Core Scientific represents one of the stronger Miners as they are already earnings revenue on 243 megawatts with another 200 megawatts expected to be earning revenue in the coming months. This helps transition Core Scientific away from being pure speculation as the company is beginning to execute. With that said, Core Scientific must continue to execute to reach its full potential, and this is particularly important because of the company’s debt structure.
As a reminder, Core Scientific is pivoting from being a Bitcoin miner to offering multisite infrastructure buildouts as a colocation data center provider. Therefore, at the moment, Core Scientific offers a challenging fundamental profile, with operating margins and cash flows still in the red. However, management stated the 243MW currently being billed will result in $350 million annualized colocation GAAP revenue, and raised their expected cash gross profit margin up 500 bps to 82.5% at the midpoint. The takeaway is that Core Scientific can offer enough profitability and visibility to support more growth.
Notably, Core Scientific has expanded its gross power pipeline to 4.5 GW with 3GW of that pipeline leasable by customers, suggesting annual revenue opportunities of more than $5 billion under current deal economics at full scale. Although this is quite promising, it circles back to execution and debt structure, which is discussed more below.
Lastly, Core Scientific still remains closely tied to CoreWeave (whose planned $9 billion acquisition of the miner fell through). The first attempt to diversify beyond CoreWeave with a hyperscaler fell through as a deal under exclusivity was allowed to expire. It’s a yellow flag that a hyperscaler deal fell through (raises important questions), although management seems optimistic as they are in discussions with three hyperscaler customers.
Quick Recap on Miners’ Value Proposition
Time-to-power is becoming a central bottleneck for AI data centers, as grid constraints rise, connection queues lengthen, putting the emphasis on quick, suitable on-site and behind-the-meter solutions such as Bloom’s fuel cells and GE Vernova’s gas turbines.
Bitcoin miners offer a third solution for the time-to-power thesis, offering up to several GW of capacity in quick fashion, bypassing interconnection queues for greenfield builds, and offering cheaper electricity costs from long-term power contracts. For example, miners such as IREN and TeraWulf have touted electricity costs around $0.046-$0.047/kWh in the past, compared to PJM’s ~$0.08/kWh in 2025 and commercial sector rates averaging $0.08-$0.22/kWh. For a 400MW data center, electricity expenses at miner rates would be roughly $162 million, versus $280 million to $771 million under commercial sector average rates, or annual savings of ~42% to 79%.
For neoclouds such as CoreWeave, these lease-based deals and cheaper electricity costs offer a compelling structure to quickly bring significant capacity online to scale revenue, without bearing the construction capex (around $12-14 million per MW) or dealing with power procurement.
Overall, the value proposition is that miners are cheaper and faster than new, greenfield data center sites that are not energized, yet the downside is that they are capital constrained and may be unable to build-out capacity beyond what is currently in their pipelines.
According to Core Scientific, they can offer five sites with the first of them ready-for-service (RFS) with a timeline of 18 months or less. Part of Core Scientific’s current strategy is to stop retrofitting the existing infrastructure and to pursue greenfield instead. Thus, the 18 months reflects a (very quick) newer build rather than the unpredictable nature of upgrading older sites. Here is what was stated on the call: “I think the thing that was much more difficult than we certainly gave a credit for was the — was actually executing on brownfield conversions, which is why everything you see that we're doing forward is actually a greenfield site with a very highly standard basis design that allows us to get kind of leverage over our supply chain and be super predictable in terms of our delivery dates.”
Although this pushed back the timeline on when a Miner like Core Scientific becomes a more viable stock, it also could increase the predictability of deals getting signed and executed as we move further into the 18-month lead time (i.e., 2027).
Gross Power Pipeline Expanded to 4.5GW, Lots of Execution to Get There
When we first covered Core Scientific more than a year ago for Advanced members here, Core Scientific: Hypergrowth with 21X AI Segment Growth Potential, the miner’s contract power pipeline spanned 1.3GW, yet today, it is more than 3X higher at 4.5GW. Notably, this excludes the 590MW already contracted by CoreWeave, meaning Core Scientific’s gross power pipeline technically exceeds 5GW, more than double TeraWulf’s 2.3GW and in a similar boat as IREN and Applied Digital around 4.5GW each in North America.
This 4.5GW power pipeline translates to 3GW of leasable capacity, with 1.5GW of that 3GW figure currently grid-connected. Two sites – Muskogee, Oklahoma and Pecos, Texas – account for the majority of Core Scientific’s pipeline, both with potential to scale to 1.5GW gross power each, or 1GW leasable.
However, Core Scientific’s current focus remains on delivering its capacity for CoreWeave, ramping from the 243MW billable as of Q1 to 450MW by the end of Q2, with the target of reaching full capacity in early 2027:
"Across our remaining contracted sites, we will continue delivering billable megawatts over the coming months while scaling execution on the CoreWeave contract, positioning us to deliver more than 450 billable by the end of the summer, while remaining on track to deliver the full 590 megawatts by the early 2027.”
Executing on CoreWeave’s ramp will be the primary focal point for 2026 and early 2027, as management hinted that delivery of non-CoreWeave capacity within the 4.5GW pipeline will not occur until early 2027: “strategically positioning the business to sign attractive new customer contracts with capacity outside of CoreWeave available for delivery starting in early 2027.”
What is Core Scientific’s Pipeline Worth?
We can roughly translate what this power pipeline could suggest for Core Scientific’s revenue potential at 3GW of total leasable power. At roughly $1.4 million per MW per year, or the current run rate of its CoreWeave deal, its entire pipeline (should it materialize and at similar terms) could be worth $4.2 billion in annual revenue potential. Should it advance towards $1.7 million per MW, or in line with Applied Digital’s recent deal, that annual revenue potential moves to $5.1 billion.
Overall, Core Scientific’s power strategy is all about ‘proactive positioning’, as management put it – securing land, labor and equipment to keep delivery timelines and ready-for-service dates on track for within 18 months, securing gas and behind-the-meter power to enable expansion, and showing prospective customers on-the-ground progress to entice deal-making discussions.
As you can see, to get to the full pipeline, it comes down to strong execution.
Shifting to Greenfield Development
There was one interesting topic of discussion late in Q1’s call about lessons learned from developing multiple sites for CoreWeave, and how that translates into a competitive advantage. On this, management revealed that the advantage lies within their development approach – they are not retrofitting sites, but rather developing them from scratch:
“I think the thing that was much more difficult than we certainly gave a credit for was the — was actually executing on brownfield conversions, which is why everything you see that we're doing forward is actually a greenfield site with a very highly standard basis design that allows us to get kind of leverage over our supply chain and be super predictable in terms of our delivery dates.
Brownfield sites are highly unpredictable. They require a lot of customization. It's a lot of effort to try to retrofit an existing building. While sometimes that could be faster, it comes with a lot more complexity.”
This is a key distinction we raised in our Hyperscaler Power analysis, Why Power is Critical for Data Centers and their Hyperscaler Customers:
Brownfield sites (retrofitting) are the path other Bitcoin miners are taking as it is cheaper and faster than greenfield, allowing them to convert old Bitcoin mining halls into AI data center capacity at a relatively quick pace. However, greenfield builds – where the developer owns the land, power, and building – offer a higher degree of customization, though at a much higher cost and often with the longest timelines to completion due to permitting, site selection, and grid connection.
It is that last point where Core Scientific gets its greenfield advantage – it does not have to deal with lengthy site selection or grid connection requestions, with a repeatable development playbook that can pencil in RFS dates within the next 12 to 18 months. It also represents (somewhat of) a faster path-to-market compared to typical greenfield hyperscale builds, which can take >16 months to reach first operations since starting construction. This is evident in the Muskogee campus with the Polaris deal adding 440MW of contracted energy to its facility, bypassing the grid interconnection queue and opening the door for quick expansion (pending demand and capex).
However, the main challenge is financing these greenfield builds faster than its miner peers, as these new sites are crucial in diversifying customer exposure outside of CoreWeave. For example, TeraWulf is targeting 2H 2027 delivery of up to 480MW at a single campus in Kentucky, while IREN is aiming to add more than 700MW in 2027.
$3.3 Billion Financing Helping Accelerate Site Development
We can roughly infer what Core Scientific’s pipeline would cost to build out, based on management’s estimates for development costs of million per MW. Core Scientific is estimating build costs to be roughly $11 million per leasable MW, meaning that its leasable pipeline of 3GW would cost in the ballpark of $33 billion.
On this topic, Core Scientific recently closed a $3.3 billion secured senior note raise due in 2031, netting $2.9 billion in gross proceeds, to be allocated across its five sites currently under development.
Of the proceeds, $2-2.2 billion is expected to help support development of roughly 1 GW in leasable capacity, or two-thirds of its current grid-connected 1.5GW of leasable capacity. It’s important to note that the $2-2.2 billion figure merely represents a 20% cash outlay necessary to land project financing, with this completing the remaining 80%, or ~$8.8 billion.
All told, the 3GW pipeline would likely require $6-6.6 billion in cash and potentially more than $25 billion in related project financing to be fully developed under a similar structure. This is more than 6X Core Scientific’s current cash balance, meaning debt or project financing will be leaned on quite heavily. The problem with that is high interest – the $3.3 notes carry a 7.75% rate (essentially a junk bond), meaning Core Scientific will add $256 million in interest payments annually, placing further strain on its balance sheet. While it does help avoid diluting shareholders, it opens the door to execution risk, both by Core Scientific and its key customer CoreWeave.
Importantly, management emphasized that they are not waiting for a deal to be signed before advancing site development, with current capital letting Core Scientific build and target 12 to 14 month ready-for-service timelines. Considering that debt is funding the non-CoreWeave-associated buildouts and that Core Scientific is not waiting for deals to be signed to continue building, analysts questioned what guardrails Core Scientific had on capex:
“Is there any guardrail on how much CapEx you would start putting forward before getting a lease?
Adam Sullivan, CEOAdam Sullivan, CEO
“I mean the way we're thinking about it right now is we want to take the first data hall to full RFS. And as part of that, that means we're securing the labor, securing the trades, we're securing long lead equipment. And we're putting ourselves in a position where if a customer signs really within any time period leading up to the RFS, the first data hall, we can just continue to extend all of that labor that we have secured on site. So that's kind of our guardrail right now in terms of where we sit. But we feel very confident in the strategy and the ability to show the progress that we're making across each of these sites to customers is really what's forcing the engagement here because everyone is incredibly interested in capacity that's getting delivered in '27 right now.”
The main readthrough here is that Core Scientific does not really have a financial guardrail in place, and instead is banking on a deal being signed, based on high interest in the market and the fact that they are making construction progress. This means that Core Scientific will likely be on the hook for a majority of the construction costs of the new facilities, a shift in strategy from its CoreWeave deal where the neocloud is fronting some of the capex bill for its capacity. Management also noted that they are looking to deploy behind-the-meter power solutions over the same 12 to 14 month timeframe, which, if not included in the above capex portrait, could add $500 to $600 million per GW to project costs.
The longer that a deal takes to come to fruition, the more capex, and more debt, that Core Scientific will have to incur.
Touching on Behind-the-Meter Power
It’s necessary to briefly touch upon Core Scientific’s willingness to turn to behind-the-meter power solutions as a key method of increasing its power pipeline. Based on commentary for the planned Pecos and Muskogee expansions, Core Scientific expects behind-the-meter solutions to account for as much as ~1.86GW across both sites (to reach 1.5GW each), if additional grid power under load study does not pan out.
One of the main benefits of the miners that we had originally highlighted was that miners already have power secured, yet the main risk here is that Core Scientific’s goal of having two GW-scale sites do not have power secured, and instead may rely on more expensive sources of power.
Core Scientific noted that behind-the-meter offers a faster time to power than waiting for grid interconnection, which is reasonable considering the scale of these two sites; however, as noted above, behind-the-meter solutions are not necessarily cheap, and could run as much as $500 million per GW. This could add more than $1 billion to development costs across the two sites, an expensive endeavor assuming power would have to be procured prior to a deal. The other risk is that there is no guarantee that Core Scientific would be able to secure the power necessary for both sites to expand, either via the grid or behind-the-meter.
Core Scientific’s Crux – No Second Deal (Yet)
The main drawback, to say, is that Core Scientific has yet to diversify beyond CoreWeave, partially because CoreWeave had attempted to acquire Core Scientific, likely limiting its deal-making ability. Additonally, Core Scientific had a hyperscaler in exclusive discussion across its Pecos and Muskogee campuses, yet the customer's exclusivity expired without a deal being signed.
Despite that exclusivity agreement expiring, management explained that “three hyperscalers immediately engaged on those same sites, and we are now in active discussions.” CEO Adam Sullivan added that it was “hard to determine the exact reasons why” the original hyperscaler did not follow through with a deal, though Core Scientific believed it was “the best time for us to bring these back to market because hyperscalers were knocking at the door and asking questions about the sites. And we knew we could have an opportunity to bring another hyperscaler into the fray.”
Given that Core Scientific essentially has taken a step back in the deal-making process, analysts questioned about the three hyperscaler engagements, and if this would be starting the process again from scratch or if there were previous discussions that could accelerate a potential deal. Management confirmed the latter, explaining that it was simply “bringing back both Pecos and Muskogee back to the table. And that's really why we are able to immediately reengage with those customers.” Core Scientifc added that it was also in conversations with AI labs, neoclouds and chipmakers.
Though there was no indication around when a potential deal could be signed, management believes they are closer to a deal than in Q4 and uniquely positioned to close potential deals. This stems from their focus on having ready-for-service dates within the next 18 months with active construction progress, with five sites expected to have first data center halls ready in 2027:
How does the negotiation get altered with some of these potential customers when you've secured the supply chain and you're kind of moving forward? Does that accelerate discussions? Does that keep them more engaged?
Adam Sullivan, CEOAdam Sullivan, CEO
Yes. I mean it definitely keeps them more engaged. I mean they rarely see sites that come across their desk where there's an RFS time line really within 18 months, but even more so less than that. And so for us, being able to show photos and videos of sites with active construction going on and the list of equipment that are on order that dramatically changes the dynamic of the discussions because this isn't just a photo of a piece of land. This is an active construction site actively progressing towards building a data center.
Although management did not specifically discuss why the hyperscaler fell through, our readthrough is the change in tone from brownfield to greenfield may be where the delay came in. If you go back about 6 months ago, Miners were attempting to retrofit. According to this earnings call, that is a dead-end of sorts and greenfield is the way forward, which would naturally cause a delay in a deal.
Financials
Revenue Inflects in Q1 as Colocation Revenue Ramping
Core Scientific’s revenue inflected in Q1 as Colocation revenue showed a strong ramp with billable capacity for CoreWeave reaching 243MW, up from 185MW in Q4. Q1 revenue was $115.2 million, up 44.9% YoY and 44.5% QoQ, accelerating from (16%) YoY and (1.7%) QoQ in Q4.
For a segment breakdown:
Colocation revenue was $77.5 million, up 804.5% YoY and 147.4% QoQ, driven by incremental capacity delivered to CoreWeave during the quarter. This marked a sharp acceleration from 267.8% YoY and 109.6% QoQ in Q4.
Within Colocation, lease revenue was $59.2 million, up 892.4% YoY and 136.7% QoQ. Power fees passed through to CoreWeave were $21 million, while maintenance cost ($2.7 million).
Management added that the 243MW of billable capacity represents roughly $350 million in annualized revenue, with 200MW of incremental billable capacity expected to come online by the end of the summer (Q2). This additional 200MW would represent roughly $288 million in annualized revenue, or $72 million quarterly; however, assuming half lands in Q2 due to the intra-quarter ramp timing, Colocation revenue would roughly estimate to $113 million next quarter, up 45.8% QoQ and 966% YoY.
Digital Asset (Bitcoin) Mining revenue totaled $37.7 million across self-mining ($30.1 million) and hosted mining ($7.6 million), declining (46.9%) YoY and (22.1%) QoQ. Core Scientific is expecting a “meaningful step down” in miners in 2H as it transitions to Colocation.
Currently, Q2 revenue is projected to be $134.5 million, accelerating to 71% YoY though QoQ growth would moderate to 16.8%. Q3 is projected to see a further acceleration to 112.8% YoY and 28.3% QoQ to $172.5 million in revenue driven by the capacity ramp.
For the full year, revenue is currently projected to be $622 million, up 95% YoY, with FY27 estimated to reach $1.04 billion, up 66.5% YoY. Considering Core Scientific is aiming to deliver five sites in 2027 and satisfy the full 590MW for CoreWeave in the early part of the year (representing $850 million in annualized revenue), there is potential for upside to the current revenue estimate if it can contract out some of these sites to new customers.
Operating Margin Impacted by Impairment Charge, Colocation Margin Dynamics
Q1 saw gross margin improve double-digits YoY as Colocation takes a larger mix and as Bitcoin operations are wound down. However, impairment charges related to the Bitcoin operations had an outsized impact on operating margin.
GAAP gross margin was 26.1%, up 15.8 points YoY and roughly flat QoQ.
GAAP operating margin was (269.4%) due to recording a $266.5 million impairment charge in the quarter, widening from (59.1%) a year ago and (147.3%) in Q4. Excluding the impairment charge, operating margin would’ve been (38.1%).
GAAP net margin was (301.3%), which was not comparable to 724.6% a year ago or 270.8% in Q4 as both quarters benefitted significantly from changes in fair value of warrants.
It’s also important to touch a bit upon Colocation margins, as power fees passed through to customers are recorded as revenue, yet because they are fully passed through, carry a 0% margin.
Thus, Colocation reported an 57% gross margin overall in the quarter, up 52 points YoY and 11 points QoQ. However, when stripping out passed-through power costs, Colocation gross margin (lease revenue minus maintenance and other expenses) was 78%, up 21 points QoQ. Management added that they have “increased our target cash gross profit range for the CoreWeave contract to 80% to 85%, up from our original target of 75% to 80%” as they now have “much greater visibility into the associated cost structure given we are now billing for a meaningful portion of the contracted megawatts.”
EPS
Driven by the impairment charge, Core Scientific reported a large GAAP loss this quarter, though GAAP profitability is expected as early as Q3.
GAAP EPS was ($1.06) in Q1, down from $1.25 a year ago and $0.42 in Q4. Adjusted EPS was ($0.11), improving from ($0.13) a year ago and ($0.18) in Q4.
Looking ahead to Q2, GAAP EPS is projected to be ($0.02), likely accounting for no impairment charges, while adjusted EPS is projected to be ($0.06). Q3 is expected to see GAAP EPS turn thinly positive at $0.01, while adjusted EPS would remain negative at ($0.06); however, this profitability likely assumes no impairment charges, which are a real possibility given the expectation of a significant wind down in Bitcoin operations in 2H.
Adjusted EBITDA in Q1 was $4.4 million for a 3.8% margin, up from (7.6%) a year ago and (53.5%) in Q4.
Balance Sheet and Cash Flows
One of Core Scientific’s advantages in the miner landscape is that CoreWeave is fronting a majority of the capex at up to $750 million ($1.5M/MW), whereas other miners are turning to debt and paying the entire construction/retrofitting costs themselves. However, Core Scientific’s current strategy of progressing greenfield builds pre-contract may require a higher degree of self-funding moving forward.
Q1 operating cash flow was $249.9 million for a 216.8% margin, driven by the impairment charge and sale of ~$208 million in Bitcoin. This was up from a (56.6%) margin a year ago and 197.3% in Q4.
Q1 free cash flow was ($136.7 million) for a (118.6%) margin, improving from (162.2%) a year ago and (152.7%) in Q4. Capex was elevated at $389.3 million, or ~3.4X of revenue.
Deferred revenue was $654.2 million, up from $555.9 million in Q4.
Cash was $1.0 billion, while debt was $2.1 billion; this does not include the $3.3 billion senior secured notes raised in Q1. Debt and project financing will need to be tracked closely given the current health of Core Scientific’s balance sheet with a ($1.3 billion) deficit.
Conclusion
Fundamentally, Core Scientific’s revenue is beginning to inflect as it delivers more capacity for CoreWeave, aiming to deliver an additional 200MW by the end of Q2 to take its total billable capacity to nearly 450MW, more than 75% of the way to its full 590MW obligation. Margins remain negative, though GAAP EPS is expected to potentially shift positive as early as Q3 as Colocation revenue ramps into year-end.
Core Scientific is making solid progress in expanding its power pipeline, with up to 4.5GW of gross power potential with behind-the-meter and load expansions under study, offering up to 3GW of leasable capacity if fully developed. Pecos and Muskogee are expected to be the company’s primary campuses, both with potential to expand to 1GW of leasable capacity each, and likely the main cornerstones in diversifying exposure outside of CoreWeave to hyperscaler customers.
While the company is working to progress rapidly with greenfield development of its non-CoreWeave-tied sites, aiming to have five sites ready for service in 2027, capex and debt needs must be watched closely as Core Scientific is funding this development itself. The weak fundamental profile of Core Scientific’s financials makes this stock an Advanced-only momentum play, and one we would only participate in for momentum purposes if we felt it was breaking out. Join Knox this week in his weekly webinar for more information.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund do not own shares in CORZ at the time of writing and may own stocks pictured in the charts.
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