 million decrease in power costs due primarily to lower power rates; and
◦a $8.2 million or 30% decrease in depreciation expense, which was driven primarily by an approximate net decrease of 16,800 deployed miners during the current year; partially offset by
◦a $2.7 million or 57% increase in employee compensation due to increases in bonuses and salaries driven primarily by an increase in employee headcount.
Digital Asset Hosted Mining
For the three months ended March 31, 2025, gross profit in the Digital Asset Hosted Mining segment decreased by $7.5 million compared to the three months ended March 31, 2024, reflecting a Digital Asset Hosted Mining segment gross margin of 46% for the three months ended March 31, 2025, compared to a gross margin of 32% for the three months ended March 31, 2024. The increase in Digital Asset Hosted Mining segment gross margin for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 was primarily due to:
•a $25.6 million or 87% decrease in the digital asset hosted mining revenue driven primarily by our shift to Colocation operations, partially offset by:
• a $18.0 million or 90% decrease in the total cost of digital asset hosted mining services driven primarily by:
◦a $12.1 million decrease in power costs from lower usage driven primarily by our operational shift to Colocation segment and lower rates;
◦a $3.0 million decrease in other segment costs; and
◦a $1.1 million decrease in depreciation expense and a $1.1 million decrease in employee compensation.
For the three months ended March 31, 2025 and 2024, the top three hosting customers accounted for approximately 100% and 86%, respectively, of the Digital Asset Hosted Mining’s segment total revenue.
Colocation
For the three months ended March 31, 2025, gross profit in the Colocation segment was $0.5 million compared to nil for the three months ended March 31, 2024, due to the Colocation segment starting operation during the quarter ended June 30, 2024. Colocation revenue includes a base license fee as well as the direct pass-through of power costs to our client, with no margin added. Colocation costs at our Austin, Texas data center consist primarily of lease expense, the direct pass-through of power costs, and direct and indirect facilities operations expenses, including personnel and benefit costs and stock-based compensation.
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A reconciliation of the reportable segment gross profit to income before income taxes included in our Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024, is as follows (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
Reportable segment gross profit | $ | 8,213 | $ | 77,646 | $ | (69,433) | |||||||||||||||||
| Change in fair value of digital assets | 10,688 | — | 10,688 | ||||||||||||||||||||
Gain from sales of digital assets | — | (543) | 543 | ||||||||||||||||||||
Change in fair value of energy derivatives | — | 2,218 | (2,218) | ||||||||||||||||||||
Loss on exchange or disposal of property, plant and equipment | 6 | 3,820 | (3,814) | ||||||||||||||||||||
Selling, general and administrative | 40,115 | 16,924 | 23,191 | ||||||||||||||||||||
| Operating (loss) income | (42,596) | 55,227 | (97,823) | ||||||||||||||||||||
| Non-operating expenses (income), net: | |||||||||||||||||||||||
Loss on debt extinguishment | — | 50 | (50) | ||||||||||||||||||||
Interest (income) expense, net | (2,187) | 14,087 | (16,274) | ||||||||||||||||||||
| Reorganization items, net | — | (111,439) | 111,439 | ||||||||||||||||||||
| Change in fair value of warrants and contingent value rights | (621,464) | (60,114) | (561,350) | ||||||||||||||||||||
| Other non-operating expense, net | 157 | 1,746 | (1,589) | ||||||||||||||||||||
Total non-operating income, net | (623,494) | (155,670) | (467,824) | ||||||||||||||||||||
Income before income taxes | $ | 580,898 | $ | 210,897 | $ | 370,001 | |||||||||||||||||
Liquidity and Capital Resources
Sources and Uses of Cash
We finance our operations primarily through debt issuances, cash generated from operations, including the sale of self-mined bitcoin and fees from leasing Colocation segment data center space, equipment financing arrangements, and sales of equity securities.
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 March 31, 2025, that our operating cash flows, existing cash balances, and continued access to debt markets will be sufficient to satisfy our cash requirements over the next twelve months and beyond.
Cash, Cash Equivalents, Restricted Cash and Cash Flows
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less from the date of acquisition.
| March 31, | December 31, | ||||||||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||||||||
| Cash and cash equivalents | $ | 697,942 | $ | 836,197 | $ | (138,255) | |||||||||||||||||
| Restricted cash | 783 | 783 | — | ||||||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 698,725 | $ | 836,980 | $ | (138,255) | |||||||||||||||||
As of March 31, 2025 and December 31, 2024, restricted cash of $0.8 million, consisted of cash held in escrow to pay for construction and development activities.
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The following table summarizes our cash, cash equivalents and restricted cash and cash flows for the periods indicated.
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
Cash, cash equivalents and restricted cash – beginning of period | $ | 836,980 | $ | 69,709 | |||||||
Net cash provided by (used in) | |||||||||||
Operating activities | (40,599) | 22,174 | |||||||||
Investing activities | (93,458) | (31,970) | |||||||||
Financing activities | (4,198) | 54,363 | |||||||||
Cash, cash equivalents and restricted cash - end of period | $ | 698,725 | $ | 114,276 | |||||||
Our principal uses of cash in recent periods have been funding our operations and investing in capital expenditures.
Operating Activities
Changes in net cash from operating activities results primarily from cash received from hosting customers payments for power fees and equipment purchases. Other drivers of the changes in net cash from operating activities include research and development costs, sales and marketing costs and general and administrative expenses (including personnel expenses and fees for professional services) and interest payments on debt.
Net cash used in operating activities was $40.6 million for the three months ended March 31, 2025 and net cash provided by operating activities was $22.2 million for the three months ended March 31, 2024. The decrease in net cash provided by operating activities was primarily due to a decrease in $67.4 million from our bitcoin holding strategy and a decrease of $28.4 million in net income before the effects of non-cash adjustments. The decrease in net cash provided by operating activities was offset by an increase of $36.0 million from operating assets and liabilities driven primarily by customer prepaid base license fees of $42.0 million used in funding property, plant, and equipment purchases.
Investing Activities
Our net cash used in investing activities consists primarily of purchases of property, plant and equipment. Net cash used in investing activities for the three months ended March 31, 2025 and 2024, was $93.5 million and $32.0 million, respectively. Purchases of property, plant, and equipment were $88.4 million during the three months ended March 31, 2025. Of those purchases, $59.5 million related to the Colocation segment and $28.9 million related to the digital asset mining segments. Prepaid base license fees of $42.0 million recognized as deferred revenue during the three months ended March 31, 2025 and included in the operating activities above, funded a portion of the property, plant, and equipment purchases for the Colocation segment. The increase in investing cash used was further driven by a $5.0 million purchase of a strategic equity investment.
Financing Activities
Net cash used in financing activities consists of proceeds from stock issuances and principal payments on debt, including notes payable and finance leases.
Net cash used in financing activities for the three months ended March 31, 2025 was $4.2 million. Net cash provided by financing activities for the three months ended March 31, 2024 was $54.4 million. The decrease in net cash provided by financing activities was related to $55.0 million from the issuance of common stock and a $20.0 million draw from the exit facility during the three months ended March 31, 2024. The decrease in cash provided by financing activities was partially offset by decreases in principal payments on debt of $9.7 million, restricted stock tax holding obligations of $3.4 million, and principal repayments of finance leases of $3.0 million.
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Future Commitments and Contractual Obligations
Our material cash commitments from known contractual and other obligations consist primarily of obligations for long-term debt and related interest, leases for property and equipment, and capital expenditures related to the conversion of a significant portion of our data centers to high-density colocation operations. Certain amounts included in our contractual obligations as of March 31, 2025, are based on our estimates and assumptions about these obligations, including their duration, anticipated actions by third parties and other factors.
For more information regarding the Company’s future commitments and contractual obligations refer to Notes 4 — Leases, 5 — Convertible and Other Notes Payable and 8 — Commitments and Contingencies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 2 — Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements in Part I. Item 1 — “Financial Statements” of this Quarterly Report on Form 10-Q and in Part II. Item 8 to our audited consolidated financial statements and accompanying notes of the 2024 Annual Report on Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the United States Securities and Exchange Commission (“SEC”) on February 27, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements. For more information regarding the forward-looking statements used in this section and elsewhere in this Quarterly Report on Form 10-Q, see the section titled “Cautionary Note Regarding Forward-Looking Statements” included at the forepart of this Quarterly Report on Form 10-Q.
Foreign Currency and Exchange Risk
The vast majority of our cash generated from revenue is denominated in U.S. dollars.
There have been no material changes to the Company’s foreign currency and exchange risk as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. For a discussion of the Company’s exposure to foreign currency and exchange risk, refer to the Company’s foreign currency and exchange risk disclosure set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Annual Report on Form 10-K.
Risk Regarding the Price of Bitcoin
Our business and development strategy is focused on maintaining and expanding our bitcoin mining operations to maximize the amount of new bitcoin rewards we earn. As of March 31, 2025, we held 977 bitcoin, with a carrying value of $80.6 million, all of which were produced from our bitcoin mining operations.
We cannot predict the future market price of bitcoin and, as such, we cannot predict future changes in the carrying value of our bitcoin assets based on future market prices. The future value of bitcoin will affect the amount of revenue recognized from our operations, and any changes in the future value of bitcoin while we hold it in our account would also be reported in our net income (or loss), either of which could have a material adverse effect on the market price for our securities.
Bitcoin prices for the three months ended March 31, 2025 ranged from a low of $76,781 to a high of $108,993, with an average price of $93,443. A hypothetical 10% increase or decrease in the price of bitcoin produced during the three months ended March 31, 2025, would have increased or decreased net income by approximately $6.7 million.
Commodity Price Risk
Certain of our operating costs are subject to price fluctuations caused by the volatility of the underlying commodity prices, including electricity used in our data center operations. From time to time, the Company manages the commodity price risk by
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entering into derivative instruments to manage the variability in future cash flows from forecasted energy purchases. Management considers energy prices, weather forecasts, forecasted energy purchases, and other factors when determining the extent of its risk management strategy over commodity price risk.
There have been no material changes to the Company’s commodity price risk as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. For a discussion of the Company’s exposure to commodity price risk, refer to the Company’s commodity price risk disclosure set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Annual Report on Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) (“the Exchange Act”) prior to the filing of this quarterly report. Disclosure controls and procedures have been designed to provide reasonable assurance that information included under the Exchange Act is accumulated and communicated to management, as appropriate, to allow timely decisions regarding our required disclosures.
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) from January 1, 2025 through March 31, 2025, that management believes materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations on Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in lawsuits and other contingencies in the ordinary course of business. While the outcome of such contingencies cannot be predicted with certainty, we believe that the liabilities arising from these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds our estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant. For a description of our material pending legal proceedings, please see Note 8 — Commitments and Contingencies, to our unaudited condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Please refer to the discussions contained in our Annual Report on Form 10-K for the year ended December 31, 2024 within Item 1. – “Business” under the subtitle “Emergence from Bankruptcy”; Item 1A. — “Risk Factors”; Item 7. — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the subtitle “Developments During 2024; and Item 8. — Notes to Consolidated Financial Statements for further information regarding the Company’s emergence from bankruptcy and satisfaction and extinguishment of claims in the Chapter 11 Cases during the year ended December 31, 2024.
Item 1A. Risk Factors
For a discussion of our risk factors, see Part I. Item 1A. — “Risk Factors” of the Company’s Annual Report on Form 10-K for fiscal year December 31, 2024, which was filed with the SEC on February 27, 2025.
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During fiscal year 2024, our “Colocation” segment was referred to as “HPC Hosting,” and, as such, any risk factors referring to the “HPC Hosting” segment or “HPC hosting” business should be read as being applicable to our “Colocation” segment and “high-density colocation” business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended March 31, 2025, 0.1 million shares of New Common Stock were issued upon the exercise of Tranche 1 Warrants in reliance on the exemption provided by Section 1145 of the Bankruptcy Code. The Company received cash proceeds from the exercise of $0.5 million.
During the quarter ended March 31, 2025, 3.4 million shares of New Common Stock were issued upon the exercise of Tranche 2 Warrants in reliance on the exemption provided by Section 1145 of the Bankruptcy Code. The Company received minimal cash proceeds from the exercise.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Trading Arrangements
During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated
On March, 4, 2025 , Todd DuChene , Executive Vice President, Chief Legal and Administrative Officer and Secretary , adopted a trading plan subject to termination on the earlier of April 1, 2026 or upon the occurrence of certain specified events set forth therein. The trading plan is intended to permit Mr. DuChene to exercise and sell an aggregate of approximately 600,000 shares.
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Item 6. Exhibits
| Exhibit No. | Exhibit Description | |||||||
| 2.1†† | ||||||||
| 2.2†† | ||||||||
| 2.3†† | ||||||||
| 2.4 | ||||||||
10.1*# | ||||||||
10.2*# | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
99.1 | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | |||||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags) | |||||||
___________
| * | Filed herewith. | ||||
| # | Indicates management contract or compensatory plan. | ||||
| †† | Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CORE SCIENTIFIC, INC. | ||||||||
| Date: May 7, 2025 | By: | /s/ Jim Nygaard | ||||||
Jim Nygaard | ||||||||
| Chief Financial Officer | ||||||||
| (Duly Authorized Officer & Principal Financial Officer) | ||||||||
57
EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this “Agreement”) dated as of February 26, 2025 (the “Effective Date”) is made by and between Core Scientific, Inc. (the “Company”) and James P. Nygaard, Jr. (the “Executive”). WHEREAS, the Company desires to employ the Executive as Executive Vice President, Chief Financial Officer, upon and subject to the terms and conditions set forth herein, and the Executive wishes to accept such employment upon and subject to such terms and conditions. NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, the parties hereby agree as follows: 1. Employment. (a) The Company hereby agrees to employ the Executive and the Executive hereby accepts such employment upon and subject to the terms and conditions of this Agreement from the Effective Date until the first (1st) anniversary of the Effective Date, unless the Executive’s employment is earlier terminated pursuant to Section 4 (such period referred to as the “Initial Term”). The Initial Term shall automatically be extended on the same terms and conditions as set forth in this Agreement for successive one (1)-year periods unless and until either: (i) a party gives the other party no less than ninety (90) calendar days’ advance written notice prior to the end of the Initial Term or any such one (1)-year extension period (as applicable) that such party will not further extend the Initial Term or such one (1)-year extension period (as applicable), or (ii) the Company or the Executive terminates the Executive’s employment in accordance with Section 4. The Initial Term and any and all extensions thereof (or partial extension in the event of an earlier termination pursuant to Section 4), if any, shall be collectively referred to as the “Employment Period”. (b) The Executive confirms and agrees that: (i) the Executive shall not at any time disclose to the Company or any of its affiliates or representatives, or use for any purpose in the course of the Executive’s employment, any confidential or proprietary information of any other person, including without limitation any former employer; (ii) the Executive has returned to all former employers any and all property belonging to any of them (including without limitation all electronically stored information), and will not at any time use any such property for any purpose in the course of the Executive’s employment; and (iii) the Executive is not a party to or bound by any employment or services agreement, confidentiality agreement, noncompetition agreement, other restrictive covenant, fiduciary obligation, order, judgment or other obligation or agreement that would or could prohibit or restrict the Executive from executing this Agreement, being employed by the Company or from performing any of his duties under this Agreement. 2. Position, Duties and Responsibilities. The Company shall employ the Executive during the Employment Period as its Executive Vice President, Chief Financial Officer. During the Employment Period, the Executive’s principal place of employment will be at the Company’s newly established headquarters in Miami, Florida. During the Employment Period: (a) the Executive’s duties and responsibilities shall include such duties commensurate with such position; (b) the Executive shall report to the Company’s Chief Executive Officer; (c) the Executive shall at all times comply with all applicable policies and procedures of the Company and its affiliates as in effect or as amended from time to time; and (d) the Executive shall perform the duties assigned to him hereunder to the best of his abilities and in the best interests of the Company and its affiliates and shall devote substantially all of his business time, attention and reasonable best efforts to the affairs of the Company and its affiliates. Notwithstanding the foregoing, the Executive may serve on one or more for-profit or charitable boards of directors during the Employment Period (“Board Service”), provided that (i) such Board Service does not, in the Company’s good faith judgment, materially interfere with the Executive’s duties and responsibilities to the Company, (ii) any such entity on whose board the Executive serves does not materially Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
2 conflict with the business of the Company or any of its affiliates, and (iii) the Executive first seeks and receives the advance written approval of the Company’s Board of Directors (the “Board”) to serve on any such board (which approval shall not be unreasonably delayed or denied). The Executive shall be available to travel domestically and internationally on such occasions as the Executive’s duties or the Company may reasonably require from time to time. As used in this Agreement, “affiliate” means, with respect to a given person (including the Company), any other person that owns or controls, is owned or controlled by, or is under common ownership or control with, such person. 3. Compensation and Benefits. (a) Base Salary. During the Employment Period, the Company shall pay to the Executive a base salary at the gross annualized rate of $600,000 (the “Base Salary”), payable in accordance with the Company’s standard payroll policy. (b) Annual Bonus. Subject to Section 4, commencing with calendar year 2025 and during each calendar year of the Employment Period thereafter, the Executive will be eligible to receive an annual cash bonus (the “Annual Bonus”), the amount, terms and conditions of which shall be determined at the sole discretion of the Compensation Committee of the Board (the “Committee”). The target Annual Bonus will be equal to one hundred percent (100%) of the Executive’s Base Salary, and with the actual amount of any such Annual Bonus to be determined by the Committee based on performance criteria established by the Committee for each year. Except as otherwise provided in Section 4(d), the Executive must be employed through the date the Annual Bonus is paid in order to be eligible for the Annual Bonus. Annual Bonuses will generally be paid following the completion of the audit of the Company’s financial statements for the calendar year to which the Annual Bonus relates, but in all cases, no later than the end of the year following the year to which such Annual Bonus relates; [provided that, the Executive’s Annual Bonus for calendar year 2024 shall not be less than $600,000 and shall be paid, including in the event the above performance criteria is not attained with respect to the 2025 calendar year, to the Executive after the 2025 calendar year and prior to March 15, 2026. (c) Equity Award. The Executive may from time to time be eligible to receive equity or equity- based incentive awards under the Core Scientific, Inc. 2024 Stock Incentive Plan established by the Company or such other equity incentive plan established as the equity incentive plan for Company executives generally (the “Equity Plan”), subject to and in accordance with the terms and conditions thereof, as in effect or amended from time to time, it being understood that (i) the specific terms and conditions of the equity awards to be issued to the Executive under the Equity Plan with respect to the 2025 calendar year (the “2025 Equity Grant”) are set forth in the award agreement thereunder (the “2025 Equity Award Agreement”) and (ii) the 2025 Equity Award Agreements shall be entered into by the parties, and become effective, concurrently with the execution of this Agreement. (d) Employee Benefits. During the Employment Period, the Executive shall be eligible to participate in such employee benefit plans, and to receive such other fringe benefits, as the Company may in its discretion make available to its executives generally, subject to all present and future terms and conditions of such benefit plans and other fringe benefits. The Company reserves the right in its discretion to alter, suspend, amend, or discontinue any and all of its employee and fringe benefits, benefit plans, policies and procedures, in whole or in part, at any time with or without notice. (e) Vacation. During the Employment Period, the Executive shall be eligible for paid time off in accordance with the Company’s applicable policies and procedures as in effect or amended from time to time and as required by applicable law, if any. (g) Expense Reimbursement. During the Employment Period, the Company shall reimburse the Executive for all reasonable and necessary business expenses (as determined by the Company) incurred by Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
3 the Executive in connection with the Executive’s duties hereunder in accordance with Section 3(h) and with the Company’s business expense reimbursement policies, as in effect or amended from time to time. (h) Withholding; Compliance with Code Section 409A. (i) The Company shall deduct or withhold from any amounts owing from the Company to the Executive any federal, state, local or foreign withholding taxes, excise tax, or employment taxes imposed with respect to the Executive’s compensation or other payments from the Company or the Executive’s ownership interest in the Company, if any (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). (ii) The intent of the parties is that payments and benefits under this Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance thereunder (collectively, “Section 409A”) to the maximum extent permitted as a short-term deferral pursuant to Treasury Regulation §1.409A-1(b)(4) or under the separation pay exemption pursuant to Treasury Regulation §1.409A-1(b)(9)(iii) and, if not exempt, are intended to comply with Section 409A, and this Agreement shall be interpreted consistent therewith. In the event that the terms of this Agreement would subject the Executive to any taxes and other penalties under Section 409A (“409A Penalties”), the Company may in its sole reasonable discretion amend the terms of this Agreement to avoid such 409A Penalties, to the extent possible, provided that the Company will to the largest extent reasonably practicable avoid amending the economic terms of this Agreement to the detriment of the Executive. All references in this Agreement to the Executive’s termination of employment and to the end of the Employment Period shall mean a separation from service within the meaning of Section 409A. Each installment under this Agreement shall be considered a separate payment for purposes of Section 409A. Any reimbursement (including any advancement) payable to the Executive pursuant to this Agreement shall be conditioned on the submission by the Executive of all expense reports reasonably required by the Company under any applicable expense reimbursement policy, and shall be paid to the Executive within thirty (30) calendar days following receipt of such expense reports, but in no event later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement or in-kind benefit provided during a calendar year shall not affect the amount of expenses eligible for reimbursement or in-kind benefit to be provided during any other calendar year. The right to reimbursement or to an in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit. Notwithstanding any other provision in this Agreement, if on the date of the Executive’s “separation from service” (as defined in Section 409A) (A) the Company is a publicly traded corporation and (B) the Executive is a “specified employee” (as defined in Section 409A), then to the extent any amount payable under this Agreement upon the Executive’s separation from service constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A, that under the terms of this Agreement would be payable prior to the six (6)-month anniversary of the Executive’s separation from service, such payment shall be delayed until the earlier to occur of (x) the first day of the seventh (7th) month following the Executive’s separation from service or (y) the date of the Executive’s death. Notwithstanding any of the foregoing provisions of this Section 3(h)(ii), under no circumstances shall the Company be responsible for any taxes, penalties, interest or other losses or expenses incurred by the Executive due to any failure to comply with, or be exempt from, the requirements of Section 409A. 4. Termination. (a) Notwithstanding anything to the contrary in this Agreement, the Executive’s employment and the Employment Period may be terminated (i) upon the expiration of the Employment Period following either party’s provision of notice of non-renewal (as set forth in Section 1); (ii) by either party for any or no reason upon ninety (90) days’ advance written notice to the other party; (iii) by the Company for Cause (defined below) as described below; or (v) immediately upon the Executive’s death. The effective date of the Executive’s termination of employment and the Employment Period is referred to herein as the “Termination Date.” Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
4 (b) Any termination of the Executive’s employment shall, unless otherwise requested by the Company, automatically effectuate the Executive’s removal from any and all officer positions and positions on the Board or the board of directors of any Company affiliate that the Executive then holds with the Company or any of its affiliates as of the Termination Date. (c) Accrued Obligations. The Company will pay the Executive the following amounts upon a termination by either party for any or no reason (such amounts, the “Accrued Obligations”): (i) any earned and unpaid Base Salary through the Termination Date; (ii) benefits to which the Executive is entitled under the terms of, and in accordance with, any applicable benefit plan or program; (iii) any incurred but unreimbursed business expenses payable pursuant to this Agreement or in accordance with the Company’s applicable policy(ies); and (iv) unused, accrued paid time off to the extent required under applicable law. Amounts payable under subsections (i) and (iv) of this Section 4(c) shall be payable on the earlier of the next regularly scheduled Company payroll date following the Termination Date or as required under applicable law. (d) Qualifying Termination. If the Executive’s employment terminates as a result of a termination of employment by the Company without Cause (a “Qualifying Termination”) including following the Company’s non-renewal of the Employment Period under Sections 1 and 4(a)(i), then the Company will pay or provide to the Executive, in addition to the Accrued Obligations, the following severance benefits (the “Severance Benefits”), provided that the Executive does not violate any of the restrictions referenced in Section 5 of this Agreement: (i) If the Executive’s Qualifying Termination occurs outside of the Protection Period (defined below): (A) Continued Base Salary for a period of twelve (12) months following the Termination Date, payable in equal installments in accordance with the Company’s normal payroll practices; (B) Payment of any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other senior executives of the Company, but in no event later than the date that is two and one-half (2½) months following the last day of the fiscal year in which the Termination Date occurred; and (C) Subject to the specific terms and conditions of the equity awards to be issued to the Executive under the Equity Plan (including, as applicable, the 2025 Equity Grant), vesting of the unvested portion thereof (including, as applicable the 2025 Equity Grant) shall be accelerated in connection with the Executive’s Qualifying Termination in accordance with such terms and conditions set forth therein. (ii) If the Executive’s Qualifying Termination occurs during the Protection Period, and without duplication of any of the Severance Benefits provided to the Executive under Section 4(d)(i): (A) A lump-sum payment equal to the amount of the Executive’s annual Base Salary (and for the avoidance of doubt, less any amounts previously paid to the Executive pursuant to Section 4(d)(i)(A)) (the “Enhanced Severance Amount”); (B) Payment of any unpaid portion of any additional retention benefit, transaction benefit or similar benefit arrangement that is offered or provided to the Executive by the Company or its successor in connection with any “Change in Control” (as defined in the Equity Plan) to which the Protection Period relates; and (C) Payment of any unpaid Annual Bonus in respect of any completed fiscal year that has ended prior to the date of such termination, which amount shall be paid at such time annual bonuses are paid to other Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
5 senior executives of the Company, but in no event later than the date that is two and one-half (2½) months following the last day of the fiscal year in which the Termination Date occurred; and (D) subject to the specific terms and conditions of the equity awards to be issued to the Executive under the Equity Plan (including, as applicable, the 2025 Equity Grant), vesting of the unvested portion thereof (including, as applicable the 2025 Equity Grant) shall be accelerated in connection with the Executive’s Qualifying Termination in accordance with such terms and conditions set forth therein. (e) [reserved] (f) Release Requirement. As a condition precedent to the Executive’s eligibility for and receipt of the Severance Benefits, Enhanced Severance Amount or Retirement Benefits, as the case may be, the Executive must first execute a separation and release agreement in substantially the form provided by the Company and attached hereto as Exhibit A (the “Release”) within the time period specified in such Release (which shall be no more than forty-five (45) calendar days following the Termination Date), and refrain from revoking such Release to the extent a revocation option is provided therein (which revocation period shall be no more than seven (7) calendar days after the Executive’s execution of the Release, unless otherwise provided by applicable law). Notwithstanding any provision to the contrary, (i) except as otherwise provided in clause (ii) below, (A) the first installment of the Severance Benefits, (B) the Enhanced Severance Amount, and (C) the Retirement Benefits, as applicable, will be made on the Company’s next regular payday following the expiration of sixty (60) calendar days from the Termination Date; provided, that the first payment of the Severance Benefits shall include any installment amounts relating to payrolls that became payable during such sixty (60) day period and that were not paid to the Executive, and (ii) if the Termination Date occurs (A) during the Protection Period and (B) prior to a Change in Control, then the Enhanced Severance Amount shall be paid on the Company’s next regular payday following the expiration of sixty (60) calendar days from the date of such Change in Control. (g) As used in this Agreement: (i) “Cause” means any of the following conduct by the Executive, occurrence of any one or more of the following: (A) the Executive’s conviction of, or plea of no contest with respect to, (x) any felony, or of (y) any misdemeanor involving dishonesty or moral turpitude; (B) the Executive’s participation in a fraud or act of dishonesty (or an attempted fraud or act of dishonesty) that results in material harm to the Company Group (defined below); (C) the Executive’s material breach of any fully executed agreement between the Executive and the Company or any member of the Company Group; or (D) the Executive’s gross misconduct or material failure to comply with (x) a written instruction of the Board or the Executive’s supervisor or (y) any written Company Group policy, in each case that results in material harm to the Company Group; provided that the Company shall provide the Executive with written notice of the events or occurrences described in clauses (C) and (D), and, to the extent curable and reasonably capable of prompt cure, an opportunity to cure within fifteen (15) calendar days. (ii) “Protection Period” means the period commencing on or after the date that the Company enters into a definitive agreement that results in a Change in Control (even though still subject to approval by the Company’s stockholders and other conditions and contingencies, but provided that the Change in Control actually occurs) and ending twelve (12) months following, a Change in Control. 5. Continuing Obligations. The Executive acknowledges and reaffirms the Executive’s continuing obligations owed to the Company and, its direct and indirect parents, and/or its direct and indirect subsidiaries (the Company, along with its direct and indirect parents and subsidiaries, the “Company Group”), including without limitation, pursuant to: (a) the Executive’s executed Proprietary Information and Inventions Agreement with the Company, and (b) any other similar agreement entered into by the Executive and which benefits may be enforced by the Company or any other member of the Company Group, each of which Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
6 agreements and obligations remain in full force and effect in accordance with their terms following the Termination Date (collectively, the “Continuing Obligations”). 6. No Disparagement / Protected Rights; Defend Trade Secrets Act. Subject to this Agreement, the Executive agrees not to disparage any member of the Company Group or each of their respective officers, directors, managers, members, employees, shareholders, investors and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation. Nothing in this Section 6, this Agreement (including the Release), or any other agreement entered into with the Company Group: (a) will be interpreted or construed to prevent any person from giving truthful information to any law enforcement officer, court, administrative proceeding or as part of an investigation by any government agency, (b) is intended to prohibit or restrain any person in any manner from making disclosures that are protected under federal law or regulation or under other applicable law or regulation (including disclosures that are protected under the whistleblower provisions of any federal or state law), and/or (c) prevents any person from discussing or disclosing employee wages, benefits or terms and conditions of employment or information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Executive has reason to believe is unlawful. Additionally, the Executive further acknowledges that the Company has advised the Executive that the Executive will not be held civilly or criminally liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding; or (iii) is made to an attorney or is used in a court proceeding in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, provided that the trade secret is filed under seal and not disclosed except pursuant to court order. 7. Indemnification; D&O Insurance. The Company shall use commercially reasonable efforts to enter into an indemnification agreement with the Executive, which agreement shall be based on such terms that are substantially consistent with the indemnification agreements that shall be applicable to members of the Board and/or senior executives of the Company. The Company shall insure the Executive, for the duration of his employment, and at all applicable times thereafter during which the Executive has liability, in respect of his acts and omissions occurring during such employment, under such generally applicable directors and officers insurance coverage as the Company may elect to maintain from time to time to the same extent as such insurance insures current and former members of the Board and/or current and former senior executives of the Company, to the extent such insurance is available and in effect. Nothing herein prohibits the Company from suspending, amending or discontinuing its directors and officers’ insurance or changing insurance carriers from time to time for any or no reason without notice, as long as such actions are applicable to current and former members of the Board and current and former senior executives of the Company generally. 8. Section 280G Matters. Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (the “Covered Payments”) constitute parachute payments (the “Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit (defined below) to the Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to the Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”). “Net Benefit” shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes. The Covered Payments shall be reduced in a manner that maximizes the Executive’s economic position. In applying this Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
7 principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. The calculations and determinations under this Section shall be provided by an accounting firm selected by the Company (and reasonably acceptable to the Executive) prior to the applicable change in control transaction (the “Accounting Firm”) and the Company shall pay the cost of such Accounting Firm. The parties shall use commercially reasonable efforts to cause the Accounting Firm to provide such calculations prior to the consummation of the change in control transaction and its determinations shall be binding on the Executive and the Company absent manifest error. 9. Remedies. The Executive acknowledges and agrees that a breach of the obligations set forth in Section 5 of this Agreement will result in immediate and irreparable harm to the Company and its affiliates for which full damages cannot readily be calculated and for which damages are an inadequate remedy. Accordingly, the Executive agrees that the Company and its affiliates shall be entitled to injunctive relief to prevent any such actual or threatened breach or any continuing breach by the Executive (without posting a bond or other security), without limiting any other remedies that may be available to them. Nothing herein shall, or is intended to, in any way limit or restrict the damages or other relief that the Company Group may seek and recover in the event of a breach by the Executive of any provision of this Agreement. 10. Notices. Any notice, request, or other communication required or permitted to be given hereunder shall be made to the following addresses or to any other address designated by either of the parties hereto by notice similarly given: (a) if to the Company, to: Core Scientific, Inc. 838 Walker Road, Suite 21-2105 Dover, Delaware 19904 Attention: Legal Department Email: legal@corescientific.com (b) if to the Executive, to the address on file with the Company. All such notices, requests, or other communications shall be sufficient if made in writing either (i) by personal delivery to the party entitled thereto, (ii) by facsimile with confirmation of receipt, (iii) by certified mail, return receipt requested, or (iv) by express courier service, and shall be effective upon personal delivery, upon confirmation of receipt of facsimile transmission, upon the fifth (5th) calendar day after mailing by certified mail, or upon the third (3rd) calendar day after sending by express courier service. 11. Assignment. This Agreement is enforceable by the Company and any other member of the Company Group and may be assigned or transferred by the Company to, and shall inure to the benefit of, any parent or other affiliate of the Company (including any other member of the Company Group) or any person which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets, stock or business of the Company or of any discrete portion thereof. Any such assignment or transfer shall not constitute a termination of the Executive’s employment for purposes of this Agreement. The Executive may not assign any of his rights or obligations under this Agreement. 12. Amendment and Waiver. This Agreement may not be amended orally and may only be amended by a written agreement signed by both parties (subject to Sections 5 and 17 herein). A waiver by either party hereto of any of its rights or remedies under this Agreement on any occasion shall not be a bar to the exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time. Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
8 13. Governing Law. This Agreement shall be governed by the internal laws of the State of Delaware, without regard to its conflict of laws rules. 14. Headings. The Section headings used herein are for convenience of reference only and are not to be considered in construction of the provisions of this Agreement. 15. Disclosures to Future Employers. The Executive agrees to promptly disclose the Executive’s obligations to the Company under Section 5 of this Agreement to any future employer or other person with whom the Executive may become, or may seek to become, employed or engaged to perform services of any kind following the Executive’s employment with the Company. The Executive further agrees that the Company may in its discretion disclose this Agreement or any part thereof to any such actual or prospective employer or other person, and that the Executive shall not have or assert any claims of any kind against the Company for doing so. 16. Entire Agreement; Survival; Payments to Beneficiaries. This Agreement contains the entire agreement between the parties with respect to the subject matter contained herein and supersedes all prior or contemporaneous negotiations, understandings or agreements between the parties, whether written or oral, with respect to such subject matter, provided, however, that, subject to Section 6, nothing in this Section 16 or this Agreement shall limit, restrict or supersede any fiduciary, statutory, tort or other non-contractual obligations of the Executive to the Company or any of its affiliates (including without limitation under any applicable trade secrets laws), or any obligations of the Executive under any code of conduct or other applicable rule or policy of the Company or any of its affiliates, or any obligations (including without limitation with respect to non- competition, non-solicitation, intellectual property, confidentiality, forfeiture, repayment or recoupment) that the Executive has or may have pursuant to any compensation or benefit plan or policy of the Company or any of its affiliates or any award or agreement thereunder (including without limitation pursuant to any long-term or other equity and/or cash incentive plan), all of which shall continue in full force and effect in accordance with their respective terms. Sections 4 through 18 herein shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period or the Executive’s employment. If the Executive dies before receiving any amounts to which the Executive is entitled under this Agreement, such amounts shall be paid in accordance with the terms of this Agreement to the beneficiary designated in writing by the Executive, or if none is so designated, to the Executive’s estate. 17. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law (after any appropriate modification or limitation referenced in Section 5 of this Agreement), such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 18. Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original, and both of which together shall constitute one and the same instrument. Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
[Signature Page to Employment Agreement] THE PARTIES ACKNOWLEDGE BY SIGNING BELOW THAT THEY HAVE READ AND UNDERSTAND THE ABOVE AND INTEND TO BE BOUND THEREBY: JAMES P. NYGAARD, JR. CORE SCIENTIFIC, INC. By: ______________________________ By: _______________________________ Date: ____________________________ Position: ___________________________ Date: ______________________________ Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F 2/26/2025 CEO2/26/2025
EXHIBIT A SEPARATION AGREEMENT This SEPARATION AGREEMENT (this “Agreement”) dated as of [●] is made by and between Core Scientific, Inc. (the “Company”) and James Nygaard (the “Executive”). WHEREAS, the Executive and the Company desire to enter into an agreement regarding the Executive’s separation of employment with the Company and the release of claims. NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, the parties hereby agree as follows: 1. Effective Date of this Agreement. This Agreement will be effective, and the Executive hereby consents to the terms and conditions herein, on the date the Executive executes this Agreement without revocation (the “Effective Date”); provided that the Executive must return an executed copy of this Agreement to the Company by [●]. 2. Separation from Employment. The Executive agrees and acknowledges that the Executive’s employment with the Company will terminate at the close of business on [●] (the “Separation Date”). The Executive agrees that the Executive has no present or future right to employment with the Company or any of the other Released Parties (defined below). As of and following the Separation Date, (a) the Executive will no longer be employed by the Company, and (b) the Executive will no longer hold any other employment, director, manager, or officer positions with the Company, its direct and indirect parents, and/or its direct and indirect subsidiaries (the Company, along with its direct and indirect parents and subsidiaries, the “Company Group”). 3. Severance. Subject to the terms of this Agreement and provided the Executive signs and returns this Agreement to the Company within twenty-one (21) calendar days after the Executive’s receipt thereof, does not revoke this Agreement, and complies with this Agreement, the Executive shall be entitled to the severance benefits set forth in Section 4(d) or Section 4(e), as applicable, of the Executive’s employment agreement with the Company dated as of June [●], 2024 (the “Employment Agreement”) upon the terms contained in the Employment Agreement. The Executive acknowledges and agrees that all such amounts and benefits are in excess of anything to which the Executive otherwise would be entitled without executing (and not revoking) this Agreement. 4. Final Paycheck and Business Expenses. Regardless of whether the Executive signs this Agreement, the Company will pay the Executive his final paycheck for his employment services through the Separation Date. The Company also will reimburse the Executive for reasonable business expenses appropriately incurred by the Executive prior to the Separation Date in furtherance of his employment with the Company, subject to the Company’s applicable business expense reimbursement policy. The Executive shall submit all requests to the Company for expense reimbursements within twenty-one (21) days after the Separation Date. Any requests submitted thereafter shall not be eligible for reimbursement, except as required by applicable law. 5. Employee Benefits. Except as set forth in this Agreement or as otherwise required by applicable law, the Executive’s participation in and rights under any Company employee benefit plans and programs will be governed by the terms and conditions of those plans and programs, which plans, programs, Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
terms and conditions may be amended, modified, suspended or terminated by the Company at any time for any or no reason to the extent permitted by law. 6. No Other Actions or Claims. The Executive represents and warrants that: (a) there has not been filed by Executive or on Executive’s behalf any legal or other proceedings against any of the Released Parties (provided, however, that the Executive need not disclose to the Company, and the foregoing representation and warranty in this subpart (a) does not apply to, conduct or matters described in Section 10 below); (b) the Executive is the sole owner of the claims that are released in Section 13 below; (c) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity; and (d) the Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Agreement. The Executive further agrees that the Executive shall not at any time become a party to, or otherwise become a class- or collective- member or other similar claimant in, any class, collective, representative, multiple-plaintiff, or other consolidated or similar action in any court or arbitration against any of the Released Parties that involves or is based upon any claim waived and released by the Executive in Section 13 below, and will take all steps necessary to opt out of any such actions. 7. No Other Compensation or Benefits. Except as expressly provided in this Agreement and [●]1, the Executive acknowledges and agrees that he is not entitled to and will not receive any other compensation, payments, benefits, or recovery of any kind from the Company or the other Released Parties, including without limitation any bonus, severance, equity or other payments or any amounts under the Employment Agreement, other than any vested benefits to which the Executive is entitled under broad- based employee benefit plans of the Company Group in which the Executive participates. Further, any amounts payable under this Agreement shall not constitute compensation or otherwise be creditable with respect to any Company benefit plans or programs. In the event of any complaint, charge, proceeding or other claim (collectively, “Claims”) filed with any court, other tribunal, or governmental or regulatory entity that involves or is based upon any claim waived and released by the Executive in Section 13 below, the Executive hereby waives and agrees not to accept any money or other personal relief on account of any such Claims for any actual or alleged personal injury or damages to the Executive, including without limitation any costs, expenses and attorneys’ fees incurred by or on behalf of the Executive (provided, however, that this Agreement does not limit the Executive’s eligibility to receive an award under applicable law, if any, for providing truthful information to a governmental agency or regulatory entity). 8. Return of Company Property. On the Separation Date, or earlier if requested by the Company, the Executive agrees to return to the Company all Company Group documents (and all copies thereof) and all Company Group property and equipment that the Executive has in the Executive’s possession or control, including but not limited to any materials of any kind that contain or embody any proprietary or confidential information of the Company Group in whatever form (including information in electronic form and all reproductions thereof in whole or in part). The Executive further agrees that the Executive will not copy, delete, or alter in any way any Company Group information or material contained upon any Company-issued computer or Company equipment. In addition, if the Executive has used any personally-owned computer, server, e-mail system or cloud system (e.g., Box, Dropbox, GoogleDrive), memory stick, flash memory card, or portable electronic device (e.g., iPhone, iPad, Android) (collectively, “Personal Systems”) to receive, store, prepare or transmit any Company Group confidential or proprietary data, materials or information, then on the Separation Date, or earlier if requested by the Company, the Executive must provide the Company with a computer-useable forensic copy of all such information and then permanently delete and expunge all such Company Group confidential or proprietary information from such Personal Systems without retaining any copy or reproduction in any form. Notwithstanding the 1 Note to Draft: To be updated upon separation to include any agreements that provide for continuing benefits following termination of employment (equity awards, indemnification agreements, etc.). Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
foregoing, the Executive will be permitted to retain copies of plans, agreements and other records pertaining to the Executive’s personal compensation and reimbursement of expenses. 9. Other Agreements; Continuing Obligations. The Employment Agreement is hereby terminated, null and void, except that Sections 4, 5, 6, 7, 9, and 15 of the Employment Agreement shall continue in full force and effect in accordance with their respective terms, and the Executive hereby reaffirms his commitment to comply in full with all such obligations. The Executive acknowledges and reaffirms the Executive’s other continuing obligations owed to the Company Group, including without limitation, pursuant to: (a) the Executive’s executed Proprietary Information and Inventions Agreement with the Company, and (b) any other similar agreement entered into by the Executive and which benefits or may be enforced by the Company or any other member of the Company Group, each of which agreements and obligations remain in full force and effect in accordance with their terms following the Separation Date (collectively, the “Continuing Obligations”). 10. Protected Rights; Defend Trade Secrets Act. Nothing in this Agreement (including the General Release): (a) will be interpreted or construed to prevent the Executive from giving truthful information to any law enforcement officer, court, administrative proceeding or as part of an investigation by any Government Agency (defined below), (b) is intended to prohibit or restrain the Executive in any manner from making disclosures that are protected under federal law or regulation or under other applicable law or regulation (including disclosures that are protected under the whistleblower provisions of any federal or state law), and/or (c) prevents the Executive from discussing or disclosing employee wages, benefits or terms and conditions of employment or information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that the Executive has reason to believe is unlawful. Additionally, the Executive further acknowledges that the Company has advised the Executive that the Executive will not be held civilly or criminally liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding; or (iii) is made to an attorney or is used in a court proceeding in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, provided that the trade secret is filed under seal and not disclosed except pursuant to court order. 11. No Admissions. The promises and payments in consideration of this Agreement are not and shall not be construed to be an admission of any liability or obligation by either party to the other party, and neither party makes any such admission. 12. Cooperation. From and after the Separation Date, the Executive agrees to cooperate fully with the Company Group, or any member thereof, upon the Company’s reasonable request, in connection with its or their actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties, or in connection with other matters arising from events, acts, or failures to act that occurred during the period of the Executive’s employment by the Company Group in either case that relates at least in part to matters with which the Executive was involved or with respect to which he may have had knowledge while employed by the Company; provided, that such cooperation will not unreasonably burden the Executive or unreasonably interfere with the Executive’s subsequent employment or other business or personal affairs. Such cooperation includes making the Executive available to the Company Group upon reasonable notice, without subpoena, to provide complete, truthful and accurate information in witness interviews, depositions, and trial testimony. The Company will reimburse the Executive for reasonable and pre-approved out-of-pocket expenses incurred by the Executive in connection with any such cooperation, excluding forgone wages, salary, or other compensation, and will accommodate the Executive’s scheduling needs. Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
13. Release of Claims. (a) General Release. In exchange for the consideration provided to the Executive under this Agreement and the Employment Agreement to which the Executive would not otherwise be entitled, the Executive (for the Executive’s self and for any person who may make a claim by or through the Executive (including without limitation, any current or former spouse(s), dependents, heirs, assignees, executors, attorneys, or agents)) hereby generally and completely releases the Company and its respective current, former, and future predecessors, successors, direct and indirect parents, direct and indirect subsidiaries, affiliates, investors, and related entities (collectively, the “Entities”) and each of the Entities’ respective current, former, and future directors, officers, employees, shareholders, partners, members, agents, attorneys, insurers, assigns, and employee benefit plans of and from any and all claims, liabilities, and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to the Effective Date (collectively, the “Released Claims”). (b) Scope of Release. The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to the Executive’s employment with or services for the Company or any other member of the Company Group, or the termination of that employment or those services; (ii) all claims related to the Executive’s compensation or benefits from the Company or any other member of the Company Group, including salary, bonuses, incentive compensation, commissions, paid time off, severance benefits, notice rights, retention benefits, fringe benefits, stock, stock options, restricted stock, units, or any other ownership interests in the Company or any other member of the Company Group or their predecessors; (iii) all claims for breach of contract (oral or written), wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, inducement, misrepresentation, defamation, emotional distress, and discharge in violation of public policy; (v) all constitutional, federal, state, and local statutory and common law claims, in each case, as amended, including, but not limited to, claims for discrimination, harassment, retaliation, interference, attorneys’ fees; and (vi) all other allegations, claims or violations arising under Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended; the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Arizona Civil Rights Act; the Arizona Equal Pay Act; the Arizona Employment Protection Act; the Florida Civil Rights Act; Florida Whistleblower Protection Act; Florida Workers’ Compensation Retaliation provision; Florida Minimum Wage Act; Florida Fair Housing Act; the New Hampshire Law Against Discrimination; New Hampshire’s Whistleblowers’ Protection Act; New Hampshire’s Equal Pay Law; the Texas Commission on Human Rights Act; the Texas Labor Code (including the Texas Payday Act; the Texas Anti-Retaliation Act; and Chapter 21 of the Texas Labor Code); Oregon Family Leave Act; Oregon Military Family Leave Act; Chapter 659A of the Oregon Revised Statutes; any other state civil rights act; and all other constitutional, federal, state, local, and municipal law claims, whether statutory, regulatory, common law, or otherwise. (c) Excluded Claims. The Released Claims do not include any rights that are not waivable as a matter of law, including without limitation, any rights the Executive may have to seek unemployment or workers’ compensation benefits. Further, the Released Claims do not include (i) any rights or claims for indemnification which the Executive may have pursuant to any written indemnification agreement with the Company to which the Executive is party or under applicable law or the Company’s articles, bylaws or related insurance policies; (ii) any rights or claims for coverage available under any applicable director & officer insurance policy maintained by the Company; or (iii) any rights to compensation or benefits earned prior to the date of this Agreement. In addition, nothing in this Agreement (including the General Release) prevents the Executive from filing a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (collectively, the “Government Agencies”). This Agreement (including the General Release) does not limit the Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies. While this Agreement does not limit the Executive’s right to receive an award for information provided to the Securities and Exchange Commission or to receive a monetary award from a government-administered whistleblower award program, the Executive understands and agrees that, to the maximum extent permitted by law, the Executive is otherwise waiving any and all rights the Executive may have to individual relief based on any claims that the Executive has released and any rights the Executive has waived by signing this Agreement. (d) ADEA Protections. The Executive acknowledges and understands that the release of claims under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. Section 621-634, is subject to special waiver protections under 29 U.S.C. Section 626(f). In accordance with that section, the Executive specifically agrees that the Executive is knowingly and voluntarily releasing and waiving any rights or claims of discrimination under the ADEA. In particular, the Executive acknowledges and understands that: (i) the Executive is not waiving any claims for age discrimination under the ADEA that may arise after the date the Executive signs this Agreement, and the Executive is not waiving vested benefits, if any; and (ii) the Executive is waiving rights or claims for age discrimination under the ADEA arising up to the effective date of this Release Agreement in exchange for payment described in Section 3 above, which is in addition to anything of value to which the Executive is already entitled. 14. Consideration Period and Advice to Consult with Counsel. The Executive acknowledges that this Agreement (including the General Release) includes an offer to pay the Executive the severance benefits provided in the Employment Agreement in return for a complete and full general release of the Entities from any and all claims the Executive may have against the Entities, except for claims that may not be released by law. The Executive is hereby informed that the terms of this Agreement shall be open for acceptance and execution by the Executive for a period of twenty-one (21) calendar days from the date of receipt, during which time the Executive is advised and encouraged to consult with an attorney of the Executive’s choice (and at the Executive’s cost) and to consider whether to accept this Agreement. Changes to this Agreement, whether material or immaterial, will not restart the running of this twenty-one (21) calendar day acceptance period. To receive the consideration provided for in this Agreement, the Executive must return a signed and dated original copy of this Agreement to [●], within twenty-one (21) calendar days from the date of receipt. 15. Right to Revoke. The Executive is hereby informed of the Executive’s right to revoke (cancel) this Agreement as far as it extends to potential claims under the Age Discrimination in Employment Act (“ADEA”) by written notice to the Company within seven (7) calendar days following the Executive’s execution of this Agreement. Any such revocation must be made in writing and delivered by hand or by certified mail, return receipt requested, postmarked on or before the last day of the applicable revocation period to the representative identified in Section 14. If the Executive exercises the Executive’s right to revoke the Executive’s release of claims under the ADEA, the Company may, at its option, either nullify this Agreement in its entirety, or keep it in effect in all respects other than as to that portion of the release of claims that the Executive has revoked. The Executive agrees and understands that if the Company chooses to nullify this Agreement in its entirety, the Executive will have no obligations under this Agreement. 16. General. This Agreement, along with the Proprietary Information and Inventions Agreement and sections of the Employment Agreement described in Section 9 above (which obligations shall remain in full force and effect in accordance with their terms following the Separation Date), constitutes the complete, final and exclusive embodiment of the entire agreement between the Executive Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
and the Company with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes and terminates any other agreements, promises, warranties or representations by and between the Executive, the Company and all other members of the Company Group concerning its subject matter. This Agreement may not be modified or amended except in a writing signed by both the Executive and the Company’s Board of Directors. This Agreement is governed by the laws of the State of Delaware, without reference to conflicts of law principles, and will bind the heirs, personal representatives, successors and assigns of both the Executive and the Company, and inure to the benefit of both the Executive and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes. THE PARTIES ACKNOWLEDGE BY SIGNING BELOW THAT THEY HAVE READ AND UNDERSTAND THE ABOVE AND INTEND TO BE BOUND THEREBY: JAMES NYGAARD CORE SCIENTIFIC, INC. By: ______________________________ By: _______________________________ Date: ____________________________ Position: ___________________________ Date: ______________________________ Docusign Envelope ID: F05AEDD6-5811-4293-B0C3-2D0F1750BD5F
CORE SCIENTIFIC, INC.
2024 STOCK INCENTIVE PLAN
Restricted Stock Unit Award Notice
Restricted Stock Unit Award Notice
You have been awarded a restricted stock unit award with respect to shares of Common Stock of Core Scientific, Inc., a Delaware corporation (the “Company”), pursuant to the terms and conditions of the Core Scientific, Inc. 2024 Stock Incentive Plan (the “Plan”) and the Restricted Stock Unit Award Agreement (together with this Award Notice, the “Agreement”). Copies of the Plan and the Restricted Stock Unit Award Agreement are attached hereto. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Agreement.
Restricted Stock Units: | You have been awarded a restricted stock unit (“RSU”) award with respect to a total number of RSUs. | ||||
Grant Date: | , 2025 | ||||
| Vesting Commencement Date | , 2025 | ||||
Vesting Schedule: | Except as otherwise provided in the Plan, the Agreement or any other agreement between you and the Company or any of its Subsidiaries that is in effect as of the Grant Date, the Award shall vest in substantially equal installments on each of the first three anniversaries of the Vesting Commencement Date (each, a “Vesting Date”), if, and only if, you are, and have been, continuously (except for any absence for vacation, leave, etc. in accordance with the Company’s or its Subsidiaries’ policies): (i) employed by the Company or any of its Subsidiaries; (ii) serving as a Non-Employee Director; or (iii) providing services to the Company or any of its Subsidiaries as an advisor or consultant from the date of this Agreement through and including the applicable Vesting Date. | ||||
CORE SCIENTIFIC, INC. | ||
By: ______________________________ | ||
Name: | ||
Title: | ||
Acknowledgment, Acceptance and Agreement:
By signing below and returning this Award Notice to Core Scientific, Inc., I hereby accept the Award granted to me and acknowledge and agree to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.
__________________________________ | Date: , 2025 | ||||
Executive | |||||
CORE SCIENTIFIC, INC.
2024 EQUITY AND INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
RESTRICTED STOCK UNIT AWARD AGREEMENT
Core Scientific, Inc., a Delaware corporation (the “Company”), hereby grants to the individual (the “Holder”) named in the award notice attached hereto (the “Award Notice”) as of the date set forth in the Award Notice (the “Grant Date”), an award with respect to the number of RSUs set forth in the Award Notice (the “Award”) pursuant to the provisions of the Core Scientific, Inc. 2024 Stock Incentive Plan (the “Plan”), the Award Notice and this agreement (the “Agreement”). Each RSU represents the right to receive one share the Company’s Common Stock, par value $0.00001 per share (“Stock”), subject to the restrictions, terms and conditions set forth in the Plan, the Award Notice and the Agreement. Capitalized terms not defined herein shall have the meanings specified in the Plan or the Award Notice, as the case may be.
1.Award Subject to Acceptance of Agreement. The Award shall be null and void unless the Holder accepts this Agreement by executing the Award Notice in the space provided therefor and returning an original execution copy of the Award Notice to the Company or electronically accepting this Agreement within the Holder’s stock plan account with the Company’s stock plan administrator according to the procedures then in effect.
2.Rights as a Stockholder. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares. The Award includes a right to dividend equivalents equal to the value of any dividends paid on the Stock for which the dividend record date occurs between the Grant Date and the date the Award is settled or forfeited. Subject to vesting, each dividend equivalent entitles the Holder to receive the equivalent cash value of any such dividends paid on the number of RSUs underlying the Award that are outstanding during such period. Dividend equivalents will be accrued (without interest) and will be subject to the same conditions as the RSUs to which they are attributable, including, without limitation, the vesting conditions, the provisions governing the time and form of settlement of the Award.
3.Restriction Period and Vesting.
3.1.Service-Based Vesting Condition. Except as otherwise provided in this Section 3, the Award shall vest in accordance with the vesting schedule set forth in the Award Notice. The period of time prior to the full vesting of the Award shall be referred to herein as the “Restriction Period.”
3.2.Termination of Employment.
(a)Death or Disability. If the Holder’s employment or service with the Company and/or a Subsidiary terminates prior to the conclusion of the Restriction Period by reason of the Holder’s (i) death or (ii) termination by the Company or a Subsidiary due to his or her Disability (as defined below), then in any such case, any unvested portion of the Award shall be fully vested upon such termination of employment or service.
(b)Termination of Employment without Cause.
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(i)Except as otherwise provided in Section 3.3(a), if the Holder’s employment or service with the Company and/or a Subsidiary terminates prior to the conclusion of the Restriction Period by reason of the Holder’s termination by the Company or a Subsidiary without Cause (as defined below), then any unvested portion of the Award, and any unvested portion of any future Restricted Stock Unit or Equity award granted prior to Holder’s termination, shall become fully vested as of Holder’s termination.
(c)Retirement.
(i)If the Holder’s employment or service with the Company and/or a Subsidiary terminates after the first anniversary of the Grant Date and prior to the conclusion of the Restriction Period by reason of the Holder’s Retirement (as defined below), then a prorated portion of the Award, consisting of a pro-rata portion of the number of RSUs scheduled to vest on the next scheduled Vesting Date, shall be immediately vested upon such termination of employment or service.
(ii)For purposes of the preceding clause (i) such pro-rata portion shall be based on the ratio of (A) the number of full months from the beginning of the calendar year in which such termination of employment or service occurs to the date of such termination of employment or service, to (B) 12, it being understood that such pro-rata portion shall relate to the number of RSUs scheduled to vest on the next scheduled Vesting Date.
(d)Forfeiture. If the Holder’s employment or service with the Company and/or a Subsidiary terminates prior to the conclusion of the Restriction Period and prior to a Change in Control for any reason other than as set forth in Sections 3.2(a)–(c), then any unvested portion of the Award shall be immediately and automatically forfeited by the Holder and cancelled by the Company.
3.3.Change in Control.
(a)Vesting Following Effective Assumption Event. In the event of a Change in Control prior to the conclusion of the Restriction Period pursuant to which (i) the Award is effectively assumed or substituted by the corporation resulting from or succeeding to the business of the Company in accordance with the Plan (as determined by the Board in its discretion) (an “Effective Assumption Event”); and (ii) the Holder’s employment or service is terminated (A) by reason of an event set forth in Section 3.2(b) or (B) due to Holder’s voluntary resignation for Good Reason (as defined below) (each, a “Qualifying Termination”) within 24 months following such Change in Control, then any unvested portion of the Award shall become fully vested as of the Holder’s Qualifying Termination.
(b)Other Vesting. In the event of a Change in Control prior to the conclusion of the Restriction Period pursuant to which no Effective Assumption Event shall occur, then any unvested portion of the Award shall vest in its entirety as of the date of the Change in Control.
3.4.Definitions. For purposes of this Award,
(a)“Cause” shall have the meaning assigned to such term in any written employment or similar agreement between the Company or any of its Subsidiaries and the Holder in effect on the Grant Date or if Holder is not party to an employment or similar agreement in effect on the Grant Date which defines “Cause,” then “Cause” shall mean: (i) the Holder’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude
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under the laws of the United States or any state thereof; (ii) the Holder’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) the Holder’s intentional, material violation of any contract or agreement between the Holder and the Company or of any statutory duty owed to the Company; (iv) the Holder’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) the Holder’s gross, or material deliberate, misconduct. The determination that a termination of the Holder’s employment or service is either for Cause or without Cause will be made by the Company (or, in the event the Holder is subject to Section 16 of the Exchange Act, the Committee), in its sole discretion. Any determination by the Company (or, if applicable, the Committee) that the Holder’s employment or service was terminated with or without Cause for the purposes of this Award shall have no effect upon any determination of the rights or obligations of the Company or the Holder for any other purpose.
(b)“Disability” shall mean the inability of the Holder to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months as provided in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code, as determined by the Company (or, in the event the Holder is subject to Section 16 of the Exchange Act, the Committee) on the basis of such medical evidence as the Company (or, in the event the Holder is subject to Section 16 of the Exchange Act, the Committee) deems warranted under the circumstances.
(c)“Good Reason” shall have the meaning assigned to such term in any written employment or similar agreement between the Company or any of its Subsidiaries and the Holder in effect on the Grant Date or if Holder is not party to an employment or similar agreement in effect on the Grant Date which defines “Good Reason,” then “Good Reason” shall mean Holder’s voluntary termination of employment or service following: (i) a material reduction in the Holder’s base salary; (ii) a material reduction in the Holder’s authority, duties or responsibilities, provided, however, that a change in job position (including a change in title) shall not be deemed a “material reduction” unless the Holder’s new authority, duties or responsibilities are substantially reduced from the prior authority, duties or responsibilities; or (iii) a relocation of the Holder’s principal place of employment that results in an increase in the Holder’s one-way driving distance by more than 30 miles from the Holder’s then current principal residence. In order to resign for Good Reason, the Holder must provide written notice of the event giving rise to Good Reason to the Board) within 30 days after the condition arises, allow the Company 30 days to cure such condition, and if the Company fails to cure the condition within such period, the Holder’s resignation from all positions the Holder then held with the Company must be effective not later than 30 days after the conclusion of the Company’s cure period.
(d)“Retirement” shall mean Holder’s voluntary termination of employment or service at a time when (i) the Holder has attained age 55 and the Holder’s period of service to the Company or its Subsidiaries equals or exceeds 10 years, or (ii) the Holder has attained age 60 and the Holder’s period of service to the Company or its Subsidiaries equals or exceeds five years.
4.Issuance or Delivery of Shares. Subject to Section 6.13 and except as otherwise provided for herein or in the Award Notice, within 30 days after the vesting of the Award or any portion thereof, the Company shall issue or deliver, subject to the conditions of this Agreement, the shares of Stock (i.e., that relate to the vested Award or portion thereof) to the Holder. Such issuance or delivery shall be evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such issuance or delivery, except as otherwise provided in Section 6. Prior to the issuance to the Holder of the shares of
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Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Stock, and will have the status of a general unsecured creditor of the Company.
5.Transfer Restrictions and Investment Representation.
5.1.Non-Transferability of Award. The Award may not be transferred by the Holder other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.
5.2.Investment Representation. The Holder hereby covenants that (a) any sale of any share of Stock acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the shares and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.
6.Additional Terms and Conditions of Award.
6.1.Withholding Taxes. As a condition precedent to the issuance or delivery of the Stock upon the vesting of the Award, at the Company’s discretion either (a) the Holder shall pay to the Company such amount as the Company (or an affiliate) determines is required, under all applicable federal, state, local, foreign or other laws or regulations, to be withheld and paid over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award or (b) the Company or an affiliate may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company or an affiliate to the Holder, which may include the withholding of whole shares of Stock which would otherwise be delivered to the Holder having an aggregate Fair Market Value, determined as of the date on which such withholding obligation arises, equal to the Required Tax Payments, in either case in accordance with such terms, conditions and procedures that may be prescribed by the Company. Shares of Stock withheld may not have a Fair Market Value in excess of the amount determined by applying the maximum individual statutory tax rate in the Holder’s jurisdiction; provided that the Company shall be permitted to limit the number of shares so withheld to a lesser number if necessary, as determined by the Company, to avoid adverse accounting consequences or for administrative convenience; provided, however, that if a fraction of a share of Stock would be required to satisfy the maximum individual statutory rate in the Holder’s jurisdiction, then the number of shares of Stock to be withheld may be rounded up to the next nearest whole share of Stock. No certificate representing a share of Stock shall be delivered until the Required Tax Payments have been satisfied in full. Any determination by the Company with respect to the withholding of shares of Stock to satisfy the Required Tax Payments shall be made by the Committee if the Holder is subject to Section 16 of the Exchange Act.
6.2.Compliance with Applicable Law. The Award is subject to the condition that if the listing, registration or qualification of the shares of Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Stock subject to the Award shall not be delivered,
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in whole or in part, unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval or other action.
6.3.Award Confers No Rights to Continued Employment. In no event shall the granting of the Award or its acceptance by the Holder, or any provision of the Agreement or the Plan, give or be deemed to give the Holder any right to continued employment by or service with the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment or service of any person at any time.
6.4.Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Award. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Plan or this Agreement shall be final, binding and conclusive.
6.5.Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Holder, acquire any rights hereunder in accordance with this Agreement or the Plan.
6.6.Notices. All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to [____]1, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.7.Governing Law. This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.8.Agreement Subject to the Plan. This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. In the event that the provisions of this Agreement and the Plan conflict, the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.
6.9.Entire Agreement. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
1 NTD: Company to provide contact information.
5
6.10.Partial Invalidity. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
6.11.Amendment and Waiver. The Company may amend the provisions of this Agreement at any time; provided that an amendment that would adversely affect the Holder’s rights under this Agreement shall be subject to the written consent of the Holder. No course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
6.12.Counterparts. The Award Notice may be executed in two counterparts, each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
6.13.Compliance With Section 409A of the Code. This Award is intended to be exempt from or comply with Section 409A of the Code, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A of the Code. To the extent this Agreement provides for the Award to become vested and be settled upon the Holder’s termination of employment or service, the applicable shares of Stock shall be transferred to the Holder or his or her beneficiary upon the Holder’s “separation from service,” within the meaning of Section 409A of the Code; provided that if the Holder is a “specified employee,” within the meaning of Section 409A of the Code, then to the extent the Award constitutes nonqualified deferred compensation, within the meaning of Section 409A of the Code, such shares of Stock shall be transferred to the Holder or his or her beneficiary upon the earlier to occur of (i) the six-month anniversary of such separation from service and (ii) the date of the Holder’s death.
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Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam Sullivan, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Core Scientific, Inc.; | ||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: | ||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |||||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |||||||
Date: May 7, 2025
| /s/ Adam Sullivan | ||
Adam Sullivan | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
Exhibit 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jim Nygaard, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Core Scientific, Inc.; | ||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: | ||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||||
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |||||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |||||||
Date: May 7, 2025
| /s/ Jim Nygaard | ||
| Jim Nygaard | ||
Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Core Scientific Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Adam Sullivan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 7, 2025 | By: | /s/ Adam Sullivan | ||||||
| Adam Sullivan | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Core Scientific Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jim Nygaard, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 7, 2025 | By: | /s/ Jim Nygaard | ||||||
| Jim Nygaard | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||