Core Scientific, Inc. Tranche 2 Warrants Q3 FY2024 earnings call

• CoreWeave exercised final two options, committing to all 500 megawatts of critical IT load. - Allocated 100 megawatts of infrastructure from Bitcoin mining to HPC, increasing HPC hosting capacity to ~570 megawatts. - Leased with option to buy Alabama data center with 11 megawatts, potential for 55 more. - Completed 100-megawatt expansion at Pecos, Texas Bitcoin mining data center. - Completed miner migrations and partial demolition at two data centers for HPC hosting. - Successful $460 million convertible note offering to improve capital structure, pay off debt, increase cash, and refinance.

Total third quarter revenue was $95.4 million. Digital asset self-mining revenue was $68.1 million, digital asset hosted mining was $16.9 million, and HPC hosting was $10.3 million. Segment gross margin was negative 9% for digital asset self-mining, 29% for digital asset hosting, and 13% for HPC hosting. Power costs were $0.038 per kilowatt hour, down from $0.045 in the prior year. Operating expenses were $40.3 million, up from $26.8 million in the prior year. Net loss was $455.3 million. Non-GAAP adjusted EBITDA was $10.1 million, 11% of revenue.

• Expect 16 megawatts critical IT load of revenue generating HPC hosting infrastructure in 2024. - Average fleet power price for active bitcoin mining data centers expected to be $0.042 to $0.044 per kilowatt hour in 2024. - Project aggregate total potential revenue over CoreWeave 12-year contracts to be ~$8.7 billion, average annual revenue $725 million, non-GAAP profit margin 75% to 80%.

• Supply chain issues could affect timing of converting sites to HPC hosting. - Uncertainty in Bitcoin mining economics due to factors like hash rate changes and halving events. - Dependence on key clients like CoreWeave and potential impact of client contract changes.

Q: About the 100 megawatts allocated from Bitcoin mining to HPC, are in conversation with potential customers and retrofit cost?

A: Conversations began earlier, competitive process for 70 megawatts, retrofit cost ~$5 million to $8 million per megawatt.

Q: On HPC revenue, why higher than expected?

A: Driven by onetime adjustment for delivery pulled forward by 30 days.

Q: Cost of 100-megawatt transition, construction vs lease?

A: Hoping to get client contract in hand before spending capital.

Q: Financing structures for future deals, CoreWeave model repeatable?

A: Clients willing to cover portion of CapEx, project finance rest.

Q: Updates on expanding power capacity at existing HPC sites?

A: Potentially 300 additional megawatts, ongoing conversations.

Q: Thoughts on Presidential Election and Bitcoin mining industry for Core?

A: Trump's support for Bitcoin, energy production, AI aligns with Core's goals.

Q: Deal structures of new sites, like kind of CoreWeave deal?

A: Focus on single tenant build-to-suit, deep design engineering conversations.

Q: Market on distressed data center side for retrofit?

A: Varies by load studies, ~$3 million to $6 million per megawatt for existing, $1 million to $3 million for retrofit.

Q: Desire to enter exclusivity on new sites?

A: Extraordinarily strong demand, focused on 10 clients, competitive process.

Q: Sourcing new HPC customers after CoreWeave contract?

A: Significant credibility, thought leaders on design, in driver seat.

Q: Power strategy for HPC capacity, relationship with utilities?

A: In-house power team, strong relationships with utilities.

Q: Block chip delivery, net new or fleet upgrade?

A: Predominantly fleet refresh.

Q: Power conversations with utilities, demand response?

A: Exit voluntary programs in regulated markets, new PPAs in deregulated.

Q: Supply chain workarounds for 2025?

A: Evaluating different sized gensets, rental of equipment.

Q: Block chip deployment time line, components?

A: Aligned with expectation, research and development team working closely.

Q: Time frame for Alabama site deal, consideration?

A: Low to mid-single-digit months, lease with option to buy at fixed price.

Q: Pipeline of additional sites, market competition?

A: Evaluated over 15-gigawatts of sites, finding unique deals, strong ability to compete.