Core Scientific, Inc.

Good day, ladies and gentlemen, and welcome to CORE Scientific First Quarter Fiscal Year 2025 Earnings Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, John Charbonneau, Vice President of Investor Relations. Sir, the floor is yours.

Good afternoon, ladies and gentlemen, and welcome to Core Scientific's first quarter 2025 earnings call. Good afternoon, ladies and gentlemen, and welcome to Core Scientific's first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. We will conduct a question and answer session after management's remarks. Please note that on this call, certain information presented contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement other than historical or current facts that predict or indicate future events or trends. forecasts, performance, or achievements, and may contain words such as believe, anticipate, expect, estimate, intend, project, plan, or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts, and assumptions that involve risks and uncertainties that may cause actual results to differ materially. For further information on these risks and uncertainties, we encourage you to review the risk factors discussed in the company's annual report on Form 10-K filed with the Security and Exchange Commission and a special note regarding forward-looking statements contained in the company's current report on Form 8-K filed today and the earnings release and slide presentation contained there. Today's presentation is available on our website at corescientific.com in the event and presentation section. The content of this conference call contains information that is accurate only as of today, May 7th, 2025. The company undertakes no obligation to update statements made today to reflect events or circumstances occurring after today. Joining me today from Core Scientific our CEO, Adam Sullivan, our Chief Operating Officer, Matt Brown, and our Chief Financial Officer, Jim Nygaard. We will now begin with remarks from Adam.

Thank you all for joining us today. Before we dive into the quarter, I want to take a step back and talk about where we are, both as a company and as an industry. AI is driving one of the biggest shifts we've seen in infrastructure in decades. It's not just about more demand, it's about a new kind of infrastructure purpose-built for high performance, high density workloads. We believe we're in any one of this transformation, especially when considering that many large enterprises are just beginning to plan their AI strategies, and we're already seeing early signs of significant demand. As those plans turn to action, Core Scientific is well positioned to be a major supplier of infrastructure that will power it. there's a clear dislocation in the market today. Traditional data center providers are struggling to meet the density requirements that AI workloads demand. That mismatch between supply and demand has opened up a unique window in where we are the only pure plate infrastructure company in the public markets focused specifically on high density co-location. That focus gives us a real opportunity to lead and to carve out a meaningful share in a market that's just getting started. At the center of our strategy is our relationship with CoreWeave. Our contracts with CoreWeave are foundational, not just because of their size, but because of how they are structured. CoreWeave is funding virtually all of the capital investment on these deployments. That keeps our balance sheet leverage light, especially compared to peers, and it gives us the flexibility to use debt strategically as a tool to fund future growth and drive long-term shareholder value. Simply put, We are building more than capacity. We are laying the foundation for what comes next for this company and for the growth of accelerated compute. And while Corey would say significant first step, it's just that, the first step of a long journey. With that, I'll start with a quick update on our three strategic priorities, then I'll hand it off to Matt for a construction update, followed by Jim for a review of the financials. We'll close out today with Q&A. But before we go further, I want to officially welcome Jim Nygaard, our Chief Financial Officer. Jim brings deep experience in M&A, capital markets, and corporate finance. He's already made a strong impact, and I'm excited to have him with us as we scale this business. Let me start with our first strategic priority, diversifying our customer base. We've seen a lot of headlines recently questioning whether demand for AI infrastructure is starting to soften. But when you listen to the data center providers themselves, Core Scientific included, the story is very different. Across the board, we're seeing strong, sustained demand for high density infrastructure. The signals from customers are clear, and the pipeline continues to build. Now to be clear, we haven't signed a new customer yet, but our sales pipeline is expanding. It includes a healthy mix of hyperscale and large enterprise customers, and we are actively negotiating with multiple customers today. We're encouraged by both the quality and the scale of the opportunities we're seeing. Hyperscale demand, while it may fluctuate at the account level, continues to track in line with what we saw last quarter. What's even more compelling is the emerging demand from large enterprises. These organizations are just beginning to roll out AI use cases, and they're realizing that existing infrastructure won't meet their performance needs. We currently have several non-hyperscale deals in our pipeline ranging from 50 to 100 megawatt customers. These are substantial deployments and they come with a return profile that's attractive. It's a strong signal that large enterprise demand can be both material and strategic to our business. As always, our goal is to place the right customers in the right locations and looking ahead to the rest of the year and 2026, I'm more confident than ever in our ability to build a customer base that is more diverse, more balanced, and more strategically aligned with our long-term vision. Our target remains the same, to have CoreWeave represent less than 50% of our billable capacity by the end of 2028. Our second strategic priority is executing on the CoreWeave contracts, and I want to take a moment to acknowledge just how much progress we've made on that front. Over the past quarter, we've made significant progress advancing the build-out of 570 megawatts of total billable capacity for CoreWave, further illustrating our ability to move quickly, execute, and deliver high-density co-location infrastructure at scale. One standout is our Denton facility, which has quickly become a cornerstone of this effort. We expect to deliver the first tranche 8 megawatts of billable capacity this month with additional deliveries in Denton scheduled throughout the year, including another 40 megawatts delivered by the end of this quarter. Notably, we understand from public statements that OpenAI is working with CoreWeave in Denton. And when fully built out, it will host one of the largest GPU clusters in North America, possibly the largest in the world. At full scale, the site will represent around 260 megawatts of buildable capacity. To put that in perspective, we broke ground in January, And in just roughly four months, we've achieved meaningful progress. It's a powerful demonstration of our ability to execute quickly and at scale with before and after pictures included in our updated investor presentation. Looking ahead, I'm even more confident than I was just two months ago in our ability to hit our milestones. 250 megawatts by the end of this year, inclusive of Austin, and 590 megawatts by early 2027. Before providing an update on our third priority for this year, let me take a moment to talk about our contract with CoreWeave, which continues to be a foundational pillar of our growth strategy. There has been a lot of interest in how this agreement is structured and for good reason. It's not only one of the largest GPU infrastructure contracts in the market today, it's also uniquely designed to position us for scalable capital efficient growth. This is a take or pay fixed price contract. That means CoreWeave is contractually committed to paying for the capacity we deliver, regardless of utilization. It's also built around shared execution risk, which keeps both parties aligned, financially and operationally, on meeting key milestones. From a capital perspective, CoreWeave is funding virtually all of the CapEx associated with these deployments. Our only direct capital outlay on the contract is the $104 million associated with the 70 megawatt expansion we announced during our last earnings call. That structure significantly reduces our capital burden, keeps our balance sheet leverage light compared to peers, and gives us the flexibility to use debt more strategically for future growth. We believe this approach sets us apart and creates a clear path to long-term value creation. The equipment installed at our sites secures Cori's contractual commitments with respect to the CapEx and the recurring payments under the contracts. As agreed, we have filed UCC1 financing statements reflecting our contractual security interest in the assets installed in our sites. With that said, CoreWeave is a close strategic customer of ours, and that continues to show strong momentum as evidenced by recent customer announcements. And we believe that we benefit from the critical role played by CoreWeave in shaping the future of accelerated compute in our strong, mutually beneficial commercial relationships over the long term. Our third strategic priority is expanding our data center capacity, both organically and through targeted M&A. On the organic side, we remain confident in our ability to add approximately 300 megawatts of billable capacity across our existing sites by the end of 2027. Looking ahead, we also continue to believe there are significant opportunities to grow into new geographies, and we're targeting an additional 400 megawatts of billable capacity through new site development over the next three years. Our site selection strategy continues to focus on locations where we can secure the right power at the right cost and match it to the right type of customer demand. On the M&A front, Jim will speak more in a moment about how we're thinking strategically about expansions through acquisition. We're focused on opportunities that align with our core competencies, offer compelling economics, and can be scaled efficiently. Together, these efforts are building the foundation for long-term capital efficient growth and reinforcing our position as a leading provider of high density infrastructure for the GPU cloud. Before I turn it over to Matt, I want to take a moment to recognize Denise Sterling, who recently stepped down as our Chief Financial Officer. Denise stepped into the CFO role at one of the most critical moments in Core Scientific's history. She played a pivotal role in stabilizing the business, guiding us through our successful restructuring, and positioning the company for long-term growth. Denise built an outstanding finance team, led us through a complex transformation, and helped secure the resources we needed to execute on our long-term vision. She also played a key role in enabling a smooth and successful transition to Jim as our new CFO. So on behalf of the entire Core Scientific team and community, thank you, Denise, for all that you've done for Core Scientific. With that, I'll turn it over to Matt Brown, our Chief Operating Officer, for a detailed update on our construction progress. Thanks, Adam.

I want to start by echoing your comments. I'm very pleased with the strong progress our team has made over the past several months as we continue to execute on the development of 570 megawatts of billable capacity for core weave across four locations, Denton, Dalton, Marble, and Muskogee. These sites, when completed, will represent a combined infrastructure investment of more than $5 billion. To date, we have secured all the equipment necessary to meet our 2025 delivery goals, and we are well insulated from the impact of recent changes in global tariffs. I want to focus my comments this quarter on our Denton, Texas facility. A 64-acre campus that will deliver 260 megawatts of billable power capacity across eight buildings totaling 350,000 square feet of high-density co-location space. Each building is engineered and purpose-built to support next-generation computing platforms that push the envelope of performance and efficiency. The scale and execution here are remarkable. To date, the manpower at Denton has scaled to over 600 contractors. We've logged more than 187,000 man-hours poured over 2,800 cubic yards of concrete, and installed more than 30 miles of conduit. I want to extend my gratitude to our trade partners and the Core Scientific Delivery Team for not only meeting their targets, but exceeding them. I would also like to acknowledge the City of Denton and Denton Municipal Electric, whose partnerships have been instrumental in keeping this project moving at pace. We are delivering the first tranche of 8 megawatts of buildable capacity to Core Weave this month. and will continue delivering capacity consistently throughout the rest of the year, including an additional 40 megawatts by the end of the second quarter. In total, Denton is expected to be a significant portion of the 250 megawatts we plan to deliver Coal Weave in 2025. In closing, I remain confident in our ability to deliver 250 megawatts to Coal Weave by the end of this year and the full 590 megawatts by early 2027. With that, I will now turn it over to our CFO, Jim Nygaard.

Thanks, Matt. Before I get started, I'd like to say how truly excited I am to be here and to join the team at such a pivotal moment in the company's evolution. What attracted me to this opportunity was the remarkable transformation already underway, shifting from Bitcoin mining operations into the data center space with real momentum. The CoreWeave contracts provide a unique and highly strategic foundation for this transition. These contracts offer long-term recurring revenue with minimal capital outlay on our part, something rarely seen in the industry. We're in a moment the broader data center industry hasn't experienced in years. AI-driven demand is fundamentally reshaping infrastructure needs around the world, and this company is extremely well positioned to lead in that shift. Of course, there's no shortage of noise in the market, Narratives that often don't reflect the facts on the ground. But I believe, as many of you do, that the market will refocus on fundamentals over time. Disciplined execution, sustainable and profitable growth, and long-term value creation. That's where our attention is, and that's what will set us apart. The opportunity ahead of us is enormous, and I'm looking forward to helping our team fully capitalize on it. I'd like to begin by sharing my perspective on capital allocation, an area that will be central to how we drive long-term shareholder value. As we scale, it's critical that every dollar we deploy aligns with our strategy, enhances operational flexibility, and supports sustainable, profitable growth. Our capital allocation priorities are clear. We will invest in the development and expansion of capacity at existing sites, new sites, and through strategic M&A, focusing on transactions that can broaden our customer base and strengthen our capabilities as a leading developer of next-generation high-density co-location infrastructure. These investments not only support our strategic objective of reducing core weave to less than 50% of billable capacity by the end of 2028, but in our view, are also the best way to maximize long-term shareholder value. That said, we maintain a high bar for capital deployment. While we don't impose strict return thresholds, every project is rigorously evaluated based on its strategic merit. Factors including location, power availability, site attributes, customer demand potential, and financial contribution to the broader portfolio. As of the end of the first quarter, we had approximately $780 million of liquidity, including cash, cash equivalents, and Bitcoin. Additionally, the structure of the CoreWeave contracts, where they fund the vast majority of associated CapEx, enables us to leverage those contracts efficiently. Looking forward, we plan to utilize traditional project financing structures that are widely used across the data center industry. And over time, we believe our net debt to adjusted EBITDA leverage can and should trend toward approximately four times, consistent with peers in the space. Now a brief word on Bitcoin, as our financial profile continues to evolve with our shift to co-location infrastructure. We remain focused on optimizing our mining operations to meet our long-term utility commitments during the transition. At the end of Q1, we held just under 1000 Bitcoin. At the end of April, the balance was just under 1200 Bitcoin. We are now positioned to efficiently hedge that exposure, allowing us to manage downside risk while retaining upside potential. In summary, with increasing scale, greater profitability, improved stability, and a more diversified customer base, we believe these factors will contribute to a lower cost of capital over time and a structurally higher valuation framework for the company. Now let's turn to the first quarter results. Total revenue for the quarter was 79.5 million, down 16% sequentially, and adjusted EBITDA was negative 6.1 million. The sequential revenue decline was primarily driven by mining disconnections and relocations as we continue converting sites to support high-density co-location. More specifically, we earned 719 Bitcoin in the first quarter compared to 974 in the fourth quarter. We ended the quarter with a fleet of approximately 156,000 self-mining units and our self-mining energized hash rate averaged 18.1 exahash during the period. With that said, as we continue to prioritize our high density co-location business, we no longer plan to publish monthly Bitcoin production reports. Instead, we will shift our focus to providing more consistent updates on CoreWeave related construction progress, which we believe is more useful to investors since it better reflects the strategic direction of the business. Moving on, CapEx for the first quarter was just under $90 million, over half of which was funded by CoreWeave in line with contract terms. In addition to amounts CoreWeave was responsible for, we funded a small amount of CapEx related to the acquisition of land and pre-funding of costs associated with non-CoreWeave co-location sites. Finally, as we've shared with you in the past, We previously entered into a purchase agreement with Block for three nanometerships, and in the first quarter, we made the second scheduled installment payment. We continue to expect the remaining installments of the Block agreement to be made during 2025 and early 26. Going forward, we do not expect the first quarter CapEx to be indicative of future quarters. Our pro forma fully diluted share count as of May 1st was approximately 502 million shares. We are currently modeling a statutory effective tax rate of 22% in 2025. We also have more than 380 million in net operating loss carry forwards, which will reduce future cash taxes. And with that, I'll open the call up for questions.

Thank you. The floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's star 1. Please hold while we poll for questions. And our first question comes from Joe Flynn from Compass Point. Go ahead, Joe.

Hi. Thanks for the question. Given that we have seen other CoreWave lease comps, we were wondering if there was any credit enhancements built into your lease, such as a guarantee from CoreWave's end customer or step-in rights in the event of a default. It just seems like, you know, you mentioned it opened at Denton. It seems like the amount of infrastructure is ultimately going to be pretty important to their build-out, and they wouldn't risk a single party losing that access. Thanks.

Yeah, thanks for the question, Joe. You know, I think, you know, what we displayed on page 12 of our investor report, we outlined some of the major terms related to the contract. You know, speaking to your earlier question related to any passers, that's something that would have to be discussed directly with CoreWeave. But the one thing I would say is, you know, we're really excited about the CoreWeave contracts that we've signed so far, and we value them highly as a commercial counterparty to Core Scientific.

Great, thanks. I'm hoping maybe you could provide more color on the, you know, the co-location, initial co-location, CapEx, and potential plans for the North Dakota, you know, remaining 100 megawatts that could be, you know, rented out.

Yeah, this is Matt. I can provide a little bit of color there. So essentially what we was doing in Grand Forks is sort of preparing that site for an ultimate build-out and expansion. So acquiring roughly 70 acres of land that's directly adjacent to the existing operating site so that we can sort of tap into the existing power infrastructure at that site for an eventual high-density co-location facility.

Great, thanks.

Thank you. And our next question comes from Brett Knobloch from Cantor Fitzgerald. Go ahead, Brett.

Hi, guys. Thanks for taking my question. Maybe one for you, Adam. It seemed like you were particularly positive on the large enterprise opportunity rather than just maybe your tier one hyperscalers. I guess what has maybe changed over the past couple of months where those conversations have started to ramp up?

Yeah, absolutely. You know, the one thing I would say about the demand of hyperscalers before we move into large enterprises, you know, there are significant ebbs and flows. I would say on an aggregate basis, it remains consistent in terms of what their demand profile looks like on an aggregate basis. But on an individual company basis, there is ebbs and flows. We've obviously seen the reports on a number of the different hyperscalers. And those timelines look much different to getting to final contract terms in large enterprises. Now, over the past six months, we've seen the large enterprise channel continue to build. And this is as very large enterprises are continuing to develop their AI use cases and determine their actual needs in terms of location and sizing. Now, I mentioned earlier that pipeline. not only from smaller customers, but from some large customers as well, where we're seeing demand ranging from 50 to 100 megawatts, which gets us very excited about that. And we believe large enterprise could represent anchor tenants at some of the new locations that we're evaluating today.

Perfect. Thank you. Then maybe just on the new location side, is that something that you would expect to – announced this year, would that announcement kind of be at the same time with a potential new tenant or would you acquire additional capacity before a potential tenant would come online? And then maybe just as a follow-up to that, do you think bringing on the 8 megawatts and then the 40 megawatts, you know, this month and this quarter, you know, will give a lot of the big potential tenants something to look at and maybe help close some of those deals?

Yeah, absolutely. So I'll talk about the first part related to new sites. This is something where we're currently in market with a number of new sites. And these are sites that we would expect to announce alongside of new customer developments. And so we're hopeful that over the course of 2025, we'll be able to make multiple announcements related to this as we are evaluating multiple jurisdictions today to continue to grow into. Now, on part two of your question, I'm going to hand it over to Matt Brown.

And would you mind repeating the second part of your question?

Yeah, can you just maybe talk about the relative importance of actually energizing some capacity that potential tenants could look at, you know, as your ability to stand up Blackwell's, for example, and give that – it would give them more confidence to then sign a deal. Do you think, like, they're waiting on that?

Yeah, no, I think that's a great point. So I think to some degree, yes. I mean, we're certainly in the mode of just executing and kind of proving that we know how to execute on the large, very complex projects. So as we continue to bring that capacity online, we'll only expect to gain additional confidence in the market.

Thank you. And our next question comes from Darren Afani from Roth. Go ahead, Darren.

Yeah, thanks for taking my questions, and congrats on the progress. Adam, your comments about enterprise versus hyperscaler, I'm just kind of curious. I know you don't have anything signed, but As you look at a large enterprise, be it a hyperscaler, any sense for kind of like timeframe in terms of actually getting a lease sign, meaning is it more advantageous that you think an enterprise would be a shorter timeframe to get that done? And is there any kind of internal preference, one versus the other?

Yeah, that's a great question. Thanks, Darren. You know, large enterprises, the timeline to getting to final contract details are definitely faster than on the hyper-scale side. There's a natural inclination to move towards hyperscale from the broader perspective of their credit worthiness. But the large enterprises that we're looking at today are, I think, $75 billion market cap plus and represent a credit worthiness that we find very acceptable. And the return profile of these are higher than hyperscale deals as well. So as we evaluate potential multi-tenant buildouts going forward, large enterprises could represent significant anchor tenancies. for those new sites to allow us to begin development in new geographies and start building out new sites. And just to go back to a previous question, Denton is a flagship facility that we're developing today. And we think that's going to be a really large standoff facility. And there's reasons why our peers are talking about that site. It is going to be truly a flagship site in the Dallas-Fort Worth area.

Great. And then maybe one more. The cadence of the 8 megawatts and then the 40 additional by the end of the quarter, like can you just kind of maybe help us understand how we should maybe model that? Is it more back-end loaded in the second quarter? Thanks.

I would say that these sites are going to continue to come online over the course of the next few months. And the 8 megawatts and the 40 megawatts, these are going to come online. As they come online, it's a day-by-day item in terms of when those will turn on. And so it's hard for us to say today exactly the exact day or hour that those will turn on, Darren. Fair enough. Thank you.

Thank you. And our next Question comes from Nick Giles from B-Ryle Securities. Go ahead, Nick.

Thank you, operator. Good afternoon, everyone. First, I want to say congratulations to Denise on your time at Coors, and congratulations to you, Jim, on stepping in. My first question, you're reiterating your construction timeline today and you mentioned that you'll now provide monthly updates on construction. So what kind of project milestones should we be looking for to really gain clarity that things are moving on time and just that your timeline remains intact?

Yeah, great question. So I think what the updates you're going to see from us will probably just additional color as each month moves by and as we kind of get through the calendar year, exactly kind of what we're targeting for ready for service dates and key project milestones. So as we kind of complete things like commissioning or we approach commissioning dates and we approach handover dates, we'll start talking about those things as well as clearing key milestones at some of the other sites in addition to Denton.

Thanks for that, Matt.

Sorry, you dropped that. Sorry. Next question comes from John Tornado from Needham. Go ahead, John.

Hey, guys, thanks for taking my question, and congrats on the quarter, and I love the new presentation. I thought it laid out a lot of stuff and answered a lot of questions. First, Adam, you mentioned you're more confident hitting milestones now versus even two months ago. That seems to be the case with the eight megawatts coming online, but was there anything that kind of changed construction-wise or other that's given you that more confidence and kind of allowed you to hit some of the milestones?

Yeah, thanks for the question, John. You know, as you get closer to commissioning dates on the first building, you know, you start to have greater confidence in your ability to continue to execute on the future buildings at that site. And so this is something that we're seeing, obviously, first and foremost at Denton, but we will continue to see that at future sites as well. As we get closer to the commissioning of the first building, we'll have much greater clarity in terms of the timeline and execution of the future buildings at that site. And so this first eight megawatt building is a large milestone for the Denton campus, and it'll be followed shortly thereafter by a 40 megawatt building. And we expect to see buildings continue to turn online over the course of this year at that facility as well.

Got it. That makes sense. And then second question, I did just want to get a little bit more clarity on that CapEx arrangement change. So the CoreWeave S1 mentioned how there was 300 million coming out of escrow. I just want to make sure I understand that, Pete. Is there any kind of clarity just around what kind of CapEx arrangement ultimately changed there?

I'll take that. The CapEx arrangement hasn't changed in terms of CoreWeave's requirement to fund the CapEx. The mechanism in which it was being done effectively changed. We were able to effectively eliminate the escrow arrangement and it just made it more efficient for their side of the ledger as well. So to be clear, When we are required to pay a PO from a contractor or to meet our obligations, we will not make those payments until we receive the funds from CoreWeap. That is how our contract is stipulated. So effectively, we're replicating the same structure as it relates to our exposure. There's no effective change in our CapEx arrangement as a result of that change.

Got it. Understood. Thank you, guys. Appreciate it. Yep. Thank you.

Thank you. And our next question comes from George Sutton from Craig Hallam. Go ahead, George.

Hey, guys. This is Logan. I'm for George. Thanks for taking the questions. Adam, can you just talk about kind of what gives you confidence in terms of that 300 megawatts that you're going to look to get out of the existing sites today? Maybe just an update on where you are in that process, having conversations with utilities, regulators, etc.? ?

Yeah, absolutely. And thanks for the question, Logan. Yeah, I mean, where we sit today is we have an extraordinarily close relationship with the utilities across all of our sites. It's something that we've cultivated when we were, I'll call it the black sheep in the industry when we were a Bitcoin miner amongst the utilities. And our relationships were forged through deep communication with each of those utilities as a Bitcoin mining business. And so as we've moved forward and have shown progress on the sites and our development towards conversion to co-location facilities, they've been impressed with our developments. They're watching us continue to grow at these sites, and they're excited about that as well. And we're currently in discussions with these utilities around what those future contracts will look like, what the total power potential is. And based on where we sit with conversations today, we feel confident in our ability to get contracts and that's 300 megawatts of billable capacity. So we believe we will be able to achieve about 450 megawatts of gross capacity over the course of 2025 and 2026 from our existing utilities, which we're excited about. We will have the opportunity to continue to expand those sites and potentially bring new customers in as well.

Got it. And then maybe just a quick follow-up. Amy, you've talked about how unique the CoreWeave deal is, and you mentioned You know, a little bit earlier that the return profile with those enterprise customers might be a little better. I'm just wondering if you can talk about how we should think about potential terms on new deals, whether it be enterprise, hyperscale, or just will it be different than that CoreWeave deal, or is it changing month to month? Just an update there would be appreciated. Okay.

Yeah, absolutely. Yeah, I mean, the CoreWeave contract is not going to be replicated in the market. Now, the distinction I would make as we evaluate new contracts going forward, there are really two components to negotiating a contract, whether it be with a hyperscaler or whether it be with a large enterprise. Those two components are NRC and MRC. The NRC is essentially what that upfront payment is towards the CapEx, and the MRC is that monthly recurring charge. And so when we evaluate deals, there's a give and take whether you're receiving in what the scale is of a non-recurring charge versus that monthly recurring charge. And so we're currently evaluating a number of different deal structures that we're in discussions with clients. And I would say we're excited about the return profiles that large enterprises represent because they do have the capability, based on their scale and their size that they're demanding today, to represent an acre tenant for us to open up a new site location. And so we will continue to evaluate deals going forward, and we're excited about the continuously growing pipeline and large enterprise channel.

Got it. Thank you.

Thank you. And our next question comes from Joe Vaffey from Canaccord Genuity. Go ahead, Joe.

Hey, Will Johnson on here for Joe. Thanks for taking my question. Adam, maybe just a high-level question from me. Do you mind talking about how, if at all, conversations with customers have changed sequentially given tariffs and new market dynamics? And then, you know, maybe how has the pace of discussions changed? And are you seeing any different reactions from hyperscalers versus enterprises? Thanks.

Yeah, I appreciate the question. And the first point, you know, tariffs represent an interesting change to the dynamics of this industry right now. You know, the way we're looking at it today is there is going to be some uptick in terms of CapEx requirements for new builds, which we believe will continuously drive up lease rates over the near term until there's greater clarity on the tariff impact on new data center developments. And so we have seen some of that start to flow through these discussions, but we have confidence that with our best in class supply chain team, that we will have rates that we believe will be similar, but still a bit more expensive, thinking about five to 10% more expensive on the CapEx side, then there will be a commiserate increase in lease rates across the industry. Now, in terms of your question related to the pace of discussions, I would say large enterprises have quickened their pace around what their demand is. I think initially they were evaluating what size, what locations they were interested in moving to. But that has become much more specific over time as they have firmed up their plans for growth. And I believe that large enterprise will continue to represent a large growth factor for large, high-density co-location facilities going forward. And so that's why, you know, we mentioned our prerecorded remarks. And we believe that it's going to be a significant channel for us going forward.

Very helpful. Thanks.

Thank you. And our next question comes from Kevin Deedy from Indiana. H.C. Wainwright. Go ahead, Kevin.

Hi, Adam, and welcome, Jim. I think maybe first off the bat for Matt, I understand that Core Scientific worked really hard with CoreWeave to help them through the development of the infrastructure, namely networking, etc., And I'm wondering, given now that there are other publicly traded companies, I'm wondering if some of that IP you helped develop, is it all proprietary? Or does it automatically translate to Corweave's other suppliers?

Yeah, the way I would look at this is that CoreWeave and Core Scientific are in a really tightly coupled relationship from both a design, engineering, and delivery standpoint. While it is sort of Core Scientific teams that are building the infrastructure and taking a lead on the design, we're certainly doing that in really close collaboration with CoreWeave's engineering team and infrastructure delivery teams. And so any IP that might result in that certainly will be shared by the two entities. And we would look at that certainly as a competitive advantage in the marketplace. No one today has tried to execute on a GPU build of the size of Denton in particular. And so we think we're gonna learn a lot of the lessons first and we're gonna be ahead of the game and we'll be able to leverage those learning experiences to future projects, which we only think will just widen our competitive advantage in the market.

Okay, regarding M&A, what could you say about targets and acquisition criteria as you think about this gap that core scientific can fill in meeting high density versus legacy data center operators that are stuck with low rack power bills. How should we reconcile that?

Yeah, thanks for the question, Kev. You know, I think the way we're thinking about it right now is we're evaluating opportunities in the new generation of data center capacity. So we really want to go after potential targets that represent an opportunity to continue our lead in terms of the amount of infrastructure that's being developed for this next generation of compute. Now, that being said, we will still look to acquire certain types of assets that maybe give us diversity on workload as well. We believe over time as we develop Core Scientific into a true data center platform that we will have a mix of more traditional CPU capacity But really our focus is continuing to grow and develop our GPU deployment platform, which we believe will be one of the largest in the United States. And we will look to continue and extend our lead in that area.

So the takeaway, Adam, for me is just to think that you'll be looking for sites and builds that fit your criteria as it stands now. versus taking a step back in the technology development chain?

Yeah, I'd say we're looking at a healthy mix of both sites as well as companies that have contracts with leading companies in the industry.

Fair enough, sir. Thank you very much for entertaining my questions. Congratulations on the progress.

Thank you. And the next question comes from Paul Golding from Macquarie Capital. Go ahead, Paul.

Thanks so much. Just quickly a housekeeping question I wanted to ask regarding digital asset mining. I think previously you'd mentioned that the digital asset mining hosting capacity, you were going to exit that by year end. Just wanted to confirm that that was still the plan since we saw some revenue come through this quarter for that. And then my main question is around long lead time items. just referencing your commentary around 2025 goals, the equipment being acquired to meet those goals. Wanted to ask about 26, you know, hearing about long lead times for step-down infrastructure and other components, particularly around electrical equipment. And so just wanted to see how that was progressing as well. Thank you.

Yeah, thank you, Paul. On the digital asset mining hosting business, we still do have a legacy contract that will continue to roll off over the course of 2025. So that would be the expectation for your modeling, that that will continue to degrade over the course of 2025. Now, for your second question related to long lead time items to meet our goals in 2026, I'll hand it over to Matt Brown.

Yeah, and I think the way to look at this is 2025, we've already secured all that equipment, and most of it's already sitting in the ground, either in warehouses adjacent to the projects that are ongoing or at the project site themselves. So 2025 is locked in from an equipment standpoint. In 2026, we have a good read-through on both the availability and cost for all that equipment. A lot of that through the first half of 2026 has already been procured, and a few portions of that will start taking delivery towards the second half of this year for projects that are going to start launching in 2026. With that said, I think part of this touches on tariffs and equipment availability. With our strong relationships with our suppliers, I would say we have really, really good insights in the availability and that we're not really too concerned right now about not being able to take receipt of equipment and meeting our OJ dates or any by dates to meet our delivery goals.

Thanks so much for the call, Matt.

Thank you. And our next question comes from Bill Pepinastu from KBW. Go ahead, Bill. Your line is open.

Yeah, good evening, gentlemen. Thanks for taking the questions. Adam, I believe it was mentioned in the call that there are several pipeline opportunities that range between 50 megawatts to 100 megawatts. Are you able to touch on the composition of those prospect customers? And how would you define their ability to scale beyond, you know, perhaps 150 megawatt or 100 megawatt? Could we see the same sort of scaling capacity as Core Reef?

That's a great question. Thank you, Bill. Yeah, and the 50 to 100 megawatt comment, just to clarify, was related on the large enterprise side. And I would say absolutely. You know, large enterprises are looking for a spread of megawatts across multiple sites in certain cases. And so we could absolutely see a client that looks to take 50 megawatts at one site and continues to grow with Core Scientific over the course of many years. And that's really something that we're looking to build as we continue to build out this company into a true data center platform. We're looking at building long-term relationships with our clients and look to continue to grow alongside of those clients as they look to continue their build-outs. And so we have high confidence in our ability to win these contracts and we will continue to update the market over the course of 2025 as to the ones that we're able to win.

Appreciate that color. And then with respect to the three nanometer block ASICs, can you give an update on delivery timeline and clarify whether these units have had any impact from the recent tariffs or are they also somewhat insulated?

Yeah, I would say that I would reiterate what we said on our previous earnings call, which was that we believe and continue to believe today that we will receive these machines over the course of the second half of 2025. Now, on the tariff side, we believe the impact will be insulated overall from the tariff impact. And just a note, our contract is priced on a fixed price for receipt of those machines. And so, you know, we're hopeful that over the course of 2025, we'll be able to continue to update the market in terms of our progress of being able to deploy these new block units that we are today incredibly excited about.

Thank you.

Thank you. And our next question comes from Stephen Gallagola from Jones Trade. And go ahead.

Hi, Adam, Matt, and welcome, Jim. Thank you for the question. Is the high level of CoreWeave concentration a deterrent for other hyperscale customers pursuing leases with Core Scientific? That was my first one. And then just additionally, for Grand Forks specifically, can you expand on what level of enterprise demand you are seeing from potential HBC tenants for that site? Thank you.

Yeah, I would say in terms of hyperscalers being deterrent by core weave concentration, I would say I would look at it as exactly the opposite. To my earlier point from one of the first questions today, which was I think our delivery and execution is only going to breed confidence as this year goes on. Again, we're probably one of the only data center providers right now that's going to launch 250 megawatts in a single calendar year of what essentially is going to be more than 100,000 of GB200s. So I think as we – our execution will kind of prove in itself, and that will gain confidence, you know, with hyperscalers. Thank you. And then can you touch on the – sorry, go ahead. Yes, sorry, your second part of your question relating to the Grand Fork site. So right now the Grand Fork site, as we see it, we were acquiring 70 acres of land for high density co-location development there, which is certainly what is part of our plan. Interest in that site has sort of ranged from enterprises to content providers and some of the hyperscalers. So I think we've seen kind of interest from pretty much all segments for that location. Thank you, Matt.

At this time, there are no questions. I would now like to turn the call back to John Charbonneau for any closing remarks.

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