Core Scientific Abandons Miners for AI Hosting Gold Rush

Core Scientific reported a significant decline in its Bitcoin mining performance during Q2, with a 56% negative gross margin. The company's self-mining revenue was $21.5 million, but costs were $33.7 million, resulting in a $12.2 million segment loss.

The miner had nearly 30% fewer machines online at the end of June compared to the previous quarter and was only operating two sites for mining. CFO Jim Nygaard stated that Core Scientific was primarily mining to offset contractual power costs during this period.

On a more positive note, the company's AI high-density colocation segment generated $136.7 million in revenue and $80.0 million in gross profit at a 59% margin. This pivot to AI hosting has proven successful for Core Scientific, with the segment producing more gross profit than the entire company.

The contract pipeline for Core Scientific's AI hosting business is significant, with over $24 billion of potential contracted revenue tied to leased capacity. However, the company still faces risks related to conversion and delivery timing.