Core Scientific, Inc. Tranche 2 Warrants Q4 FY2024 earnings call

• Key Achievements in 2024: Signed a 16-megawatt agreement with CoreWeave in Austin, delivered 30 days ahead of schedule; fully contracted 500 megawatts of HPC capacity with CoreWeave (total revenue potential $8.7 billion over 12 years); ended 2024 with over 1,300 megawatts of contracted power; expanded HPC infrastructure by reallocating resources from Bitcoin mining; secured approval to expand gross capacity at Denton site by nearly 100 megawatts; signed lease-to-buy agreement at Aubix facility in Auburn, AL; improved balance sheet in 2024; made strategic hires in data center professionals.
• Financials: Total revenue in Q4 2024 was $94.9 million, down 33% year-over-year; adjusted EBITDA was $13.3 million. The average fleet-wide power rate in 2024 was $0.04 per kilowatt hour (beat target of $0.042 - $0.044), and $0.037 per kilowatt hour in Q4 2024. Net loss in Q4 2024 was $265 million.

Digital Asset Self-Mining: Revenue was $79.9 million, a decline of 29% year-over-year. Driven by 974 Bitcoin earned in Q4 2024 versus 3,042 in the same period prior year, partially offset by a 130% year-over-year increase in Bitcoin price. As of December 31, 2024, the company operated approximately 164,000 self-mining units, representing 96% of its total mining fleet. Digital Asset Hosted Mining: Revenue was $6.5 million, down from $30 million in Q4 2023 as the company sunsets hosted mining contracts. HPC Hosting: Generated $8.5 million in revenue during the quarter. As of year-end 2024, the company had 16.5 megawatts of critical IT load, including an additional 0.5 megawatt contracted in Q4. The gross margin for HPC hosting was 9%, and the non-GAAP cash gross margin was 16%.

• 2025 focus areas: Diversify HPC customer base (goal to have CoreWeave represent less than 50% of critical IT load by 2028), execute on existing HPC contracts, and expand HPC capacity organically and via strategic M&A.
• Expanded relationship with CoreWeave: Added ~70 megawatts of critical IT load at Denton facility, with $1.2 billion additional contracted revenue over 12 years. Now expects to deliver ~250 megawatts of HPC capacity to CoreWeave by end of 2025, with full 590 megawatts online by early 2027. Aims to add 300 megawatts of capacity across existing sites by 2027 and 400 megawatts of new capacity over next 3 years.

• Permitting challenges and supply chain constraints causing delays in HPC capacity rollout. - Dependence on CoreWeave for a significant portion of revenue, and potential issues if CoreWeave's demand or contracts change. - Heightened due diligence from customers leading to slower contract signings, and competition from new market entrants with overstated power agreements.

Q: Darren Aftahi asks about the permitting process and progress on the Alabama site.

A: Adam Sullivan states permitting delays for Denton site were due to expansion and design adjustments, and ongoing negotiations in Alabama with Alabama Power with high confidence in gaining additional megawatts once customer contracts are secured.

Q: Jon Petersen inquires about the economics of the CoreWeave deal and milestones to reduce CoreWeave's revenue share.

A: Adam Sullivan explains revenue terms are consistent with prior agreements and the focus on diversifying customers to get CoreWeave below 50% of critical IT load by 2028.

Q: Joe Flynn asks about capacity push-out and data center design challenges.

A: Adam Sullivan mentions incremental design changes for GB200/GB300 architectures, permitting challenges due to complexity/size and supply chain constraints, but high confidence in delivery timelines.

Q: Brett Knoblauch asks about timing of critical IT load and pushback.

A: Adam Sullivan confirms critical IT load for 2025 includes 16.5 megawatts and there was a push-out of one 40-megawatt building to early 2026.

Q: Greg Lewis asks about enterprise customers and site expansion.

A: Adam Sullivan states enterprise customers open up potential for smaller sites with low latency, and focus is on blue-chip assets with blue-chip clients including both hyperscalers and enterprises.

Q: George Sutton asks about marrying faster delivery with increased due diligence.

A: Adam Sullivan explains faster delivery timelines vs. due diligence to weed out non-genuine data center providers, with Core Scientific having power/land/team to deliver assets.

Q: Stephen Glagola asks about CoreWeave's business model and contract security.

A: Adam Sullivan states CoreWeave's long-term contracts signal strong demand for GPUs, and confidence in CoreWeave's ability to deliver, with the industry having winners and losers.

Q: John Todaro asks about influence of permitting/equipment on rollout and operational timing.

A: Adam Sullivan states it's a combination of supply chain and permitting issues, with timeline elongating due to equipment sourcing and design complexities.

Q: Kevin Dede asks about characterization of permitting/equipment influence.

A: Adam Sullivan explains it's a combination of electrical equipment and broader design factors, not tied to one specific item.

Q: Nick Giles asks about delta between CoreWeave's 590 MW and 700 MW target and customer contract cadence.

A: Adam Sullivan states focus is on executing new clients, with discussions ongoing with hyperscalers and large enterprises, and excitement about selling additional capacity in 2025.

Q: Joseph Vafi asks about tradeoff between revenue diversification and CapEx, and pricing discussions.

A: Adam Sullivan states revenue diversification helps towards investment grade status, and pricing is geographic/proximity specific with price discovery stabilizing in 2025.

Q: Bill Papanastasiou asks about supply-demand dynamic and hyperscaler influence, and impact on terms.

A: Adam Sullivan states hyperscalers are focused on due diligence and firm power agreements, with landscape changing from 2024 rush to targeted site development.

Q: Rosemarie Sison asks about expansion into new markets and capital allocation.

A: Adam Sullivan confirms expansion into new markets like East Coast, operates with 7 utilities, and capital allocation will mature to investment grade structure with need for additional capital deployment.