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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-03-13 · 1304 added, 1262 removed, 920 unchanged (74% of the section changed)

1 unchanged sentence

Our consolidated financial statements and the notes thereto, included in Part IV, Item 15(1)(a) herein, are incorporated by reference into this Item 8.

CONSOLIDATED FINANCIAL STATEMENT TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 688)

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

1 — Organization and Description of Business

2 — Summary of Significant Accounting Policies

3 — Chapter 11 Filing and Emergence from Bankruptcy

4 — Business Combination and Restructuring

5 — Property, Plant, and Equipment

6 — Balance Sheet Components

8 — Convertible and Other Notes Payable

9 — Contingent Value Rights and Warrant Liabilities

10 — Fair Value Measurements

11 — Commitments and Contingencies

12 — Stockholders' Deficit

13 — Income Taxes

14 — Net Loss Per Share

15 — Segment Reporting

16 — Related Party Transactions

17 — Subsequent Event

Report of Independent Registered Public Accounting Firm (PCAOB ID 688 )

To the Stockholders and Board of Directors of

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Core Scientific, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, changes in contingently redeemable convertible preferred stock and stockholders’ (deficit) equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Subsequent Event

As discussed in Note 1 to the consolidated financial statements, the Company and certain of its affiliates (collectively the “Debtors”) filed voluntary petitions on December 21, 2022 with the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) for relief under the provisions of Chapter 11 of the United States Bankruptcy Code.

The Bankruptcy Court confirmed the Debtors Plan of Reorganization on January 16, 2024 and the Debtors emerged from Bankruptcy on January 23, 2024.

The Plan of Reorganization is discussed in Note 17 to the consolidated financial statements.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in contingently redeemable convertible preferred stock and stockholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report, dated February 26, 2025 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

2 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Digital Asset Self-Mining Revenue

We identified the accounting for revenue recognition from Digital Asset Self-Mining as a critical audit matter due to the complexities involved in auditing the completeness and occurrence of this revenue recognized by the Company.

During the year ended December 31, 2024, the Company recognized revenue from Digital Asset Self-Mining of approximately $408.7 million.

The Company’s management has exercised significant judgment in their determination of how existing accounting principles generally accepted in the United States should be applied to the accounting for revenue recognized from Digital Asset Self-Mining.

In addition, the accounting for Digital Asset Self-Mining revenue recognized involved certain systems and applications subject to the general controls over the information technology (“IT”) environment of the Company.

The primary procedures we performed to address this critical audit matter included the following:

• Evaluated and tested the design and operating effectiveness of IT general controls over the Company’s IT environment and key financially relevant systems;

• Evaluated and tested the design and operating effectiveness of the financial controls pertaining to the Company’s processes for recognizing revenue from Digital Assets Self-Mining;

• Performed site visitations of the facilities where the Company’s mining hardware is located, which included an observation of the physical and environmental controls and mining equipment inventory observation procedures;

• On a sample basis, tested the hashing power contributed by the Company’s mining hardware;

• Evaluated management’s rationale for the application of Accounting Standards Codification 606 to account for its digital assets earned, which included evaluating the provisions of the contract between the Company and the Mining Pool Operators;

• Evaluated management’s disclosures of its Bitcoin activity in the financial statement footnotes;

• Evaluated and tested management’s rationale and supporting documentation associated with the valuation of Bitcoin earned;

• Independently confirmed certain financial and performance data directly with the Mining Pool Operators;

• Independently confirmed certain financial data directly with the Company’s third-party wallet custodian;

• Compared the Company’s digital wallet and custody records to publicly available blockchain records;

• Performed certain substantive analytical procedures to determine completeness and occurrence of digital assets earned by the Company as consideration for services rendered.

/s/ Marcum LLP

1 unchanged sentence

Los Angeles, CA

March 12, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Core Scientific, Inc.

Opinion on the Financial Statements

We have audited the consolidated statement of operations, comprehensive income (loss), changes in contingently redeemable convertible preferred stock and stockholder’s equity, and cash flows of Core Scientific, Inc.

and subsidiaries (Debtor-in-Possession) (the Company) for the year ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2018 to 2022.

Seattle, Washington

March 31, 2022

except for the impact of the SPAC recapitalization as described in Note 4, Merger Agreement as to which the date is April 3, 2023

February 26, 2025

Core Scientific, Inc.

(Debtor-in-Possession)

Consolidated Balance Sheets

(in thousands, except par value)

2024 December 31,

Current Assets:

1 unchanged sentence

Restricted cash 783 19,300

Accounts receivable, net of allowance of $ — and $ 8,724 , respectively

Accounts receivable from related parties — 23

Accounts receivable 1,025 1,001

Digital assets 23,893 2,284

3 unchanged sentences

Operating lease right-of-use assets 114,472 7,844

Intangible assets, net 2,247 1,704

Other noncurrent assets 24,039 21,865

4 unchanged sentences

Accrued expenses and other current liabilities 69,230 179,636

179,636 17,952

Operating lease liabilities, current portion 77 769

Deferred revenue 18,134 9,830

Deferred revenue from related parties — 496

Operating lease liabilities, current portion 9,974 77

Finance lease liabilities, current portion 1,669 19,771

Notes payable, current portion

16,290 124,358

Total Current Liabilities 134,562 488,423

Finance lease liabilities, net of current portion

Operating lease liabilities, net of current portion 97,843 1,512

Notes payable, net of current portion 684,082 —

Finance lease liabilities, net of current portion 3 35,745

Convertible and other notes payable, net of current portion

1,073,990 684,082

Contingent value rights

Warrant liabilities

Other noncurrent liabilities 11,040 —

4 unchanged sentences

Stockholders’ Deficit:

Common stock;

Preferred stock;

$ 0.00001 par value;

10,000,000 and 10,000,000 shares authorized at December 31, 2023 and 2022, respectively;

386,883 and 375,225 shares issued and outstanding at December 31, 2023 and 2022, respectively

2,000,000 and nil shares authorized at December 31, 2024 and December 31, 2023, respectively;

none issued and outstanding at December 31, 2024 and December 31, 2023

Common stock;

$ 0.00001 and $ 0.0001 par value at December 31, 2024 and December 31, 2023, respectively;

10,000,000 shares authorized at December 31, 2024 and December 31, 2023;

292,606 and 386,883 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,915,035 1,823,260

2 unchanged sentences

Total Liabilities and Stockholders’ Deficit $ 1,598,815 $ 712,156

Certain prior year amounts have been reclassified for consistency with the current year presentation.

See accompanying notes to consolidated financial statements.

Core Scientific, Inc.

(Debtor-in-Possession)

Consolidated Statements of Operations

2 unchanged sentences

2024 2023 2022

Hosting revenue from customers $ 102,005 $ 130,234 $ 62,350

Hosting revenue from related parties

10,062 29,454 16,973

Equipment sales to customers

Digital asset self-mining revenue

$ 408,740 $ 390,333 $ 397,796

Equipment sales to related parties

Digital asset hosted mining revenue from customers

77,554 102,005 130,234

Digital asset mining revenue

Digital asset hosted mining revenue from related parties

— 10,062 29,454

Equipment sales to customers — — 11,391

Equipment sales to related parties — — 71,438

HPC hosting revenue 24,378 — —

Total revenue

1 unchanged sentence

Cost of revenue:

Cost of hosting services 87,245 169,717 77,678

Cost of digital asset self-mining

314,335 291,696 395,082

Cost of digital asset hosted mining services

53,558 87,245 169,717

Cost of equipment sales — — 67,114

Cost of digital asset mining 291,696 395,082 50,158

Cost of HPC hosting services 21,709 — —

Total cost of revenue

1 unchanged sentence

121,070 123,459 8,400

Loss on legal settlement

Change in fair value of digital assets

( 1,052 ) — —

Gain from sales of digital assets 3,893 44,298 4,814

Gain from sale of digital assets

— 3,893 44,298

Impairment of digital assets — ( 4,406 ) ( 231,315 )

Change in fair value of derivative instruments ( 3,918 ) — —

Change in fair value of energy derivatives

( 2,757 ) ( 3,918 ) —

Impairment of goodwill and other intangibles — — ( 1,059,265 )

10 unchanged sentences

132,247 108,111 252,973

Operating income (loss)

Operating (loss) income

( 19,196 ) 8,961 ( 2,109,553 )

Non-operating expenses, net:

(Gain) loss on debt extinguishment

Non-operating expenses (income), net:

Loss (gain) on debt extinguishment

487 ( 20,065 ) 287

1 unchanged sentence

37,070 86,238 96,826

Fair value adjustment on convertible notes — 186,853 16,047

Fair value adjustment on derivative warrant liabilities — ( 37,937 ) —

Change in fair value of convertible notes

Change in fair value of warrants and contingent value rights

1,369,157 — ( 37,937 )

Reorganization items, net ( 111,439 ) 191,122 ( 197,405 )

Other non-operating (income) expenses, net

Other non-operating (income) expense, net

( 325 ) ( 2,530 ) 5,232

Total non-operating expense, net

Total non-operating expenses, net

1,294,950 254,765 53,856

(Loss) income before income taxes

Loss before income taxes

( 1,314,146 ) ( 245,804 ) ( 2,163,409 )

1 unchanged sentence

859 683 ( 17,091 )

Net (loss) income

$ ( 1,315,005 ) $ ( 246,487 ) $ ( 2,146,318 )

Net (loss) income per share (Note 14):

$ ( 0.65 ) $ ( 6.30 ) $ 0.23

$ ( 0.65 ) $ ( 6.30 ) $ 0.20

Weighted average shares outstanding:

Net loss per share, basic and diluted

$ ( 4.39 ) $ ( 0.65 ) $ ( 6.30 )

Weighted average shares outstanding, basic and diluted

255,832 379,863 340,647

1 unchanged sentence

Core Scientific, Inc.

(Debtor-in-Possession)

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Loss

(in thousands)

1 unchanged sentence

2024 2023 2022

Net (loss) income

$ ( 246,487 ) $ ( 2,146,318 ) $ 47,312

Net loss $ ( 1,315,005 ) $ ( 246,487 ) $ ( 2,146,318 )

Other comprehensive income (loss), net of income taxes:

Change in fair value attributable to instrument-specific credit risk of convertible notes measured at fair value under the fair value option, net of tax effect of $ — , $ — and $ —

— 83,579 ( 10,966 )

Release to Reorganization items, net of accumulated fair value attributable to instrument-specific credit risk of convertible notes measured at fair value under the fair value option, net of tax effect of $ — , $ — and $ —

— — ( 72,613 )

Total other comprehensive income (loss), net of income taxes

— 10,966 ( 10,966 )

Comprehensive (loss) income

Total other comprehensive income, net of income taxes — — 10,966

Comprehensive loss

$ ( 1,315,005 ) $ ( 246,487 ) $ ( 2,135,352 )

1 unchanged sentence

Core Scientific, Inc.

(Debtor-in-Possession)

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(in thousands)

7 unchanged sentences

Shares Amount Shares Amount

Balance at December 31, 2020 10,826 $ 44,476 157,786 $ 16 $ 163,952 $ ( 74,744 ) $ — $ 89,224

Net income — — — — — 47,312 — 47,312

Other comprehensive loss, net of income taxes — — — — — — ( 10,966 ) ( 10,966 )

Stock-based compensation — — 40 — 38,937 — — 38,937

Exercise of stock options — — 14 — 7 — — 7

Issuances of common stock - business combination — — 113,456 11 1,173,753 — — 1,173,764

Issuances of common stock - legal settlements — — 240 — 2,436 — — 2,436

Exercise of warrants and stock options — — 40 — 496 — — 496

Balance at December 31, 2021

Balance at January 1, 2022

10,826 $ 44,476 271,576 $ 27 $ 1,379,581 $ ( 27,432 ) $ ( 10,966 ) $ 1,341,210

22 unchanged sentences

— $ — 386,883 $ 36 $ 1,823,260 $ ( 2,420,237 ) $ — $ ( 596,941 )

Core Scientific, Inc.

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ Deficit (cont’d)

(in thousands)

Contingently Redeemable

Convertible Preferred

Stock Common Stock Additional

Paid-In Capital Accumulated

Deficit Accumulated Other Comprehensive Income (Loss)

Stockholders’

Shares Amount Shares Amount

Balance at January 1, 2024 — $ — 386,883 $ 36 $ 1,823,260 $ ( 2,420,237 ) $ — $ ( 596,941 )

Cumulative effect of adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets

— — — — — 24 — 24

Balance at January 1, 2024, adjusted

— — 386,883 36 1,823,260 ( 2,420,213 ) — ( 596,917 )

— — — — — ( 1,315,005 ) — ( 1,315,005 )

Stock-based compensation — — — — 52,411 — — 52,411

Cancellation of common stock in connection with emergence

— — ( 386,883 ) ( 36 ) 36 — — —

Issuance of new common stock in connection with emergence

— — 152,576 2 296,893 — — 296,895

Issuance of new common stock under the Equity Rights Offering

— — 15,649 — 55,000 — — 55,000

Issuance of new common stock for the Equity Rights Offering backstop commitment

— — 2,111 — 5,475 — — 5,475

Issuance of new common stock for Bitmain obligation

— — 10,735 — 27,839 — — 27,839

Conversion premium on the issuance of the New Secured Convertible Notes

— — — — 33,202 — — 33,202

Issuance of warrants

— — — — ( 345,856 ) — — ( 345,856 )

Exercise of stock options — — — — 9 — — 9

Restricted stock awards issued, net of tax withholding obligations

— — 4,543 — ( 3,393 ) — — ( 3,393 )

Restricted stock awards forfeited — — ( 40 ) — — — — —

Exercise of warrants

— — 61,565 1 704,710 — — 704,711

Issuance of new common stock for New Secured Convertible Notes conversion

— — 44,585 — 261,772 — — 261,772

Issuance of new common stock for PIK interest

— — 882 — 3,677 — — 3,677

Balance at December 31, 2024 — $ — 292,606 $ 3 $ 2,915,035 $ ( 3,735,218 ) $ — $ ( 820,180 )

See accompanying notes to consolidated financial statements.

Core Scientific, Inc.

(Debtor-in-Possession)

Consolidated Statements of Cash Flows

4 unchanged sentences

$ ( 1,315,005 ) $ ( 246,487 ) $ ( 2,146,318 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 113,205 96,003 225,259

Losses on disposal of property, plant and equipment

4,210 1,956 28,025

Amortization of operating lease right-of-use assets 6,916 442 834

Stock-based compensation 51,924 58,892 182,894

Digital asset mining income

Digital asset self-mining and shared hosting revenue

( 425,253 ) ( 407,082 ) ( 397,796 )

Deferred income taxes — ( 18,521 ) 9,528

Loss on legal settlements — — 2,636

Gain on sale of intangible assets — ( 5,904 ) —

Gain (loss) on debt extinguishment ( 20,065 ) 287 8,016

Gain (loss) on issuance of notes payable through settlements

Fair value adjustment on derivative warrant liabilities — ( 37,937 ) —

Fair value adjustment on convertible notes — 186,853 31,217

Fair value adjustment on other liabilities — 9,498 —

Equity line of credit expenses — 1,668 —

Amortization of debt discount and debt issuance costs 752 7,135 1,374

Losses on disposals of property, plant and equipment

Proceeds from sale of digital assets generated by self-mining and shared hosting revenues 1

402,461 404,686 — 444,353

Change in fair value of digital assets

Impairment of digital assets — 4,406 231,315

Gain from sale of digital assets

— ( 3,886 ) ( 44,298 )

Impairment of goodwill, other intangibles and property, plant and equipment — 1,649,938 —

Allowance for doubtful accounts — 9,004 —

Reorganization

Change in fair value of energy derivatives

( 2,262 ) — —

Changes in working capital components:

Change in fair value of warrant liabilities

1,451,210 — ( 37,937 )

Change in fair value of contingent value rights

( 82,053 ) — —

Change in fair value of convertible notes

Change in fair value of other liabilities

Loss (gain) on debt extinguishment

487 ( 20,065 ) 287

Loss on issuance of notes payable through settlements — 8,515 —

Amortization of debt discount

3,756 752 7,135

Non-cash reorganization items

( 143,791 ) — ( 199,707 )

Non-cash PIK interest expense

Impairment of goodwill, other intangibles and property, plant and equipment — — 1,649,938

Provision for doubtful accounts — — 9,004

Equity line of credit expenses — — 1,668

Gain on sale of intangible assets — — ( 5,904 )

Deferred income taxes — — ( 18,521 )

Changes in operating assets and liabilities:

Accounts receivable, net 659 ( 767 ) ( 7,856 )

Accounts receivable from related parties — 23 277

Digital assets 384,366 400,055 24,011

Deposits for equipment for sales to customers — ( 2,403 ) 50,174

1 unchanged sentence

Accounts payable ( 12,272 ) 118,911 26,713

Accrued expenses and other current liabilities 130,382 17,229 56,200

Deferred revenue ( 47,807 ) 16,483 184,340

Accrued expenses and other 1,880 130,382 17,229

Deferred revenue from HPC hosting services

Deferred revenue from hosted mining services

( 9,481 ) ( 47,807 ) 16,483

Deferred revenue from related parties — — ( 72,449 )

Other noncurrent assets and liabilities, net ( 5,815 ) ( 13,006 ) ( 3,784 )

Net cash provided by (used in) operating activities 65,114 205,187 ( 56,735 )

Net cash provided by operating activities

42,896 65,114 205,187

Cash flows from Investing Activities:

1 unchanged sentence

Proceeds from sale of Cedarvale — 13,998 —

Cash paid in acquisitions — — ( 365,210 )

Deposits (credits) for self-mining equipment — ( 217,677 ) 704

Proceeds from sales of coupons — 10,850 ( 59,275 )

Deposits for self-mining equipment — — ( 217,677 )

Proceeds from the sale of coupons — — 10,850

Investments in internally developed software

Other — 29 ( 59 )

( 231 ) ( 833 ) —

Net cash used in investing activities ( 95,192 ) ( 2,996 ) ( 590,778 )

Cash flows from Financing Activities:

Proceeds from exercise of stock options and warrants — 25,049 513

Proceeds from the XPDI merger, net of transaction costs — 195,010 —

Proceeds from debt, net of issuance costs — 261,349 670,750

Repurchase of common shares to pay employee withholding taxes — ( 31,646 ) —

Principal repayments of finance leases ( 6,038 ) ( 3,658 ) ( 30,319 )

Payment for transaction costs — — ( 10,682 )

1 Proceeds from digital assets received as noncash revenue consideration liquidated nearly immediately after receipt as a routine operating activity.

Principal payments on debt ( 304,819 ) ( 40,991 ) ( 113,290 )

Net cash (used in) provided by financing activities ( 44,649 ) 306,153 603,532

(Decrease) increase in cash, cash equivalents, and restricted cash 17,469 ( 79,438 ) 122,957

Proceeds from the issuance of 3.00 % convertible senior notes, net

Issuance costs for 3.00 % convertible senior notes

Proceeds from the issuance of 0.00 % convertible senior notes, net

Issuance costs for 0.00 % convertible senior notes

( 1,313 ) — —

Proceeds from issuance of new common stock

Proceeds from draw from exit facility

Restricted stock tax holding obligations ( 3,393 ) — —

Proceeds from exercise of warrants

Proceeds from exercise of stock options 9 — 25,049

Repurchase of common shares to pay employee withholding taxes — — ( 31,646 )

Proceeds from the XPDI merger, net of transaction costs — — 195,010

Proceeds from debt, net of issuance costs — — 261,349

Net cash provided by (used in) financing activities

819,567 ( 44,649 ) 306,153

Net increase (decrease) in cash, cash equivalents and restricted cash

767,271 17,469 ( 79,438 )

Cash, cash equivalents and restricted cash—beginning of period 69,709 52,240 131,678

Cash, cash equivalents and restricted cash—end of period $ 836,980 $ 69,709 $ 52,240

Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:

Cash and cash equivalents $ 836,197 $ 50,409 $ 15,884

Restricted cash 783 19,300 36,356

Total cash, cash equivalents and restricted cash $ 836,980 $ 69,709 $ 52,240

Supplemental disclosure of other cash flow information:

Cash paid for interest $ 28,798 $ 4,708 $ 86,010

Income tax (refunds) payments

$ ( 159 ) $ ( 370 ) $ 5,756

Income tax payments $ ( 370 ) $ 5,756 $ 9,619

Cash paid for reorganization items, net $ 86,539 $ — $ —

Supplemental disclosure of noncash investing and financing activities:

Property, plant and equipment obtained in exchange transaction $ — $ 62,338 $ —

Noncash consideration paid for acquisitions

Cash paid for reorganization items

$ 53,835 $ 86,539 $ —

Supplemental disclosure of noncash investing and financing activities:

Change in accrued capital expenditures $ 13,411 $ 2,731 $ 69,286

Reduction in plant, property, and equipment basis related to Bitmain purchase $ ( 26,101 ) $ — $ —

Reclass of other current and non-current assets to plant, property, and equipment $ 6,867 $ — $ —

Increase in right-of-use assets due to lease commencement $ 111,736 $ — $ —

Extinguishment of convertible notes upon emergence $ ( 559,902 ) $ — $ —

Extinguishment of accounts payable, accrued expenses, finance lease liability, and notes payable upon emergence $ ( 473,244 ) $ — $ —

Cancellation of common stock in connection with emergence $ ( 36 ) $ — $ —

Issuance of new common stock in connection with emergence $ 296,893 $ — $ —

Issuance of new common stock for Bitmain obligation $ 27,839 $ — $ —

Issuance of new common stock for the Equity Rights Offering backstop commitment $ 5,475 $ — $ —

Issuance of contingent value rights $ 86,325 $ — $ —

Issuance of warrants $ 345,856 $ — $ —

Issuance of New Secured Convertible Notes $ 260,000 $ — $ —

Issuance of Secured Notes, net of discount $ 149,520 $ — $ —

Issuance of Exit Credit Agreement including $ 1.2 million paid in kind upfront fee

$ 41,200 $ — $ —

Increase in notes payable for acquisition of property, plant and equipment

Decrease in notes payable in exchange for equipment

Issuance of miner equipment lender facility loans $ 52,947 $ — $ —

Issuance of notes related to settlement $ 9,092 $ 38,547 $ —

Cumulative effect of adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets $ 24 $ — $ —

Payment-in-kind interest on Secured and Other Convertible Notes

$ — $ — $ 31,382

Cashless exercise of warrants $ — $ 3,001 $ —

Property, plant and equipment acquired under finance leases

Issuance of new common stock for PIK interest on New Secured Convertible Notes

$ 3,677 $ — $ —

Payment-in-kind interest $ — $ 31,382 $ 7,274

Decrease in equipment related to debt extinguishment $ 17,849 $ — $ —

Issuance of new common stock for New Secured Convertible Notes conversion

$ 261,772 $ — $ —

Increase in lease liability and right-of-use assets due to lease modification $ 695 $ — $ —

Noncash exercise of warrants $ 39,828 $ — $ 3,001

Property, plant and equipment disposed of through settlements $ — $ 6,301 $ —

Purchase of insurance policies financed by short-term note payable $ — $ 5,011 $ —

Issuance of notes payable through settlements $ 38,547 $ — $ —

Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:

Cash and cash equivalents $ 50,409 $ 15,884 $ 117,871

Restricted cash 19,300 36,356 13,807

Total cash, cash equivalents and restricted cash $ 69,709 $ 52,240 $ 131,678

Decrease in equipment related to debt extinguishment $ — $ 17,849 $ —

Decrease in notes payable in exchange for equipment $ — $ ( 38,610 ) $ —

Property, plant, and equipment obtained in exchange transaction $ — $ — $ 62,338

Certain prior year amounts have been reclassified for consistency with the current year presentation.

1 unchanged sentence

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

ORGANIZATION AND DESCRIPTION OF BUSINESS

MineCo Holdings, Inc.

was incorporated on December 13, 2017, in the State of Delaware and changed its name to Core Scientific, Inc.

(“Legacy Core”) pursuant to an amendment to its Certificate of Incorporation dated June 12, 2018.

On August 17, 2020, Legacy Core engaged in a holdco restructuring to facilitate a borrowing arrangement by Legacy Core pursuant to which Legacy Core was merged with and into a wholly owned subsidiary of Core Scientific Holding Co.

and became a wholly owned subsidiary of Core Scientific Holding Co.

and the stockholders of Legacy Core became the stockholders of Core Scientific Holding Co.

In July 2021, Core Scientific Holding Co.

completed the acquisition of Blockcap, Inc.

(“Blockcap”).

Prior to its acquisition, Blockcap was one of Legacy Core’s largest hosting customers.

On January 19, 2022, following the approval at the special meeting of the stockholders of Power & Digital Infrastructure Acquisition Corp., a Delaware corporation (“XPDI”), Core Scientific Holding Co.

merged with XPDI, and XPDI Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of XPDI (“Merger Sub”), consummated the transactions contemplated under the merger agreement.

In connection with the closing of that merger (the “Business Combination”), XPDI changed its name from Power & Digital Infrastructure Acquisition Corp.

to Core Scientific, Inc.

(“Core Scientific” or the “Company”).

Core Scientific is an operator of dedicated, purpose-built facilities for digital asset mining and a premier provider of blockchain infrastructure, software solutions and services.

The Company currently focuses primarily on digital asset mining.

We employ our own large fleet of computers (“miners”) to earn digital assets for our own account and provide hosting services for large customers at our seven operational data centers in Georgia ( 2 ), Kentucky ( 1 ), North Carolina ( 1 ), North Dakota ( 1 ) and Texas ( 2 ).

Core Scientific, Inc.

(“Core Scientific” or the “Company”) is a leader in digital infrastructure for bitcoin mining and high-performance computing.

We operate dedicated, purpose-built facilities for digital asset mining and are a premier provider of digital infrastructure, software solutions and services to our third-party customers.

We employ our own large fleet of computers (“miners”) to earn digital assets for our own account and we provide hosting services for large bitcoin mining customers and are in the process of allocating and converting a significant portion of our ten data centers in Alabama ( 1 ), Georgia ( 2 ), Kentucky ( 1 ), North Carolina ( 1 ), North Dakota ( 1 ), Oklahoma ( 1 ), and Texas ( 3 ) to support artificial intelligence-related workloads under a series of contracts that entail the modification of certain of our data centers to deliver hosting services for high-performance computing (“HPC”).

We derive the majority of our revenue from earning bitcoin for our own account (“self-mining”).

Our hosting business provides a full suite of services to digital asset mining customers.

We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary to operate, maintain and efficiently mine digital assets.

We operate in two segments:

“Mining,” consisting of digital asset mining for our own account, and “Hosting,” consisting of our blockchain infrastructure and third-party hosting business.

During 2022 and 2021, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales.”

Our business strategy is to grow our revenue and profitability by increasing the capacity and efficiency of our self-mining fleet and entering into strategic, revenue-enhancing hosting opportunities with third parties.

We intend to develop the infrastructure necessary to support business growth and profitability and capture adjacent opportunities that leverage our mining infrastructure, expertise and capabilities.

The Company has historically focused on designing, developing and operating digital infrastructure to engage in digital asset mining for its own account and providing hosting solutions for third-party digital asset miners.

Beginning on March 6, 2024, we announced a series of new contractual agreements with a third-party provider of HPC operations for customers using specialized graphics processing units (“GPUs”).

These new agreements leverage the Company’s existing digital infrastructure and expertise in third-party hosting solutions.

We currently operate in three segments:

“Digital Asset Self-Mining,” consisting of digital asset mining for our own account, “Digital Asset Hosted Mining,” consisting of our digital infrastructure and third-party hosting services for digital asset mining, and “HPC Hosting,” consisting of our digital infrastructure and third-party hosting services for client HPC operations.

Prior to April 1, 2024, we operated only in the Digital Asset Self-Mining and Digital Asset Hosted Mining segments.

Our digital asset hosted mining business provides a full suite of services to our digital asset mining customers.

We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary for our customers to operate, maintain and efficiently mine digital assets.

Our HPC hosting services provide colocation, facilities operations, security and other services to third-party HPC customers to support workloads for machine learning and artificial intelligence.

The extension of our business into the HPC Hosting segment involves significant risk, including risks involving facility construction, supply chain and the risk of nonperformance by our single customer, as disclosed further in Part I, Item 1A.

— “Risk Factors” of this Annual Report on Form 10-K.

Chapter 11 Filing and Emergence from Bankruptcy

On December 21, 2022, the Company and certain of its affiliates (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Code (the “Bankruptcy Code”).

The Chapter 11 Cases are jointly administered under Case No.

The Debtors continue to operate their business and manage their properties as “debtors-in-possession” (“DIP”) under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Debtors have filed various “first day” motions with the Bankruptcy Court requesting customary relief, which were generally approved by the Bankruptcy Court on December 22, 2022, that have enabled the Company to operate in the ordinary course while under Chapter 11 protection.

For detailed discussion about the Chapter 11 Cases, refer to Note 3 — Chapter 11 Filing and Other Related Matters.

The Chapter 11 Cases were jointly administered under Case No.

The Debtors continued to operate their business and manage their properties as “debtors-in-possession” (“DIP”) under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

For detailed discussion about the Chapter 11 Cases, refer to Note 3 — Chapter 11 Filing and Emergence from Bankruptcy.

On January 15, 2024, the Debtors filed the Fourth Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

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On January 23, 2024 (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied or waived and the Company emerged from bankruptcy.

The Company was not required to apply fresh start accounting based on the provisions of Accounting Standards Codification (“ASC”) 852, Reorganizations , since the entity’s reorganization value immediately before the date of confirmation was more than the total of all its post-petition liabilities and allowed claims.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

4 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Debtor-in Possession

As of December 31, 2023, we were debtors-in-possession under the Bankruptcy Code.

As such, we were authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

For detailed discussion about the Chapter 11 Cases and our emergence from bankruptcy, refer to Note 3 — Chapter 11 Filing and Other Related Matters and Note 17 — Subsequent Events.

Liquidity and Financial Condition

For the year ended December 31, 2023, the Company generated a net loss of $ 246.5 million.

The Company had unrestricted cash and cash equivalents of $ 50.4 million as of December 31, 2023.

The Company has historically generated cash primarily from the issuance of common stock and debt, through sales of digital assets received as digital asset mining revenue and from operations through contracts with customers.

As of December 31, 2023, the Company had a working capital deficit of $ 391.4 million and a total stockholders’ deficit of $ 596.9 million.

The Company’s status in bankruptcy along with its historical financial performance resulted in the Company previously concluding and disclosing that there was substantial doubt regarding its ability to continue as a going concern.

The Plan of Reorganization at the Effective Date (i) eliminated substantial debt and debt service, (ii) established new debt in the form of a secured credit agreement, publicly traded notes and convertible notes, and debt to equipment lenders secured by mining machines, and (iii) new publicly traded equity and warrants.

The settlement of accrued and payable claims through new debt and equity issuance and the extension of debt service to future periods on the Effective Date substantially eliminates the reported working capital deficit at December 31, 2023.

When combined with the additional liquidity of the available delayed-draw term loan and the expected cash flows from operations, management has concluded that the Company’s capital, liquidity and cash flow from operations is sufficient to fund its operations and debt service obligations for at least the next 12 months and that its previous conclusion regarding substantial doubt has been alleviated.

For detailed discussion about our emergence from bankruptcy, refer to Note 17 — Subsequent Events.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period.

Some of the more significant estimates include assumptions used to estimate the Company’s ability to continue as a going concern, the valuation of the Company’s common shares and the determination of the grant date fair value of stock-based compensation awards for periods prior to the Business Combination, the valuation of digital assets, goodwill, other intangible assets and property, plant and equipment, the fair value of convertible debt, derivative warrants, acquisition purchase price accounting, and income taxes.

Some of the more significant estimates include assumptions used in the valuation of the Company’s common shares and the determination of the grant date fair value of stock-based compensation awards for periods prior to the Business Combination (as defined in Note 4 — Business Combination and Restructuring), the valuation of digital assets, property, plant and equipment, the initial measurement of lease liabilities, stock-based compensation, the fair value of derivative liabilities, and income taxes.

These estimates are based on information available as of the date of the financial statements;

2 unchanged sentences

Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less from the date of acquisition.

As of December 31, 2023, cash equivalents included $ 42.2 million of highly liquid money market funds, which are classified as Level 1 within the fair value hierarchy.

Restricted cash consists of cash held in escrow under the Original DIP Credit Agreement and in escrow to pay for construction and development activities.

As of December 31, 2024, the Company had cash and cash equivalents of $ 836.2 million, substantially all of which exceeded Federal Deposit Insurance Corporation insured limits.

Cash equivalents included $ 832.2 million of highly liquid money market funds, which are classified as Level 1 within the fair value hierarchy.

Restricted cash consists of a deposit held at a lender’s bank in accordance with the terms of a note agreement.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable balance consists of amounts due from its hosting customers.

The Company records accounts receivable at the invoiced amount less an allowance for any potentially uncollectible accounts under the current expected

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected.

The Company records accounts receivable at the invoiced amount less an allowance for any potentially uncollectible accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected.

The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, which considers forecasts of future economic conditions in addition to information about past events and current conditions.

5 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, the Company did not record any credit losses or recoveries.

The Company’s allowance for doubtful accounts was nil and $ 8.7 million as of December 31, 2023 and 2022, respectively.

Valuation of Common Stock

Upon completion of the Business Combination (as discussed in Note 4 — Business Combinations, Acquisitions and Restructuring) in fiscal 2022, the Company determined the fair value of New Core Common Stock (as defined below) using the most observable inputs available, including quoted prices of XPDI Class A Common Stock and sales of the Company’s Series A and Series B Contingently Redeemable Convertible Preferred Stock.

The Company also used the market approach, which estimated the value of the Company’s business by applying valuation multiples derived from the observed valuation multiples of comparable public companies to the Company’s expected financial results.

The Company retained the services of certified valuation specialists to assist with the valuation of the Company’s common stock.

Certain inputs for the New Core Common Stock fair value were unobservable and significant to the resulting fair value measurement, resulting in Level 3 instrument classification.

Applying these valuation and allocation approaches involves the use of estimates, judgments and assumptions that are highly complex and subjective, such as those regarding the Company’s expected future revenue, expenses, valuation multiples, the selection of comparable public companies and the probability of future events.

Changes in any or all of these estimates and assumptions, or the relationships between these assumptions, impact the Company’s valuation as of each valuation date and may have a material impact on the valuation of the Company’s common stock and common stock warrants issued with the Company’s debt and equity instruments.

The Company’s allowance for doubtful accounts was nil as of December 31, 2024 and 2023.

Digital Assets

The Company has sold or held its digital assets as dictated by liquidity and funding needs.

Currently the Company is required by covenant to sell bitcoin it receives as consideration shortly after receipt.

Sales of digital assets awarded to the Company through its self-mining activities are classified as cash flows from operating activities.

The Company’s digital assets are accounted for as intangible assets with indefinite useful lives.

Digital assets that are received as digital asset mining revenue are initially measured at fair value as discussed below in Digital Asset Mining Revenue.

Digital assets that are purchased in an exchange of one digital asset for another digital asset are recognized at the fair value of the asset surrendered.

As indefinite lived intangible assets digital assets are not amortized but are evaluated and assessed for impairment on at least an annual basis and more frequently in the interim when indicators of impairment exist.

Impairment is indicated and recognized when the carrying amount of the digital asset lot exceeds its fair value.

Impairment is measured using quoted prices of the digital asset at the time its fair value is being assessed.

Quoted prices, including intraday low prices, are collected and utilized in impairment testing and measurement on a daily basis.

To the extent that an impairment loss is recognized, the loss establishes the new cost basis of the digital asset.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized impairments of digital assets of $ 4.4 million, $ 231.3 million, and $ 37.2 million, respectively.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized net gains of $ 3.9 million, $ 44.3 million, and $ 4.8 million respectively, on sales of digital assets.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income (loss).

The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period.

ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024, with early adoption permitted.

The Company’s digital assets are within the scope of ASU 2023-08 and the Company elected to early adopt the new standard prospectively effective January 1, 2024.

The transition guidance requires a cumulative-effect adjustment as of the beginning of the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Activity related to our digital asset balances for the years ended December 31, 2023 and 2022 were as follows (in thousands):

current fiscal year for any difference between the carrying amount of the Company’s digital assets and fair value.

The early adoption did not have a material impact on the Company’s consolidated financial statements.

As of August 19, 2024, the Company is no longer required to sell bitcoin it earns through mining within ten days of receipt as provided by the terms of the recently extinguished debt facilities (Exit Credit Agreement, the Secured Notes and the New Secured Convertible Notes).

See Note 8 — Convertible and Other Notes Payable.

The Company intends to optimize cash received from bitcoin mining which may entail, subject to market conditions, holding bitcoin for future sale at any particular point in time.

Digital assets are classified as current assets on the Company’s Consolidated Balance Sheets, reflecting management's current intent and expectation to convert these assets to cash within the next year.

The classification of digital assets is evaluated regularly, and any change in management's intent or expectations regarding the timing of conversion to cash could result in a reclassification of these assets.

Sales of digital assets awarded to the Company through its self-mining activities are classified as cash flows from operating activities if sold nearly immediately.

The Company does not have any off-balance sheet holdings of digital assets and does not safeguard digital assets for third parties.

The Company tracks its cost basis of digital assets in accordance with the first-in-first-out method of accounting.

The Company’s digital assets have active markets with observable prices and their fair value measurements are considered Level 1.

The following table presents a roll-forward of total digital assets for the year ended December 31, 2024, (under the prospectively adopted ASU 2023-08 fair value model), and the year ended December 31, 2023 (in thousands):

December 31, 2024 December 31, 2023

Digital assets, beginning of period

Digital asset mining revenue, net of receivables *

$ 2,284 $ 724

Mining proceeds from shared hosting 17,626 —

Proceeds from sales of digital assets

Cumulative effect of ASU 2023-08, adopted January 1, 2024

Digital assets, beginning of period, as adjusted

Digital asset self-mining revenue, net of receivables 1

409,560 389,456

Gain from sales of digital assets 3,886 44,298

Mining revenue from shared hosting

15,693 17,626

Proceeds from sales of digital assets and shared hosting

( 402,461 ) ( 404,686 )

Change in fair value of digital assets 2

Gain from sale of digital assets

Impairment of digital assets

Payment of board fee

( 89 ) ( 316 )

Digital assets, end of period

$ 23,893 $ 2,284

1 As of December 31, 2024 and 2023, there was $ 0.9 million and $ 1.7 million, respectively, of digital asset receivable included in prepaid expenses and other current assets on the consolidated balance sheets.

Digital assets are available to be sold as a source of funds, if needed, for current operations and are classified as current assets on the Company’s Consolidated Balance Sheets.

In connection with the credit and note agreements described in Note 17 — Subsequent Events, the Company is required to sell its bitcoin within ten days of receipt.

The Company does not have any off-balance sheet holdings of digital assets nor does it have the obligation to safeguard digital assets for third parties.

2 During the year ended December 31, 2024, sales of digital assets resulted in realized gains of $ 3.9 million and realized losses of $ 3.7 million, which is measured as the difference between the original cost basis and the disposal proceeds.

The following table presents the Company’s bitcoin holdings as of December 31, 2024, (in thousands, except for quantity):

256 $ 24,991 $ 23,893

Deposits for Equipment

The Company has entered into agreements with vendors to supply equipment for its digital asset mining operations.

These agreements generally require significant refundable deposits payable months in advance of delivery and additional advance payments in monthly installments thereafter.

The Company classifies deposits for digital asset mining equipment based on the expected predominant source and use of the cash flows for the equipment that has been contracted for purchase.

The Company expects that the predominant source and use of cash flows for digital asset mining equipment will be related to the Company’s own self-mining operations.

Therefore, the Company has classified deposits for equipment as cash flows from investing activities.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Property, Plant and Equipment, Net

Property, plant and equipment includes land, buildings and improvements for datacenter facilities and leasehold improvements for the Company’s corporate headquarters.

Property and equipment consists of computer, mining, network, electrical and other equipment, including property and equipment under finance leases.

Property, plant, and equipment includes the cost of land, buildings, and improvements for datacenter and support facilities and the Company’s corporate office space.

Property and equipment further consists of computer, mining, network, electrical and other equipment, including property and equipment under finance leases.

Property, plant and equipment, net is stated at cost less accumulated depreciation and amortization.

3 unchanged sentences

Depreciation expense, including amortization of assets held under finance leases, is primarily included in Cost of revenue in the Company’s Consolidated Statements of Operations.

Self-mining computer equipment that is subsequently contracted for sale to customers is valued at the lower of cost or net realizable value, with any write-down recognized as Cost of Equipment Sales in the Company’s Consolidated Statements of Operations.

Property, plant and equipment capitalized costs include the directly identifiable costs incurred to acquire, construct, install, or otherwise prepare the asset for its intended use and to put it into service.

Directly identifiable costs include construction payroll and benefits, demolition necessary for construction to purpose, and other direct capital project costs.

Intersegment transfers of property, plant, and equipment are recorded at their net carrying value with no resulting gain or loss.

The Company has entered into operating and finance leases for office space, data facilities, computer and networking equipment, electrical infrastructure and office equipment, with lease periods expiring through 2051.The Company determines whether an arrangement contains a lease at the inception of the arrangement.

If a lease is determined to exist, the term of such lease is assessed based on the commencement date on which the underlying asset is made available for the Company’s use by the lessor.

The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising.

The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and presentation over the lease term.

For leases with a term exceeding 12 months, a lease liability is recognized on the Company’s consolidated balance sheets at lease commencement, reflecting the present value of its fixed payment obligations over the lease term.

A corresponding right-of-use asset equal to the initial lease liability is also recognized, adjusted for any prepaid rent and initial direct costs incurred in connection with the execution of the lease and reduced by any lease incentives received.

For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses rates implicit in its leasing arrangements, if readily determinable, otherwise the Company uses its incremental borrowing rate.

The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a similarly secured basis and term, the economic environment of the associated lease, and other information available to management.

For leases with a term of 12 months or less, at commencement, and that do not include an option to purchase the underlying assets, the Company has elected the exemption to not measure and recognize an associated lease liability or right-of-use asset.

For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term.

Variable lease costs are recognized as the obligation for payment is incurred and primarily consist of insurance and property tax reimbursements to the lessor.

The Company addresses lease modifications that are not accounted for as separate leases at the effective date of the modification.

If the terms and conditions of the lease are changed, the lease payments are adjusted accordingly and the lease liability is remeasured using a revised discount rate.

Any resulting changes in the lease liability are recognized in the carrying amount of the related right-of-use asset.

Long-Lived Asset Impairments

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A long-lived asset may be impaired when the estimated future undiscounted cash flows are less than the carrying amount of the asset.

If that comparison indicates that the asset’s carrying value may not be recoverable, the impairment is measured based on the difference between the carrying amount and the estimated fair value of the asset.

Long-lived assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell.

See Note 5 — Property, Plant and Equipment, Net, for discussion of long-lived asset impairments related to property, plant and equipment, including impairments.

The total purchase price of any of the Company’s acquisitions is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date.

The excess of the purchase price over those fair values is recorded as goodwill.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Company does not amortize goodwill, but tests it for impairment annually as of October 31, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting units are less than their carrying amounts as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test.

If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or chooses not to perform a qualitative assessment, then the quantitative goodwill impairment test will be performed.

The quantitative test compares the fair value of the reporting unit with its carrying amount.

If the carrying amount exceeds its fair value, the excess of the carrying amount over the fair value is recognized as an impairment loss, and the resulting measurement of goodwill becomes its new carrying value.

The Company identified goodwill impairment triggering events during the year ended December 31, 2022.

These events included declines in the market price of bitcoin, the market price of the Company’s stock and the Company’s market capitalization.

As a result, the Company performed the quantitative test to compare the fair value to the carrying amount for each reporting unit at June 30, 2022.

Sustained and further deterioration in market prices and in the Company’s financial position resulted in additional quantitative testing at September 30, 2022.

The Company concluded that the carrying value of the Mining reporting unit exceeded its fair value and, as such, recorded a $ 996.5 million impairment of goodwill in its Mining reporting unit for the year ended December 31, 2022.

The Company concluded the carrying amount of the Equipment Sales and Hosting reporting unit exceeded its fair value and, as such, recorded a $ 58.2 million impairment of goodwill in its Equipment Sales and Hosting reporting unit for the year ended December 31, 2022.

These impairments are presented within impairment of goodwill and other intangibles on the Company’s Consolidated Statements of Operations.

As of December 31, 2023 and 2022, the Company had no remaining goodwill.

Energy Forward Purchase Contract

In October 2023, the Company entered into an energy forward purchase contract to fix a specified component of the energy price related to forecasted energy purchases at the Cottonwood 1 facility from November 1, 2023 through May 31, 2024, respectively, in incremental blocks of 48 MW per month.

The energy forward purchase contract minimizes price volatility risk as energy is purchased at a fixed rate, addressing exposures related to changes in operating costs.

The Company did not enter into the forward purchase contract for speculative or trading purposes.

The Company determined the forward purchase contract meets the definition of a derivative because it has a notional amount, no initial net investment, and can be net settled.

The forward purchase contract is not designated as a hedging instrument for accounting.

The forward purchase contract is recorded and initially measured at its fair value and is subsequently remeasured at its fair value each reporting period, with changes in fair value reported in net (loss) income.

T he following table summarizes the fair value of the energy forward purchase contract on the Company’s Consolidated Balance Sheets (in thousands):

Fair Value (Level 2) as of December 31,

Financial statement line item

Energy forward purchase contract

Accrued expenses and other current liabilities

If that comparison indicates that the asset’s carrying value may not be recoverable, the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Company recorded the following gains/(losses) related to the energy forward purchase contract on the Company’s Consolidated Statements of Operations (in thousands):

Year Ended December 31,

Financial statement line item

Energy forward purchase contract

Change in fair value of derivative instruments

$ ( 3,918 ) $ —

Derivative Warrant Liabilities

The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

The classification of derivative instruments, including whether such instruments should be classified as liabilities or as equity, is re-assessed at the end of each reporting period.

The Company has public warrants and private placement warrants that have been recognized as derivative liabilities.

Accordingly, the Company recognized the warrant instruments as liabilities at fair value and adjusted the instruments to fair value at each reporting period.

The liabilities were subject to re-measurement at each balance sheet date until exercised, and any change in fair value was recognized in the Company’s Consolidated Statements of Operations and presented as fair value adjustment on derivative warrant liabilities.

The initial and subsequent estimated fair value of both the public warrants and private placement warrants was based on the listed price in an active market for the public warrants.

After the Petition Date, as defined below, discussed in Note 3 — Chapter 11 Filing and Other Related Matters below, the public warrants and private placement warrants were moved to liabilities subject to compromise.

See Note 11 — Derivative Warrant Liabilities for additional discussion.

impairment is measured based on the difference between the carrying amount and the estimated fair value of the asset.

Long-lived assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell.

Deferred Revenue

The Company records contract liabilities in Deferred revenue on the Consolidated Balance Sheets when cash payments are received in advance of performance and recognizes them as revenue when the performance obligations are satisfied.

The Company’s total deferred revenue balance as of December 31, 2024 and December 31, 2023, was $ 18.1 million and $ 9.8 million, respectively.

In the year ended December 31, 2024, the Company recognized $ 6.7 million of revenue, respectively, that was included in the deferred revenue balance as of the beginning of the year.

In the year ended December 31, 2023, the Company recognized $ 21.0 million of revenue that was included in the deferred revenue balance as of the beginning of the year.

Advanced payments are typically recognized in the following month for hosted mining services and are generally recognized within 30 months of license order commencement for HPC hosting services.

Convertible and Other Notes Payable

Convertible and other notes payable (“Notes payable”) are accounted for under ASC 470, Debt (“ASC 470”) and are presented at their carrying value, which is their remaining par or face amount net of any related unamortized premium, discount and issuance costs.

Notes payable are initially recognized at their present value.

When cash proceeds are received for the issuance of Notes payable, the proceeds are used to establish their present value.

When cash proceeds are not received for the issuance of Notes payable, their present value is based on the consideration exchanged.

This present value generally will be the Notes payable’s cash flows discounted at a market rate when it is more evident than the noncash consideration exchanged.

When the present value of Notes payable on issuance varies from its par or face amount, an original discount or premium results and any related issuance costs are used to determine an effective interest rate.

Original premium, discount and issuance costs are amortized using the level effective rate interest method.

Amortization is recognized as a component of current interest expense.

Notes payable are evaluated at issuance to determine whether or not they have features or terms which would be treated as embedded derivatives that are required to be bifurcated under ASC 815, Derivatives and Hedging (“ASC 815”).

As of December 31, 2024 and 2023, Notes payable did not have any embedded derivatives required to be bifurcated.

Debt Issuance Costs

Debt issuance costs are capitalized and amortized over the term of the associated debt.

Debt issuance costs are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the debt liability consistent with the debt discount.

Revenue From Contracts With Customers - Digital Asset Mining Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue Recognition (“ASC 606”).

The core principle of the revenue standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when the Company satisfies a performance obligation

In order to identify the performance obligations in a contract with a customer, an entity must assess the promised goods or services in the contract and identify each promised good or service that is distinct.

A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

• The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct);

• The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Debt issuance costs are presented in the Company’s Consolidated Balance Sheets as a direct deduction from the carrying amount of the debt liability consistent with the debt discount.

Contingent Value Rights Liabilities

As described in Note 9 — Contingent Value Rights and Warrant Liabilities, on the Effective Date, pursuant to the Plan of Reorganization, the Company entered into a contingent value rights agreement (the “Contingent Value Rights Agreement”) which provides for the issuance of the contingent value rights (the “CVRs”) to certain creditors and provides for the issuance of CVRs issued to holders of allowed general unsecured claims (“GUC”) (in such capacity, the “GUC Payees”) (the “GUC CVRs”).

The CVRs and GUC CVRs are equity-linked instruments which are either only cash settled or in some instances share settled at the Company’s sole discretion.

The Company determined that these equity-linked instruments are not indexed to the Company’s stock and are required to be recognized as liabilities which are, initially and subsequently, measured at fair value with changes in value reflected in Net loss.

Warrant Liabilities

The classification of derivative instruments, including whether such instruments should be classified as liabilities or as equity, is re-assessed at the end of each reporting period.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.

The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, an entity must consider the effects of all of the following:

• Variable consideration

• Constraining estimates of variable consideration

• The existence of a significant financing component in the contract

• Noncash consideration

• Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized under the accounting contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each performance obligation on a relative standalone selling price basis.

The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time, as appropriate.

Application of the five-step model to the Company’s mining operations

Prior to the Effective Date, the Company had public warrants and private placement warrants that were recognized as derivative liabilities.

Accordingly, the Company recognized the warrant instruments as liabilities at fair value and adjusted the instruments to fair value at each reporting period.

The liabilities were subject to re-measurement at each balance sheet date, and any change in fair value was recognized in the Company’s Consolidated Statements of Operations and presented as Change in fair value of warrants and contingent value rights.

The initial and subsequent estimated fair value of both the public warrants and private placement warrants was based on the listed price in an active market for the public warrants.

As described in Note 9 — Contingent Value Rights and Warrant Liabilities, on the Effective Date, pursuant to the Plan of Reorganization, holders of the Company’s previous common stock received warrants.

The warrants are equity-linked instruments.

Revenue From Contracts With Customers - Digital Asset Self-Mining Revenue

The Company recognizes revenue in accordance with ASC 606, Revenue Recognition (“ASC 606”).

One of the Company’s ongoing major or central operations is to provide a service of performing hash calculations to third-party pool operators alongside collectives of third-party bitcoin miners (such collectives, “mining pools”) as a participant.

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The mining pool fee is only incurred to the extent we perform hash calculations and generate revenue in accordance with the pool operator’s payout formula during the same 24-hour period beginning mid-night UTC daily.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The above non-cash consideration is variable, since the amount of block reward earned depends on the amount of hash calculations we perform;

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The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that control is transferred, which is the same day as contract inception.

The Company measures the non-cash consideration based on the volume weighted average spot rates of aggregated exchanges over a 24-hour period beginning mid-night UTC and ending 23:59:59 UTC on the day of contract inception using the Company’s primary bitcoin pricing source system.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The Company measures the non-cash consideration using the spot rate for Bitcoin as quoted on Coinbase Global, Inc., the Company’s principal market.

The Company recognizes non-cash consideration on the same day that control of the contracted service is transferred to the pool operator, which is the same day as the contract inception.

Prior to 2022, in certain arrangements, the Company did not have a reliable means to estimate its relative share of the rewards until they were paid to it and the variable consideration was constrained until the Company received the consideration, at which time revenue was recognized.

The Company measured consideration at fair value on the date received, which was typically not materially different than the fair value at inception of the arrangement or the time the Company had earned the award from the pools.

Direct expenses associated with providing hash calculation services to a third-party operated mining pool are recorded as cost of revenues.

Depreciation and amortization expenses on fixed and right-of-use assets, including digital asset mining equipment, used to provide the services are also recorded as a component of cost of revenues.

Revenue From Contracts With Customers - Hosting

The Company primarily generates revenue from contracts with customers from hosting services.

Prior to fiscal 2023, the “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”, when the Company also recognized revenue from contracts with customers from sales of computer equipment, in which the Company generally recognized revenue when control of the promised equipment was transferred to customers.

Revenue From Contracts With Customers - Digital Asset Hosted Mining Services

The Company generates revenue from contracts with customers from digital asset hosted mining services.

Prior to fiscal 2023, the “ Digital Asset Hosted Mining ” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”, when the Company also recognized revenue from contracts with customers from sales of computer equipment, in which the Company generally recognized revenue when control of the promised equipment was transferred to customers.

The Company generally recognizes revenue when the promised service is performed.

Revenue excludes any amounts collected on behalf of third parties, including sales and indirect taxes.

Performance Obligations

The Company’s performance obligations primarily relate to hosting services, which are described below.

The Company has performance obligations associated with commitments in customer hosting contracts for future services that have not yet been recognized in the financial statements.

As of December 31, 2023, for contracts with original terms that exceed one year (typically ranging from 15 to 24 months), we expect to recognize approximately $ 78.1 million of revenue in the future related to performance obligations associated with existing hosting contracts.

As of December 31, 2023, unsatisfied performance obligations that are expected to be recognized in 2024 and 2025 are $ 68.4 million and $ 9.7 million, respectively.

Hosting Services

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The term between invoicing and when payment is due typically does not exceed 30 days.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Equipment Sales (Applicable to years ended December 31, 2022 and 2021)

Equipment Sales (Applicable to year ended December 31, 2022)

The Company entered into contracts with more than one performance obligation.

For example, the Company entered into contracts that include both hosting services and sales of computer equipment to those same customers, for which revenue is recognized at the point in time when control of the equipment is transferred to the customer (typically at the start of the contract period).

For example, the Company entered into contracts that include both hosting services and sales of computer equipment to those same customers, for which revenue was recognized at the point in time when control of the equipment was transferred to the customer (typically at the start of the contract period).

For these contracts, revenue was recognized based on the relative standalone selling price of each performance obligation in the contract.

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We do not expect to enter equipment sales contracts in the future or to have any equipment sales revenue after December 31, 2022.

Deferred Revenue

The Company records contract liabilities in Deferred revenue on the Company’s Consolidated Balance Sheets when cash payments are received in advance of performance and recognizes them as revenue when the performance obligations are satisfied.

The Company’s current and non-current deferred revenue balance as of December 31, 2023 and 2022, was $ 9.8 million and $ 80.4 million, respectively, all from advance payments received during the years then ended.

In the year ended December 31, 2023, the Company recognized $ 21.0 million of revenue that was included in the deferred revenue balance as of the beginning of the year.

Of the remaining deferred revenue balance, $ 20.5 million and $ 33.0 million were released as a result of the Celsius and Gryphon claim settlements, respectively.

See Note 3 — Chapter 11 Filing and Other Related Matters for further details on the settlements.

In the year ended December 31, 2022, the Company recognized $ 88.6 million of revenue that was included in the deferred revenue balance as of the beginning of the year.

Advanced payments for hosting services are typically recognized in the following month and advanced payments for equipment sales are generally recognized within one year .

Deposits for Equipment

The Company has entered into agreements with vendors to supply equipment for its customers and for the Company’s own digital asset mining operations.

These agreements generally require significant refundable deposits payable months in advance of delivery and additional advance payments in monthly installments thereafter.

The Company classifies deposits for digital asset mining equipment based on the expected predominant source and use of the cash flows for the equipment that has been contracted for purchase.

Prior to the acquisition of Blockcap on July 30, 2021, the Company expected that the predominant source and use of the cash flows for orders of digital asset mining equipment would be related to customer sales.

Beginning with orders placed subsequent to July 30, 2021, the Company expects that the predominant source and use of cash flows for digital asset mining equipment will be related to the Company’s own self-mining operations.

Therefore, the Company has classified deposits for equipment related to orders prior to July 30, 2021, as cash flow from operating activities and has classified deposits for equipment related to orders made subsequent to July 30, 2021, as cash flows from investing activities.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Revenue Recognition - HPC Hosting Revenue

Our HPC hosting segment generates revenue by licensing data center space to our customer under licensing agreements.

These arrangements contain lease components for the right to use data center space and nonlease components for power delivery, physical security, and maintenance services.

We have elected the practical expedient available under ASC Topic 842, Leases , to combine the nonlease revenue components that have the same pattern of transfer as the related operating lease components into a single combined component.

The single combined component is accounted for under ASC Topic 842 as an operating lease if the lease components are the predominant components and is accounted for under ASC Topic 606 if the nonlease components are the predominant components.

The lease components are the predominant components in our current licensing arrangements and the single combined component in these arrangements are accounted for under the operating lease guidance of ASC Topic 842.

We have concluded that it is probable that substantially all of the payments will be collected over the term of the arrangements and recognize the total combined component license payments under the agreements on a straight-line basis over the non-cancellable term.

Straight-line license revenue represents the difference in revenue recognized during the period and the license payments due pursuant to the underlying arrangement as deferred revenue in the consolidated balance sheets.

Certain arrangements include options to extend the term.

These extension options are not reasonably certain to be exercised and are excluded from the lease term and calculation of lease payments at lease commencement.

Certain licensing arrangements provide for variable payments for power delivery services and maintenance services on customer assets and reimbursements for lessor costs such as taxes.

Payments for physical security and other routine maintenance services are included in the fixed lease payments.

Power delivery services represent a stand ready obligation to make power available to the customer over the coterminous lease term and have the same pattern of transfer as the related operating lease components.

Customers may request and the Company may provide maintenance services on customer assets during the coterminous lease term.

Customers are charged monthly for fees incurred on these maintenance services delivered and actual power costs incurred at current utility or fuel cost rates.

These payments from customers for power delivery and maintenance services are recognized as variable lease payments in accordance with the practical expedient elected.

Variable lease payments are presented on a gross basis and are included in HPC hosting revenue in the Consolidated Statements of Operations.

Performance Obligation Commitments

The Company’s performance obligation commitments relate to digital asset hosted mining services.

The Company has performance obligations associated with commitments in customer digital asset hosted mining contracts for future services that have not yet been recognized in the financial statements.

As of December 31, 2024, for contracts with original terms that exceed one year (typically ranging from 15 to 24 months), we expect to recognize approximately $ 8.4 million of revenue in the future related to performance obligations associated with existing hosted mining contracts.

The Company expects to recognize approximately 100 % of this amount over the next 12 months.

Costs of Revenue

The Company’s Cost of Hosting Services and Cost of Digital Asset Mining primarily consist of electricity costs, salaries, stock-based compensation, depreciation of property, plant and equipment used to perform hosting services and mining operations and other related costs.

Cost of Equipment Sales represents costs of computer equipment sold to customers.

The Company’s Cost of Digital Asset Self-Mining, Cost of Digital Asset Hosted Mining Services, and Cost of HPC Hosting Services primarily consist of p ower fees, depreciation expense, facility operations expense and employee compensation, including stock-based compensation .

Cost of Equipment Sales represented costs of computer equipment sold to customers.

Stock-Based Compensation

Under ASC 718, Stock Compensation (“ASC 718”) estimated fair value uses a fair-value-based method.

Stock-based compensation expense is measured at the grant date based on the estimated fair value of the equity award.

The estimated fair value of restricted stock units (“RSUs”) with only service conditions is based on the closing market price of the Company’s common stock on the date of grant.

The estimated fair value of market condition restricted stock units (“MSUs”) is estimated on the date of grant using the Monte-Carlo pricing model for each service and market condition tranche.

For RSU awards with only service conditions, the estimated fair value of the equity awards is recognized as expense on a straight-line basis, less actual forfeitures as they occur, over the requisite service period for the entire award, which is generally the vesting period.

For RSU awards with service and market conditions, the compensation expense is recognized for each separately vesting portion of the award, or tranche, as if it were a separate award with its own vesting and exercise conditions (i.e., on an accelerated attribution basis).

The estimated fair value of each tranche is recognized as expense on a straight-line basis, less actual forfeitures as they occur, over the requisite service for the tranche.

The requisite service period of each tranche is the greater of the

Core Scientific, Inc.

Notes to Consolidated Financial Statements

derived service period from the market condition or the service condition vesting period.

See Note 12 — Stockholders' Deficit for more information about the service and market conditions associated with the Company’s equity awards.

Research and Development

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Research and development costs are expensed as incurred.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Stock-Based Compensation

Stock-based compensation expense is measured at the grant date based on the value of the equity award.

The fair value of stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model.

The fair value of restricted stock unit awards is estimated on the date of grant using the estimated fair value of the Company’s common stock on the date of grant.

For awards with only service conditions, primarily stock options and certain restricted stock units, the estimated fair value of the equity awards is recognized as expense on a straight-line basis, less actual forfeitures as they occur, over the requisite service period for the entire award, which is generally the vesting period.

For awards with service and performance conditions, primarily restricted stock unit awards, the compensation expense is recognized separately for each tranche of each award as if it were a separate award with its own vesting date (i.e., on an accelerated attribution basis) and the estimated fair value of the equity awards is recognized as expense when it is probable that the performance conditions will be achieved.

If the performance conditions become probable of being achieved before the end of the requisite service period, the unrecognized compensation costs for which the requisite service have been provided is recognized in the period in which achievement becomes probable and the remaining unrecognized compensation costs for which requisite service has not been provided is recognized as expense prospectively on an accelerated attribution basis over the remaining requisite service period for the entire award, less actual forfeitures as they occur.

See Note 12 — Stockholders' (Deficit) Equity for more information about the service and performance conditions associated with the Company’s equity awards.

Employee Benefit Plan

The Company currently maintains a defined contribution retirement and savings plan for the benefit of our employees who satisfy certain eligibility requirements (the “401(k) Plan”).

Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) Plan.

Prior to January 1, 2022, the Company did not match contributions made by participants in the 401(k) Plan.

During the years ended December 31, 2023 and 2022, the Company recognized matching contributions cost of $ 1.0 million and $ 1.1 million, respectively.

Earnings Per Share

The Company computes earnings per share (“EPS”) following ASC Topic 260, Earnings per share .

Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average common shares outstanding for the period.

Diluted EPS presents the dilutive effect on a per-share basis from the potential conversion of convertible securities or the exercise of options and or warrants;

the dilutive impacts of potentially convertible securities are calculated using the if-converted method;

the potentially dilutive effect of options or warrants are computed using the treasury stock method.

Securities that are potentially an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from diluted EPS calculation.

The Company is subject to income taxes mainly in the jurisdictions in which it provides various infrastructure, technology and hosting services.

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In assessing the need for a valuation allowance, the Company considered all available evidence, including recent operating results, projections of future taxable income, the reversal of taxable temporary differences, and the feasibility of tax planning strategies.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

GAAP sets forth a two-step approach to recognizing and measuring uncertain tax positions.

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The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provisions for income taxes.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Recently Adopted Accounting Standards

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Measurement of Credit Losses on Financial Instruments , which requires an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables.

Under this update, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument.

The Company adopted ASU 2016-13 as of January 1, 2023, and the adoption did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60):

In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) , which will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in ASU 2023-07 will be applied retrospectively and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-07 as of January 1, 2024, which resulted in the disclosure of significant segment expenses in Note 15 — Segment Reporting.

There was no impact to the Company’s financial position, results of operations or cash flows as a result of the adoption.

In December 2023, the FASB issued ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024, with early adoption permitted.

The Company elected to early adopt the new standard effective January 1, 2024.

The financial statement impact upon adoption was not material.

Under the Company’s current bitcoin strategy, the impact of the adoption on 2024 financial performance is expected to be immaterial.

On January 1, 2024, the Company elected to early adopt ASU 2023-08.

For a discussion of the impact of this standard, see the “Digital Assets” policy within this footnote.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This update will be effective for the Company during the annual reporting period beginning January 1, 2025.The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

Under the ASU, PBEs must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).” This update will be effective for the Company during the annual reporting period beginning January 1, 2025.

Improvements to Income Tax Disclosures (“ASU 2023-09”) .

Under this ASU, public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).” The amendments in ASU 2023-09 will be applied on a prospective basis and are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s consolidated financial statements.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

CHAPTER 11 FILING AND OTHER RELATED MATTERS

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

The amendment should be applied prospectively, however, retrospective application is also permitted.

The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

There are no other new accounting pronouncements that are expected to have a significant impact on the Company’s unaudited consolidated financial statements.

CHAPTER 11 FILING AND EMERGENCE FROM BANKRUPTCY

On December 21, 2022 (the “Petition Date”), the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code.

The Chapter 11 Cases are jointly administered under Case No.

The Debtors continue to operate their business and manage their properties as DIP under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Debtors continued to operate their business and managed their properties as DIP under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On June 20, 2023, the Debtors filed with the Bankruptcy Court (i) a proposed Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related proposed form of Disclosure Statement;

(ii) on August 8, 2023, the Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement;

and (iii) on September 7, 2023, the Second Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement;

(iv) on November 16, 2023, the Debtors filed the Third Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement;

and (v) on January 15, 2024, the Debtors filed the Fourth Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related proposed form of Disclosure Statement, and on January 15, 2024, the Debtors filed the Fourth Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Affiliated Debtors (with Technical Modifications) with the Bankruptcy Court.

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On January 16, 2024, the Bankruptcy Court entered the Confirmation Order among other things, confirming the Plan of Reorganization.

On the Effective Date, the conditions to the effectiveness of the Plan of Reorganization were satisfied or waived and the Company emerged from bankruptcy.

See Note 17 — Subsequent Events for additional details.

On January 23, 2024, (the “Effective Date”), the conditions to the effectiveness of the Plan of Reorganization were satisfied or waived and the Company emerged from bankruptcy.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

See Notes 8 — Convertible and Other Notes Payable, 9 — Contingent Value Rights and Warrant Liabilities, and 12 — Stockholders' Deficit for additional information about the Company’s emergence from bankruptcy.

Original DIP Credit Agreement and Restructuring Support Agreement

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Replacement DIP Credit Agreement

On February 2, 2023, the Bankruptcy Court entered an interim order (the “Replacement Interim DIP Order”) authorizing, among other things, the Debtors to obtain senior secured non-priming super-priority replacement post-petition financing (the “Replacement DIP Facility”).

On February 2, 2023, the Bankruptcy Court entered an interim order authorizing, among other things, the Debtors to obtain senior secured non-priming super-priority replacement post-petition financing (the “Replacement DIP Facility”).

On February 27, 2023, the Debtors entered into a senior secured super-priority replacement debtor-in-possession loan and security agreement governing the Replacement DIP Facility (the “Replacement DIP Credit Agreement”), with B.

Riley Commercial Capital, LLC, as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

(collectively, the “Replacement DIP Lender”).

Proceeds of the Replacement DIP Facility were used to, among other things, repay amounts outstanding under the Original DIP Facility, including payment of all fees and expenses required to be paid under the terms of the Original DIP Facility.

Riley Commercial Capital, LLC, as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto (collectively, the “Replacement DIP Lender”).

Proceeds of the Replacement DIP Facility were used to, among other things, repay amounts outstanding under the original debtor-in-possession facility that was entered into in connection with the filing of the Chapter 11 Cases (the “Original DIP Facility”), including payment of all fees and expenses required to be paid under the terms of the Original DIP Facility.

These funds, along with ongoing cash generated from operations, were anticipated to provide the necessary financing to effectuate the planned restructuring, facilitate the emergence from Chapter 11, and cover the fees and expenses of legal and financial advisors.

The Replacement DIP Facility, among other things, provides for a non-amortizing super-priority senior secured term loan facility in an aggregate principal amount not to exceed $ 70 million.

Under the Replacement DIP Facility, (i) $ 35 million was made available following Bankruptcy Court approval of the Interim DIP Order and (ii) $ 35 million was made available following Bankruptcy Court approval of the Final DIP Order.

Loans under the Replacement DIP Facility will bear interest at a rate of 10 %, which will be payable in kind in arrears on the first day of each calendar month.

The Administrative Agent received an upfront payment equal to 3.5 % of the aggregate commitments under the Replacement DIP Facility on February 3, 2023, payable in kind, and the Replacement DIP Lender will receive an exit premium equal to 5 % of the amount of the loans being repaid, reduced or satisfied, payable in cash.

The Replacement DIP Credit Agreement includes representations and warranties, covenants applicable to the Debtors, and events of default.

If an event of default under the Replacement DIP Credit Agreement occurs, the Administrative Agent may, among other things, permanently reduce any remaining commitments and declare the outstanding obligations under the Replacement DIP Credit Agreement to be immediately due and payable.

On March 1, 2023, the Bankruptcy Court entered an order approving the Replacement DIP Facility on a final basis and the terms under which the Debtors are authorized to use the cash collateral of the holders of their convertible notes (the “Final DIP Order”).

On July 4, 2023, the Debtors, the Administrative Agents and the Replacement DIP Lender entered into the First Amendment to the Replacement DIP Credit Agreement.

For detailed discussion about the First Amendment, refer to Note 10 — Commitments and Contingencies.

In January 2024, the Replacement DIP Facility was repaid in full and terminated on the Effective Date of the Company’s Plan of Reorganization.

Federal Income Tax Consequences

As of December 31, 2023, the Tax Group had net operating loss (“NOL”) carryforwards of approximately $ 330.2 million (all of which are post-2017 NOLs that are subject to an 80% taxable income limitation) and certain other tax attributes before taking into account the implementation of the Plan of Reorganization.

An ownership change is not expected with the implementation of the Plan of Reorganization which would, if it occurred, limit our ability to utilize our NOL carryforwards under Sec.

382 of the Internal Revenue Code (the “Tax Code”).

However, certain future equity trading activity and other actions could result in an ownership change of the Tax Group independent of the Plan of Reorganization, which could adversely affect the ability of the Debtors to utilize their tax

Core Scientific, Inc.

Notes to Consolidated Financial Statements

In addition, as discussed below, in connection with and as a result of the implementation of the Plan of Reorganization, the amount of the Tax Group’s NOL carryforwards, and possibly certain other tax attributes, may be reduced.

In general, the Tax Code provides that a debtor in a bankruptcy case must reduce certain of its tax attributes - such as NOL carryforwards and current year NOLs, capital loss carryforwards, tax credits, and tax basis in assets - by the amount of any cancellation of debt (“COD”) incurred pursuant to a confirmed chapter 11 plan.

Based on the Plan of Reorganization, the Tax Group is expected to incur COD income for U.S.

federal income tax purposes as a result of the implementation of the Plan of Reorganization and, thus, expect that the Tax Group’s NOL carryforwards or other tax attributes will be reduced as a result of any COD incurred.

163(l) generally disallows a corporate issuer's interest deductions with respect to debt instruments payable in equity of the issuer or a related party.

A debt instrument is considered “payable in equity” if by the terms of the instrument, or at the option of an issuer or related party, a substantial amount of the principal or interest is (1) required to be paid in or converted into equity, or (2) determined by reference to the value of equity.

In addition, debt is considered payable in equity if the overall arrangement is such that it is “reasonably expected” that the issuer will pay in or by reference to equity, even if the issuer's payment in or by reference to equity is conditioned on events outside the issuer's control.

Pursuant to the current terms of certain new debts, the Debtors may pay a portion of the interest in stock and, under certain circumstances, require the conversion of such notes into stock.

In addition, a holder of the respective debts may at its option convert the notes into stock.

The proper application of Sec.

163(l) in the case of the new debts is subject to varying interpretations.

However, based on the current terms of the new debts, the Debtors expect disallowance of deductibility of certain interest with respect to the new debts under Sec.

NYDIG Settlement

On February 26, 2023, the Bankruptcy Court entered an order (the “NYDIG Order”), whereby the Debtors and NYDIG agreed that the Debtors would transfer the miners serving as collateral under the NYDIG Loan back to NYDIG over a period of several months in exchange for the full extinguishment of the NYDIG Loan.

The final shipment of miners serving as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $ 20.8 million Gain on debt extinguishment in the Company’s Consolidated Statements of Operations.

Priority Power Settlement

6 unchanged sentences

There was no impact to the Consolidated Statements of Operations as a result of the satisfaction of the settlement.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Huband-Mantor Construction Settlement

2 unchanged sentences

The satisfaction of the settlement resulted in a loss of $ 8.3 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

See Note 7 — Notes Payable for further discussion of the promissory note.

See Note 8 — Convertible and Other Notes Payable for further discussion of the promissory note.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Celsius Mining LLC Settlement

3 unchanged sentences

The sale of the Cedarvale Facility resulted in a loss of $ 2.2 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

Refer to Note 10 — Commitments and Contingencies for further discussion of the sale.

ACM ELF ST LLC Lease Settlement

In September 2023, the Company entered into a $ 7.5 million equipment finance agreement with ACM ELF ST LLC in settlement and satisfaction of a previous equipment finance agreement which resulted in a gain of $ 5.0 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

See Note 7 — Notes Payable for further discussion of the promissory note.

See Note 8 — Convertible and Other Notes Payable for further discussion of the promissory note.

Didado Electric, LLC Settlement

7 unchanged sentences

Harper Construction Company, Inc.

On November 4, 2023, the Bankruptcy Court entered an order (the “Harper Order”), approving the parties agreement to settle all claims of Harper Construction Company, Inc (“Harper”) against the Debtors and releasing any and all liens related to the Debtors’ Muskogee datacenter in exchange for the Debtors’ execution of an unsecured promissory note in favor of Harper in the principal

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

amount of $ 4.7 million to be paid over 30 months starting forty-five days after the emergence date.

The satisfaction of the settlement resulted in a loss of $ 5.0 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

3 unchanged sentences

The satisfaction of the settlement resulted in a gain of $ 1.1 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Maddox Settlement

21 unchanged sentences

Oklahoma Gas & Electric Settlement

On January 24, 2024, the Bankruptcy Court entered an order (the “OG&E Order”), granting Oklahoma Gas & Electric Company (“OG&E”) an allowed $ 4.8 million general unsecured claim in full and final satisfaction of all claims of OG&E against the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The satisfaction of the settlement resulted in a loss of $ 4.8 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

3 unchanged sentences

Expenses (including professional fees), realized gains and losses, and provisions for losses that can be directly associated with the reorganization must be reported separately as Reorganization items, net in the Consolidated Statements of Operations beginning December 21, 2022, the date of filing of the Chapter 11 Cases.

Liabilities that may be affected by the Plan must be classified as liabilities subject to compromise at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the Plan or negotiations with creditors.

The amounts currently classified as liabilities subject to compromise may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of secured status of certain claims, the values of any collateral securing such claims, or other events.

Any resulting changes in classification will be reflected in subsequent financial statements.

If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the Plan, the entire amount of the claim is included with prepetition claims in liabilities subject to compromise.

As a result of the filing of the Chapter 11 Cases on December 21, 2022, the classification of pre-petition indebtedness is generally subject to compromise pursuant to the Plan of Reorganization.

As of December 31, 2023, liabilities that were affected by the Plan of Reorganization were classified as liabilities subject to compromise at the amounts expected to be allowed by the Bankruptcy Court, even if they may have been settled for lesser amounts as a result of the Plan of Reorganization or negotiations with creditors.

If there was uncertainty about whether a secured claim was under secured, or would be impaired under the Plan of Reorganization, the entire amount of the claim was included with prepetition claims in liabilities subject to compromise.

After the Effective Date, any resulting changes in classification were reflected in subsequent financial statements.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

As a result of the filing of the Chapter 11 Cases on December 21, 2022, the classification of pre-petition indebtedness was generally subject to compromise pursuant to the Plan of Reorganization.

Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities were stayed.

2 unchanged sentences

Among other things, the Bankruptcy Court authorized the Debtors to pay certain pre-petition claims relating to employee wages and benefits, taxes and critical vendors.

The Debtors are paying and intend to pay undisputed post-petition liabilities in the ordinary course of business.

In addition, the Debtors may reject certain pre-petition executory contracts and unexpired leases with respect to their operations with the approval of the Bankruptcy Court.

Any damages resulting from the rejection of executory contracts and unexpired leases are treated as general unsecured claims.

The Debtors paid undisputed post-petition liabilities in the ordinary course of business.

In addition, the Debtors rejected certain pre-petition executory contracts and unexpired leases with respect to their operations with the approval of the Bankruptcy Court.

Any damages resulting from the rejection of executory contracts and unexpired leases were treated as general unsecured claims and paid in full.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Reorganization items, net incurred as a result of the Chapter 11 Cases presented separately in the accompanying Consolidated Statements of Operations were as follows (in thousands):

Years Ended December 31,

Year Ended December 31,

2024 2023 2022

Professional fees and other bankruptcy related costs $ 21,480 $ 92,195 $ 2,302

Settlements with creditors:

Negotiated settlements:

Priority Power — ( 4,878 ) —

ACM ELF ST LLC Lease — ( 5,003 ) —

HMC — 8,269 —

Trilogy — ( 385 ) —

Didado — 657 —

Celsius - Cedarvale PSA — 2,175 —

Harper — 4,977 —

McCarthy — 4,590 —

2 unchanged sentences

Foundry — ( 12,636 ) —

OG&E — 4,800 —

Maddox ( 2,843 ) 1,277 —

Other, net ( 8 ) 14 —

Total settlements with creditors

Post-petition interest, fees and other cures

Total negotiated settlements

( 2,269 ) ( 20,525 ) —

Satisfaction of allowed claims:

Extinguishment of secured and other convertible notes

( 10,831 ) — —

Extinguishment of miner equipment lender loans and leases

( 102,024 ) — —

Satisfaction of general unsecured creditor claims

( 31,167 ) — —

Satisfaction of cures and other claims

Total satisfaction of allowed claims

( 143,791 ) 94,567 —

Reimbursed claimant professional fees

Debtor-in-possession financing costs 339 24,885 —

1 unchanged sentence

(Gain) from adjustment of liabilities subject to compromise fair value to expected allowed amount — — ( 203,236 )

— ( 203,236 )

Reorganization items, net $ ( 111,439 ) 191,122 $ ( 197,405 )

The Company incurred significant costs associated with the reorganization, primarily debtor-in-possession financing costs and legal and professional fees, which were classified as Reorganization items, net subsequent to our petition.

The accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022, include amounts classified as Liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases.

These amounts represent the Company's current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases and may differ from actual future settlement amounts paid.

Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process.

During the year ended December 31, 2024, there were significant reorganization related gains resulting primarily from satisfaction of allowed claims under the Plan of Reorganization on the Effective Date and negotiated settlements, partially offset by professional fees and other bankruptcy related costs.

These reorganization related impacts were classified as Reorganization items, net until the Effective Date.

Reorganization costs incurred after the Effective Date have been classified as General and administrative expense.

The accompanying Consolidated Balance Sheet as of December 31, 2023, includes amounts classified as Liabilities subject to compromise, which represented liabilities the Company estimated would be allowed as claims in the Chapter 11 Cases by the Court.

These amounts represented the Company's estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Liabilities subject to compromise consisted of liabilities reclassified from the following balance sheet categories (in thousands):

December 31, 2023 December 31, 2022

Liabilities subject to compromise consisted of the following (in thousands):

December 31, 2023

Accounts payable $ 36,678

1 unchanged sentence

Accounts payable, and accrued expenses and other current liabilities $ 56,978

Operating lease liability $ — $ 13,868

Financing lease liability — 70,796

Debt subject to compromise $ 41,777

2 unchanged sentences

Liabilities subject to compromise $ 99,335

Pre-petition unsecured and secured claims which were identified as impaired and subject to compromise during the bankruptcy process have been reclassified as Liabilities subject to compromise.

During the quarter ended September 30, 2023, improvements in the Company’s condition and other developments indicated that secured claims which were initially considered subject to compromise at the beginning of the bankruptcy process and at December 31, 2022, were determined to no longer be subject to compromise as of September 30, 2023 and December 31, 2023.

This determination is the primary reason for the decrease in the reclassification of debt, leases, accounts payable and accrued expenses and other current liabilities to the Liabilities subject to compromise balance, with Court approved settlements contributing nominally to the reductions.

Pre-petition unsecured and secured claims which were identified as impaired and subject to compromise during the bankruptcy process were reclassified to Liabilities subject to compromise.

During the year ended December 31, 2023, improvements in the Company’s condition and other developments indicated that secured claims which were initially considered subject to compromise at the beginning of the bankruptcy process and at December 31, 2022, were determined to no longer be subject to compromise as of December 31, 2023.

Final determination of the value at which liabilities were settled was made when the Plan of Reorganization became effective and the Company emerged from bankruptcy.

BUSINESS COMBINATIONS, ACQUISITIONS AND RESTRUCTURING

BUSINESS COMBINATION AND RESTRUCTURING

Merger Agreement

In 2021, XPDI entered into that certain Agreement and Plan of Reorganization and Merger, dated as of July 20, 2021, as amended on October 1, 2021, and as further amended on December 29, 2021, by and among Core Scientific Holding Co., XPDI Merger Sub and XPDI (the “Merger Agreement”).

XPDI’s stockholders approved the transactions (collectively, the “Merger”) contemplated by the Merger Agreement at a special meeting of stockholders held on January 19, 2022 (the “Special Meeting”).

Pursuant to the terms of (a) the Merger Agreement and (b) that certain Agreement and Plan of Merger, dated as of October 1, 2021, as amended on January 14, 2022, by and among XPDI, Core Scientific Holding Co., XPDI Merger Sub 3, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDI (“Merger Sub 3”), and Blockcap, Inc., a Nevada corporation and wholly owned subsidiary of Core Scientific (“Blockcap”), the Business Combination was effected by (i) the merger of Merger Sub with and into Core Scientific (the “First Merger”), which occurred on January 19, 2022 (the “Closing Date”), with Core Scientific surviving the First Merger as a wholly owned subsidiary of XPDI, (ii) the merger of Core Scientific with and into XPDI (the “Second Merger”), which occurred on January 20, 2022, with XPDI surviving the Second Merger, and (iii) following the closing of the Second Merger on January 20, 2022, the merger of Blockcap with and into Merger Sub 3 (the “Third Merger”), with Merger Sub 3 surviving the Third Merger as a wholly owned subsidiary of XPDI under the name “Core Scientific Acquired Mining LLC.” Immediately prior to the effective time of the First Merger (such effective time of the First Merger, the “Effective Time”), XPDI filed a Second Amended and Restated Certificate of Incorporation (the “Post-Combination Charter”) with the Secretary of State of the State of Delaware pursuant to which XPDI changed its name from “Power & Digital Infrastructure Acquisition Corp.” to “Core Scientific, Inc.” (hereinafter referred to as the “Company” or “New Core”) and redesignated its Class A common stock, par value $ 0.0001 per share (“XPDI Class A Common Stock”), and Class B common stock, par value $ 0.0001 per share (“XPDI Class B Common Stock”), as common stock, par value $ 0.0001 , of the Company (“New Core Common Stock”).

In 2021, Power & Digital Infrastructure Acquisition Corp., a Delaware corporation (“XPDI”), entered into that certain Agreement and Plan of Reorganization and Merger, dated as of July 20, 2021, as amended on October 1, 2021, and as further amended on December 29, 2021, by and among Core Scientific Holding Co., XPDI Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of XPDI (“Merger Sub”) and XPDI (the “Merger Agreement”).

XPDI’s stockholders approved the transactions (collectively, the “Merger” or “Business Combination”) contemplated by the Merger Agreement at a special meeting of stockholders held on January 19, 2022 (the “Special Meeting”).

Pursuant to the terms of (a) the Merger Agreement and (b) that certain Agreement and Plan of Merger, dated as of October 1, 2021, as amended on January 14, 2022, by and among XPDI, Core Scientific Holding Co., XPDI Merger Sub 3, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDI (“Merger Sub 3”), and Blockcap, Inc., a Nevada corporation and wholly owned subsidiary of Core Scientific (“Blockcap”), the Business Combination was effected by (i) the merger of Merger Sub with and into Core Scientific (the “First Merger”), which occurred on January 19, 2022 (the “Closing Date”), with Core Scientific surviving the First Merger as a wholly owned subsidiary of XPDI, (ii) the merger of Core Scientific with and into XPDI (the “Second Merger”), which occurred on January 20, 2022, with XPDI surviving the Second Merger, and (iii) following the closing of the Second Merger on January 20, 2022, the merger of Blockcap with and into Merger Sub 3 (the “Third Merger”), with Merger Sub 3 surviving the Third Merger as a wholly owned subsidiary of XPDI under the name “Core Scientific Acquired Mining LLC.” Immediately prior to the effective time of the First Merger (such effective time of the First Merger, the “Effective Time”), XPDI filed a Second Amended and Restated Certificate of Incorporation (the “Post-Combination Charter”) with the Secretary of State of the State of Delaware pursuant to which XPDI changed its name from “Power & Digital Infrastructure Acquisition Corp.” to “Core Scientific, Inc.” (hereinafter referred to as the “Company”) and redesignated its Class A common stock, par value $ 0.0001 per share (“XPDI Class A Common Stock”), and Class B common stock, par value $ 0.0001 per share (“XPDI Class B Common Stock”), as common stock, par value $ 0.0001 , of the Company (“New Core Common Stock”).

The Exchange Ratio (as defined in the Merger Agreement) was 1.60015286880 of a share of New Core Common Stock per fully-diluted share of Legacy Core.

In connection with the Special Meeting and the Business Combination, holders of 12.3 million of the 34.5 million then-outstanding shares of XPDI Class A Common Stock exercised their right to redeem their shares for cash at a redemption price of approximately $ 10.00 per share, for an aggregate redemption amount of $ 123.5 million.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Business Combination provided gross proceeds of approximately $ 221.6 million from the XPDI trust account, resulting in approximately $ 201.0 million in net cash proceeds to Core Scientific, after the payment of transaction expenses, which is presented within proceeds from issuance of common stock, net of transaction costs on the consolidated statements of cash flows.

19 unchanged sentences

Each award of the Company’s restricted stock units (“RSUs”) was converted into RSUs of New Core based on an exchange ratio of 1.60015286880 .

Each convertible note is convertible into New Core Common Stock in accordance with the terms of such convertible promissory note;

Each convertible note was convertible into New Core Common Stock in accordance with the terms of such convertible promissory note;

provided, however, that with respect to outstanding convertible promissory notes for which Core Scientific received a duly executed exercise of conversion in accordance with such convertible promissory note, exercising the right of such holder to convert such convertible promissory note subject to and conditioned upon the occurrence of the Effective Time, the outstanding principal amount and accrued interest as of the Effective Time with respect to such convertible promissory note was converted into shares of New Core Common Stock, equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Core Scientific Common Stock issuable upon the conversion of such convertible promissory note in accordance with such convertible promissory note immediately prior to the Effective Time and (ii) the Exchange Ratio.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Blockcap Acquisition

On July 30, 2021, the Company acquired 100 % of the equity interest in Blockcap, one of its largest hosting customers at the time.

Blockcap was a blockchain technology company with industrial scale digital asset mining operations.

Blockcap’s primary historical business was the mining of digital asset coins and tokens, primarily bitcoin and, to a lesser extent, Siacoin and Ethereum.

While Blockcap did sell or exchange the digital assets it mined to fund its growth strategies or for general corporate purposes from time to time, it generally retained its digital assets as investments in anticipation of continued adoption of digital assets as a “store of value” and a more accessible and efficient medium of exchange than traditional fiat currencies.

In addition to mining, holding and exchanging digital assets, Blockcap also evaluated and completed investments in related technologies and ancillary businesses, including RADAR, an early-stage company focused on technology enhancement and development in the digital asset industry that it acquired on July 1, 2021.

The acquisition of Blockcap significantly expanded the Company’s self-mining operations and increased the number of miners it owns.

Transaction Costs

The Company recognized transaction costs of $ 1.1 million for the year ended December 31, 2021.

These costs were associated with legal and professional services and were recognized as General and administrative expenses in the Company’s Consolidated Statements of Operations.

Unaudited Pro Forma Information

The following unaudited pro forma financial information gives effect to the Blockcap acquisition as if it had been completed on January 1, 2020.

The unaudited pro forma information was prepared in accordance with the requirements of ASC 805, Business Combinations , which is a different basis than pro forma information prepared under Article 11 of Regulation S-X (“Article 11”).

As such, they are not directly comparable with historical results for stand-alone Core Scientific prior to July 30, 2021, historical results for Core Scientific from July 30, 2021, that reflect the acquisition and are inclusive of the results and operations of Blockcap, nor our previously provided pro forma financials prepared in accordance with Article 11.

The pro forma results for the year ended December 31, 2021, include the impact of several significant nonrecurring pro forma adjustments to previously reported operating results.

The pro forma adjustments are based on historically reported transactions by the respective companies.

The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition (in thousands).

Year Ended December 31,

Total revenue $ 586,991 $ 70,948

Operating income

$ 137,109 $ ( 23,354 )

Significant pro forma adjustments include:

• Transaction costs of $ 1.9 million are assumed to have occurred on the pro forma close date of January 1, 2020, and are recognized as if incurred in the first quarter of 2020;

• Tangible and intangible assets are assumed to be recorded at their estimated fair values as of January 1, 2020 and are depreciated or amortized over their estimated useful lives;

• Accounting policies of Blockcap are conformed to those of Core Scientific including depreciation for mining equipment.

• Share-based compensation awards of Blockcap for which the performance condition of the award is assumed to be probable of being met as of January 1, 2020 and expensed as they are earned based on the service condition.

• The elimination of $ 19.2 million of expense recognized by Blockcap in July 2021, for the acceleration of certain equity awards of its CEO and others.

Because this acceleration was deemed to be in contemplation of the Business Combination, Core Scientific has recorded $ 23.3 million of compensation expense for the acceleration in its financial statements for the period ending December 31, 2021, which was determined based on the fair value of the awards at the time of the Business Combination.

This adjustment is necessary to avoid duplication of the expense attributable to the combined company related to the acceleration of the same awards.

The selected unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations would have been had the acquisition actually occurred on January 1, 2021, nor do they purport to project the future consolidated results of operations.

Restructuring Activities

During the second quarter of fiscal 2022, market conditions led management to evaluate its operations and refocus its efforts and resources on the core activities of its hosting and mining segments.

Management initiated a plan to exit certain activities,

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

For the periods subsequent to the acquisition, Blockcap contributed total revenues of $ 42.6 million and operating income of $ 15.5 million for the year ended December 31, 2021, that were included in the Company’s Consolidated Statements of Operations.

Restructuring Activities

During the second quarter of 2022 market conditions led management to evaluate its operations and refocus its efforts and resources on the core activities of its hosting and mining segments.

Management initiated a plan to exit certain activities, technologies and ancillary businesses, and to reduce portions of the Company’s workforce including those acquired through Blockcap’s acquisition of RADAR.

technologies and ancillary businesses, and to reduce portions of the Company’s workforce including those acquired through Blockcap’s acquisition of RADAR.

Management completed the restructuring plan in October 2022 and all expected costs of the restructuring plan were recognized as of December 31, 2022.

2 unchanged sentences

Total cash and stock-based restructuring charges of $ 2.3 million were recognized in general and administrative expenses for the year ended December 31, 2022.

As a result of exiting Blockchain Technologies during the second quarter of 2022, $ 2.0 million of intangible assets will cease to be used.

As a result of exiting Blockchain Technologies during the second quarter of 2022, $ 2.0 million of intangible assets ceased to be used.

Additionally, the Company determined that $ 2.5 million of software intangible assets that were previously acquired from Stax Digital LLC would no longer be used as a result of current and planned software upgrades.

Consequently, the Company recorded an impairment of other intangible assets of $ 4.5 million for the year ended December 31, 2022, which is presented within impairment of goodwill and other intangibles on the Company’s Consolidated Statements of Operations.

Goodwill associated with these activities was included in the goodwill impairment charge of $ 1.05 billion for the year ended December 31, 2022, of which $ 996.5 million was related to the Mining reporting unit and $ 58.2 million was related to the Equipment Sales and Hosting reporting unit.

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net as of December 31, 2023 and 2022 consist of the following (in thousands):

2023 2022 Estimated Useful Lives

Goodwill associated with these activities was included in the goodwill impairment charge of $ 1.05 billion for the year ended December 31, 2022, of which $ 996.5 million was related to the Digital Asset Self-Mining reporting unit and $ 58.2 million was related to the Equipment Sales and Digital Asset Hosted Mining reporting unit.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment, net as of December 31, 2024 and December 31, 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023 Estimated Useful Lives

Land and improvements 1

18 unchanged sentences

Land is not depreciated.

2 Includes finance lease assets of $ 46.6 million and $ 112.7 million at December 31, 2023 and 2022, respectively.

2 Includes finance lease assets of nil and $ 46.6 million at December 31, 2024 and 2023, respectively.

3 Includes finance lease assets of $ 8.5 million and $ 12.7 million at December 31, 2024 and 2023, respectively.

2 unchanged sentences

Depreciation expense, including amortization of finance lease assets, for the years ended December 31, 2024, 2023 and 2022, was $ 112.3 million, $ 95.7 million and $ 224.1 million, respectively.

Depreciation for the years ended December 31, 2023, 2022 and 2021, allocated to costs of revenue was $ 95.4 million, $ 223.6 million, and $ 31.7 million, respectively.

There were no impairments or indicators of impairment to long-lived assets for the years ended December 31, 2024 and 2023.

During the year ended December 31, 2022, the Company’s operating performance and liquidity continued to be severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global Bitcoin network hash rate and an increase in additional operating costs related to these factors.

Additionally, primary and secondary market prices for

Additionally, primary and secondary market prices for application-specific integrated circuit (“ASIC”) miners of the type used by the Company in its business operations had decreased significantly from previous levels.

During the quarter ended September 30, 2022, the Company evaluated whether the estimated future undiscounted cash flows from the operation of its data center facilities would recover the carrying value of the property, plant and equipment located at the sites and used in site operations, including the Company’s deployed mining equipment.

Based on this evaluation, the Company determined

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

application-specific integrated circuit (“ASIC”) miners of the type used by the Company in its business operations have decreased significantly from previous levels.

Based on this evaluation, the Company determined that the carrying value of the property, plant and equipment at the Cedarvale, Texas facility site may no longer be fully recoverable by the cash flows of the site.

that the carrying value of the property, plant and equipment at the Cedarvale, Texas facility site may no longer be fully recoverable by the cash flows of the site.

The Company measured the amount of impairment at the Cedarvale facility site as the difference between the carrying amount of the site asset group of $ 119.8 million and the estimated fair value of the site asset group of $ 60.5 million, resulting in an impairment of the facility site’s property, plant and equipment of $ 59.3 million for the year ended December 31, 2022.

4 unchanged sentences

During the year ended December 31, 2022, the Company recognized impairments to property, plant and equipment of $ 590.7 million.

There were no impairments or indicators of impairment to long-lived assets for the years ended December 31, 2023 and 2021.

The Company’s analysis involved the use of a combination and corroboration of cost and market approaches.

10 unchanged sentences

The Company developed its estimates using the best information available at the time.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets as of December 31, 2023 and 2022 consist of the following (in thousands):

Prepaid power

$ 7,325 $ 4,430

Prepaid insurance

Prepaid expenses

Prepaid construction

Digital assets and receivables

Total prepaid expenses and other current assets

$ 24,022 $ 31,881

Prepaid expenses includes prepayments related to subscriptions, rent, and other operating expenses.

Other includes prepayments of equipment and taxes, as well as security deposits associated with utilities and leases.

Accrued expenses and other current liabilities as of December 31, 2024 and 2023, consist of the following (in thousands):

Accrued interest 1

Accrued compensation

$ 34,184 $ 593

Accrued liabilities 249 38,288

Accrued expenses and other 20,283 11,590

Accrued inventory purchases

Accrued taxes

Accrued capital expenditures 12,106 416

Accrued interest 5,101 94,311

Other current liabilities 17,590 46,028

1 unchanged sentence

$ 69,230 $ 179,636

1 As a result of the Company's Chapter 11 Cases, the Company has not made any payments related to accrued interest for any debt obligations that are subject to compromise.

Accrued liabilities includes expenses related to settlements, audit fees, and security services.

Accrued expenses and other includes expenses related to advisor and legal fees, payroll and benefits, and other operating costs.

Other current liabilities primarily represents energy costs and other current liabilities.

1 Certain prior year amounts have been reclassified for consistency with the current year presentation.

Accrued liabilities includes expenses related audit fees and security services.

In 2023, accrued liabilities also included expenses related to settlements.

Other current liabilities represents purchases of miners, taxes payable, energy costs, and other operating costs.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

NOTES PAYABLE

The commencement of the Chapter 11 Cases constituted an event of default under certain of the Company's debt agreements.

Any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors' rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

See Note 3 — Chapter 11 Filing and Other Related Matters for further information.

The stay applies to the ability of creditors to demand accelerated payments under default provisions, as a result, the Company continues to classify its notes and leases, not subject to compromise, according to the original payment schedules.

Notes payable as of December 31, 2023 and 2022 consist of the following (in thousands):

Stated Interest Rate

Effective Interest Rates

Maturities December 31, 2023 December 31, 2022

Kentucky note 5.0 % 5.0 % 2023 $ 529 $ 529

NYDIG loan 11.0 % - 15.0 %

Lessee Accounting

In February 2024, the Company entered into a lease agreement for a data center in Austin, Texas with a current operating capacity of 20 MW (the “Austin Lease”).

The Austin Lease term is eight years .

As of December 31, 2024, total future lease payments were expected to be approximately $ 91.2 million.

In September 2024, the Company entered into a lease agreement by and between the Company and Aubix, LLC (the "Aubix Lease") for approximately 5.7 acres of land, including a 40,000 square foot building that the Company intends to use for its HPC hosting operations.

The Aubix Lease commenced in November 2024 when the Company began occupancy of the leased space.

The term of the Aubix Lease is 10 years from the commencement date.

The Company has the right to extend the term of the Aubix Lease up to an additional 15 years in 5 year increments.

At lease inception, total future minimum lease payments related to the Aubix Lease were approximately $ 43.5 million.

In November 2024, the Company entered into a lease amendment with The City of Denton (the "Denton Lease Amendment") for additional land and access to power.

The Denton Lease Amendment created an additional right-of-use asset and was recorded as a new operating lease.

The term of the Denton Lease Amendment is 25 years.

At lease inception, total future minimum lease payments related to the Denton Lease Amendment were $ 17.6 million.

The components of operating and finance leases are presented on the Company’s Consolidated Balance Sheets as follows (in thousands):

Financial statement line item December 31, 2024 December 31, 2023

Operating lease right-of-use assets Operating lease right-of-use assets $ 114,472 $ 7,844

Finance lease right-of-use assets

Property, plant and equipment, net $ 5,873 $ 16,268

Operating lease liabilities,

current portion Operating lease liabilities,

current portion $ 9,974 $ 77

Operating lease liabilities, net

of current portion Operating lease liabilities, net

of current portion $ 97,843 $ 1,512

Finance lease liabilities, current portion Finance lease liabilities, current portion $ 1,669 $ 19,771

Finance lease liabilities, net of

current portion Finance lease liabilities, net of current portion $ 3 $ 35,745

Supplemental disclosure of noncash investing and financing activities in the Company’s Consolidated Statements of Cash Flows includes a decrease in lease liability due to lease satisfactions on the Effective Date of $ 50.7 million presented in Extinguishment of accounts payable, accrued expenses, finance lease liability, and notes payable upon emergence for the year ended December 31, 2024.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The components of lease expense were as follows (in thousands):

Year Ended December 31,

Financial statement line item 2024 2023 2022

Operating lease expense Cost of HPC hosting services $ 10,274 $ — $ —

Operating lease expense Cost of digital asset self-mining

Operating lease expense Cost of digital asset hosted mining services

Operating lease expense General and administrative expenses 2,129 1,024 1,937

Short-term lease expense General and administrative expenses 383 — 24

Variable lease expense

Cost of HPC hosting services 1,455 — —

Finance lease expense:

Amortization of right-of-use assets Cost of digital asset self-mining

1,106 11,424 31,372

Various — 38,573

Stockholder loan 10.0 % 20.0 % 2023 10,000 10,000

Trinity loan 11.0 % 11.0 % 2024 23,356 23,356

Bremer loan 5.5 % 5.6 % 2026 18,331 18,331

Blockfi loan 9.7 % - 13.1 %

Interest on lease liabilities Interest expense, net 1,200 1,787 7,080

Total finance lease expense 2,306 13,211 38,452

Total lease expense $ 17,047 $ 14,235 $ 40,413

Information relating to the lease term and discount rate is as follows:

December 31, 2024 December 31, 2023

Weighted Average Remaining Lease Term (Years)

Operating leases 8.5 16.7

Finance leases 0.7 2.2

Weighted Average Discount Rate

Operating leases 8.5 % 11.7 %

Finance leases 12.5 % 12.9 %

Information relating to lease payments is as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Lease Payments

Operating cash flows from operating leases $ 16,328 $ 956 $ 726

Operating cash flows from finance leases $ 1,856 $ 964 $ 8,873

Financing cash flows from finance leases

$ 6,038 $ 3,495 $ 27,868

Anchor Labs loan 12.5 % 12.5 % 2024 25,159 25,159

Mass Mutual Barings loans 9.8 % - 13.0 %

1 Approximately $ 4.6 million of finance lease liabilities were reinstated pursuant to the Plan of Reorganization.

Of the $ 7.9 million of finance lease payments made during the year ended December 31, 2024, $ 4.4 million related to cure payments from emergence on the Effective Date.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The Company’s minimum payments under noncancelable operating and finance leases having initial terms and bargain renewal periods in excess of one year are as follows at December 31, 2024, and thereafter (in thousands):

Operating leases Finance leases

2025 $ 18,589 $ 1,750

2026 19,000 3

Riley Bridge Notes 7.0 % 7.0 % 2023 41,777 41,777

Liberty loan 10.6 % 10.6 % 2024 6,968 6,968

Secured Convertible Notes 1

2027 19,423 —

Other Convertible Notes 2

2028 19,859 —

Original DIP Credit Agreement 3

2029 20,358 —

Thereafter 54,309 —

Total lease payments 151,538 1,753

imputed interest 43,721 81

Total $ 107,817 $ 1,672

Lessor Accounting

We generate revenue by leasing property to a customer under licensing agreements.

The manner in which we recognize these transactions in our financial statements is described in Note 2 — Summary of Significant Accounting Policies, Revenue Recognition — HPC Hosting Segment .

There was no lease revenue during the years ended December 31, 2023 and 2022.

The components of lease revenue were as follows (in thousands):

December 31, 2024

Lease Revenue

Operating lease revenue

Variable lease revenue

Total lease revenue

The following table represents the maturity analysis of operating lease payments expected to be received at December 31, 2024, and thereafter (in thousands):

Operating leases

2025 $ 23,254

Thereafter 33,747

Total $ 157,206

Core Scientific, Inc.

Notes to Consolidated Financial Statements

CONVERTIBLE AND OTHER NOTES PAYABLE

Notes payable as of December 31, 2024 and 2023, consists of the following (in thousands):

Stated Interest Rate

Effective Interest Rates

Maturities December 31, 2024 December 31, 2023

Replacement DIP Credit Agreement 1

10.0 % 10.0 % 2024 $ — $ 4,273

Other Convertible Notes 2

10.0 % 10.0 % 2025 — 322,396

ACM financing — % 15.0 % 2025

First Insurance loan — % 7.6 % 2024

Secured Convertible Notes 2

10.0 % 10.0 % 2025 — 237,584

2029 Convertible Notes 3.0 % 3.7 % 2029

2031 Convertible Notes

— % 0.4 % 2031

Miner Financing:

Blockfi loan 9.7 % - 13.1 %

10.1 % - 13.1 %

2023 — 53,913

Liberty/Stonebriar loan 10.6 % 10.6 % 2024 — 6,968

ACM note — % 15.0 % 2025 3,023 6,519

Mass Mutual Barings loans 9.8 % - 13.0 %

9.8 % - 13.0 %

2025 — 63,844

Anchor Labs loan 12.5 % 12.5 % 2024 — 25,159

Trinity loan 11.0 % 11.0 % 2024 — 23,356

Equipment and Settlement:

Bremer loan 5.5 % 5.5 % 2027 10,669 18,331

HMC note 5.0 % 15.0 % 2026 9,042 14,208

Didado note 5.0 % 15.0 % 2027 8,964 13,000

Harper note 5.0 % 15.0 % 2026 3,119 4,678

Trilogy note 5.0 % 15.0 % 2026 2,107 2,927

Riley Bridge Notes 7.0 % 7.0 % 2023 — 41,777

First Insurance note 7.6 % 7.6 % 2024 — 2,538

Stockholder loan 10.0 % 20.0 % 2023 — 10,000

Kentucky Note 5.0 % 5.0 % 2023 — 529

Other 5.0 % - 7.7 %

7.1 % - 15.0 %

Notes payable, prior to reclassification to Liabilities subject to compromise

Notes payable in Liabilities subject to compromise 5

1,122,053 854,453

Unamortized discount and debt issuance costs - post-petition 6

Notes payable in Liabilities subject to compromise 3

Unamortized discounts - post-petition

Total notes payable, net 1,090,280 808,440

1 unchanged sentence

16,290 124,358

Notes payable, net of current portion

Convertible and other notes payable, net of current portion

$ 1,073,990 $ 684,082

1 Secured Convertible Notes includes principal balance at issuance and PIK interest.

2 Other Convertible Notes includes principal balance at issuance and PIK interest.

3 Original DIP Credit Agreement, see Note 3 - Chapter 11 Filing and Other Related Matters for further information.

4 Replacement DIP Credit Agreement, see Note 3 - Chapter 11 Filing and Other Related Matters for further information.

5 In connection with the Company's Chapter 11 Cases, $ 41.8 million and $ 844.7 million of outstanding notes payable have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively, at their expected allowed amount.

As of December 31, 2023 and 2022, $ 0.6 million and $ 12.6 million, respectively, of accrued interest was classified as Liabilities subject to compromise.

6 As a result of the Company's Chapter 11 Cases, the Company expensed $ 3.5 million of unamortized discount and debt issuance costs, net recorded in Reorganization items, net in the year ended December 31, 2022.

1 Replacement DIP Credit Agreement, see Note 3 — Chapter 11 Filing and Emergence from Bankruptcy for further information.

2 Other Convertible Notes and Secured Convertible Notes included principal balances at issuance and PIK interest.

3 In connection with the Company's Chapter 11 Cases, $ 41.8 million of outstanding notes payable were reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheets as of December 31, 2023, at their expected allowed amount.

Up to the Petition Date, the Company continued to accrue interest expense in relation to these reclassified debt instruments.

As of December 31, 2023, $ 0.6 million of accrued interest was classified as Liabilities subject to compromise.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Maturities on convertible and other notes payable, gross of unamortized discounts, are as follows (in thousands):

Convertible Notes Other Notes Payable

$ 1,085,000 $ 37,052

0.00 % Convertible Senior Notes due 2031

On December 5, 2024, the Company issued $ 625.0 million aggregate principal amount of 0.00 % Convertible Senior Notes due 2031 (the "2031 Convertible Notes").

The 2031 Convertible Notes mature on June 15, 2031, unless earlier converted, redeemed, or repurchased.

Noteholders may convert their 2031 Convertible Notes at their option only upon the occurrence of certain events, including if the Company’s common stock price exceeds 130 % of the conversion price for a specified period or upon certain corporate events.

The Company may redeem the 2031 Convertible Notes, in whole or in part, at its option on or after June 22, 2028, subject to certain conditions.

Noteholders may require the Company to repurchase their 2031 Convertible Notes upon the occurrence of a “Fundamental Change” (as defined in the 2031 Convertible Notes Indenture) or on December 15, 2027.

The 2031 Convertible Notes Indenture includes customary provisions relating to Events of Default, including payment defaults and certain bankruptcy or insolvency events.

The initial conversion rate is 44.4587 shares of common stock per $1,000 principal amount of 2031 Convertible Notes (equivalent to an initial conversion price of approximately $ 22.49 per share).

The conversion rate is subject to adjustment upon the occurrence of certain events.

The net proceeds from the offering were approximately $ 608.7 million, after deducting the initial purchasers’ discounts and commissions and the Company’s estimated offering expenses.

The Company will recognize interest expense on the 2031 Convertible Notes using the effective interest method over the term of the notes.

The Company intends to use the net proceeds for general corporate purposes.

3.00 % Convertible Senior Notes due 2029

On August 19, 2024, the Company issued $ 460.0 million aggregate principal amount of 3.00 % Convertible Senior Notes due 2029 (the "2029 Convertible Notes").

The 2029 Convertible Notes mature on September 1, 2029, unless earlier converted, redeemed, or repurchased.

Noteholders may convert their 2029 Convertible Notes at their option only upon the occurrence of certain events, including if the Company’s common stock price exceeds 130 % of the conversion price for a specified period or upon certain corporate events.

The Company may redeem the 2029 Convertible Notes, in whole or in part, at its option on or after September 7, 2027, subject to certain conditions.

Noteholders may require the Company to repurchase their 2029 Convertible Notes upon the occurrence of a “Fundamental Change” (as defined in the 2029 Convertible Notes Indenture).

The 2029 Convertible Notes Indenture includes customary provisions relating to Events of Default, including payment defaults and certain bankruptcy or insolvency events.

The initial conversion rate is 90.9256 shares of common stock per $1,000 principal amount of 2029 Convertible Notes (equivalent to an initial conversion price of approximately $ 11.00 per share).

The conversion rate is subject to adjustment upon the occurrence of certain events.

The net proceeds from the offering were approximately $ 447.6 million, after deducting after deducting the initial purchasers’ discounts and commissions and the Company’s estimated offering expenses.

The Company will recognize interest expense on the 2029 Convertible Notes using the effective interest method over the term of the notes.

The Company used approximately $ 62.0 million of the net proceeds from the 2029 Convertible Notes Offering to repay in full the outstanding loans under the Exit Credit Agreement, of which $ 0.8 million was paid for interest.

Additionally, the Company used approximately $ 154.1 million of the net proceeds from the 2029 Convertible Notes Offering to redeem all of the outstanding Secured Notes, of which $ 4.1 million was paid for interest.

The Company intends to use the remaining net proceeds from the 2029 Convertible Notes Offering for general corporate purposes.

Miner Equipment Lender Agreements (BlockFi and Stonebriar)

On September 6, 2024, the Company paid $ 49.6 million to repay the BlockFi facility in full, of which $ 0.7 million was paid for interest.

On October 2, 2024, the Company paid $ 6.5 million to repay the Stonebriar facility in full, of which $ 0.1 million was paid for interest.

Below is a description of the Miner Equipment Lender Agreements prior to their repayment.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into separate New Miner Equipment Lender Agreements (Election 2) with each holder of an Allowed Miner Equipment Lender Secured Claim that was a Settling Miner Equipment Lender that elected on its ballot to receive and was receiving the Miner Equipment Lender Treatment Election 2 (the “Election 2 Miner Equipment Facility Lenders”), in each case, in the principal amount of eighty percent ( 80 %) of each applicable Holders’ Allowed Miner Equipment Lender Claim as of the Effective Date (the “Miner Equipment Lender Facility”).

The maturity date on the Miner Equipment Lender Facility was January 23, 2029.

Loans issued under the Miner Equipment Lender Facility accrued interest (1) from the Effective Date to and including the second anniversary of the Effective Date, (x) if the Company did not deliver an Election Notice (as defined below), at a rate of 13.0 % per annum and was payable 3.0 % in cash interest and 10.0 % paid-in-kind, and (y) if the Company delivered a written notice to the Election 2 Miner Equipment Facility Lenders five (5) business days prior to the due date of any interest payment during this period (an “Election Notice”), the Company could elect to have interest accrue at either (a) 12.0 % per annum, payable 5.0 % in cash and 7.0 % paid-in-kind or (ii) 8.0 % per annum, payable in cash and (2) following the second anniversary of the Effective Date, at a rate of 10.0 % per annum, payable in cash.

Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the New Miner Equipment Lender Agreements (Election 2)), the obligations under the Miner Equipment Lender Facility could, at the option of the Election 2 Miner Equipment Facility Lenders, accrue interest at a rate equal to an additional 2.0 % per annum over the rate otherwise applicable, with such interest being payable in cash on demand.

Loans issued under the Miner Equipment Lender Facility were secured by a first-priority, duly-perfected and validly enforceable lien on (i) the collateral securing each Election 2 Miner Equipment Facility Lenders’ existing equipment loan/lease and (ii) new, non-financed miners acquired by the Company after the Effective Date, in an aggregate amount of up to $ 18.2 million (collectively, the “Equipment Priority Collateral”).

On the Effective Date, under the terms of the Plan of Reorganization, each Miner Equipment Facility Lender entered into a separate intercreditor agreement with the Secured Convertible Notes Agent, the Secured Notes Agent and the Exit Agent (as defined in the Plan of Reorganization) with respect to the Equipment Priority Collateral.

The present value of the Miner Equipment Lender Facility’s cash flows were estimated to be equal to its par amount, therefore no discount or premium was recorded on issuance.

The Miner Equipment Lender Facility contained customary covenants, representations and warranties.

Previous Indebtedness Extinguished During Fiscal 2024

The Replacement DIP Facility provided for a non-amortizing super-priority senior secured term loan facility in an aggregate principal amount not to exceed $ 70 million.

Under the Replacement DIP Facility, (i) $ 35 million was made available following Bankruptcy Court approval of the interim debtor-in-possession order and (ii) $ 35 million was made available following Bankruptcy Court approval of the final debtor-in-possession order on March 1, 2023.

Loans under the Replacement DIP Facility bore interest at a rate of 10 %, which was payable in kind in arrears on the first day of each calendar month.

On January 4, 2024, the Company pre-paid the outstanding balance of $ 4.5 million on the Replacement DIP Facility provided by B.

Riley Financial, the Company’s DIP lender.

The $ 4.5 million payment included exit fees of approximately $ 0.2 million.

The Replacement DIP Facility was terminated on the Effective Date.

On January 24, 2024, the Company entered into a settlement agreement with Dalton Utilities which resulted in the issuance of an unsecured promissory note with a principal amount of $ 9.1 million dated December 29, 2023.

The note bore interest at a contractual rate of 5.0 % per annum and matured on May 2, 2024.

On the Effective Date, the obligations of the Company under the Company’s Convertible Notes, replacement debtor-in-possession credit agreement, stock certificates, book entries, and any other certificate, share, note, bond, indenture, purchase right, option, warrant, or other instrument or document, directly or indirectly, evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors giving rise to any claim or interest (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in, the Debtors that are specifically reinstated pursuant to the Plan of Reorganization) were cancelled, and the duties and obligations of all parties thereto were deemed satisfied in full, canceled, released, discharged, and of no force or effect.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Extinguishments

On the Effective Date, the holders of Secured and Other Convertible Notes received Secured Notes Indenture, New Secured Convertible Notes Indenture, New Common Stock and CVRs.

Certain holders of New Secured Convertible Notes also funded and received the Exit Credit Agreement.

The exchange and underlying agreements were executed contemporaneously and in contemplation of each other and were analyzed on a combined basis under ASC 470.

The Company determined that extinguishment accounting was applicable, as the debt terms in the exchange are substantially different:

(a) the present value of the cash flows of the new and remaining instruments differ by more than 10%, (b) the fair value of the conversion option changed by more than 10% of the carrying amount of the original instruments, and (c) a substantive conversion feature was added to the debt terms.

The gain on extinguishment is reported in Reorganization items, net.

Two previous miner equipment lender loans were exchanged for Miner Equipment Lender Agreements.

The Company determined that extinguishment accounting was applicable, as the loans had original maturities near the exchange on the Effective Date.

The remaining miner equipment lender loans and leases were exchanged for New Common Stock.

The Company determined that extinguishment accounting was applicable, as the remaining miner equipment lender loans and leases were settled by the issuance of equity-classified shares.

The gain on extinguishment is reported in Reorganization items, net.

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued the following debt instruments, which are defined and described in further detail below (in thousands):

Principal Balance on the Effective Date

Exit Credit Agreement

Secured Notes Indenture $ 150,000

New Secured Convertible Notes Indenture

Miner Equipment Lender Agreements

In addition, approximately $ 15.0 million of debt was reinstated pursuant to the Plan of Reorganization.

Exit Credit Agreement

Below is a description of the Exit Credit Agreement prior to its repayment in full on August 19, 2024.

There is currently no outstanding Exit Credit Agreement.

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into a credit and guaranty agreement, dated as of January 23, 2024 (the “Exit Credit Agreement”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent, consisting of an $ 80 million first-lien credit facility with certain holders of the Company’s Convertible Notes (in such capacity, the “Exit Lenders”) equal to (i) a $ 40 million term loan comprised of (x) a $ 20 million initial term loan and (y) a $ 20 million delayed-draw term loan and (ii) a $ 40 million roll-up of the outstanding balance of the Convertible Notes (the “Exit Facility”).

The maturity date of the Exit Facility was January 23, 2027.

From the Effective Date, cash borrowings under the Exit Facility bore interest at 9.0 % per annum, payable on the first business day of each Fiscal Quarter (as defined in the Exit Credit Agreement), commencing on April 1, 2024.

The Exit Facility amortized in equal quarterly installments of $ 1.25 million beginning on January 1, 2026.

Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the Exit Credit Agreement), the obligations under the Exit Facility automatically bore interest at a rate equal to an additional 2.0 % per annum over the rate otherwise applicable, with such interest being payable in cash on each interest payment date (unless the administrative agent demands prior payment).

At issuance, the Company identified embedded features in the Exit Facility and evaluated them for potential bifurcation in accordance with ASC 815-15.

The identified embedded features were determined to be clearly and closely related to the debt host and not subject to bifurcation.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The present value of the Exit Facility’s cash flows were estimated to be equal to its par amount, therefore no discount or premium was recorded on issuance.

Obligations under the Exit Credit Agreement were secured by a valid and perfected lien and security interest on substantially all assets and property of the Company and the guarantors thereof, including a first-priority lien on all new, unencumbered miner equipment purchased by the Company or any subsidiary thereof other than the following, which were each secured by a second priority lien on, (i) Equipment Priority Collateral (as defined below) and (ii) future financed equipment.

Obligations under the Exit Credit Agreement were guaranteed by all direct and indirect subsidiaries of the Company.

The Exit Facility provided for affirmative, negative and financial covenants, that, among other things, limited the ability of the Company and, in certain cases, certain of the Company’s subsidiaries, to incur more indebtedness;

pay dividends, redeem stock or make other distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with our affiliates.

The Exit Facility also imposed financial maintenance covenants in the form of a maximum leverage ratio and minimum liquidity requirements.

The Exit Facility contained certain events of default, including, without limitation, nonpayment of principal, nonpayment of interest, fees or other obligations after three business days, bankruptcy events of the Company or any of its subsidiaries and certain changes of control.

Secured Notes Indenture

Below is a description of the Secured Notes (as defined below) prior to their repayment in full on August 19, 2024.

There are currently no outstanding Secured Notes.

On the Effective Date, under the terms of the Plan of Reorganization, the Company issued $ 150.0 million aggregate principal amount of senior secured notes due 2028 (the “Secured Notes”) pursuant to a secured notes indenture (the “Secured Notes Indenture”) among (i) the Company, as the issuer, (ii) the guarantors named therein and (iii) Wilmington Trust, National Association, as trustee and collateral agent (the “Secured Notes Agent”).

The maturity date of the Secured Notes was January 23, 2028.

The Secured Notes bore interest at a rate of 12.5 % per annum, payable on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2024.

There was no amortization on the Secured Notes prior to maturity.

The Secured Notes were secured by a valid and perfected second lien and security interest on substantially all assets of the Company and the guarantors thereof, which liens were junior in priority to liens securing the Exit Facility and were subject to the terms of the New Intercreditor Agreement.

The Secured Notes were guaranteed by all direct and indirect subsidiaries of the Company.

The Company was entitled to prepay the notes prior to maturity.

If the notes were prepaid after the first year (including in the event that the notes are accelerated), or if the notes were not paid when due at the stated maturity, the Company was required to pay a premium on the outstanding principal amount equal to:

(a) 1.00 % of the aggregate principal amount of the notes then outstanding, if the notes were prepaid on or after the first anniversary of the Issue Date (as such term is defined in the Secured Notes Indenture) and prior to the second anniversary of the Issue Date, (b) 2.00 % of the aggregate principal amount of the notes then outstanding, if the notes were prepaid on or after the second anniversary of the Issue Date and prior to the third anniversary of the Issue Date and (c) 3.00 % of the aggregate principal amount of the notes then outstanding, if the notes were prepaid on or after the third anniversary of the Issue Date or if the notes were not paid when due at maturity, in each case whether such payment was made before or after an event of default or an acceleration (including any acceleration as a result of an insolvency proceeding) of all or part of the notes.

No prepayment premium shall be applicable in connection with any prepayment, repayment or refinancing that occurs prior to the first anniversary of the Issue Date.

At issuance, the Company identified embedded features in the Secured Notes and evaluated them for potential bifurcation in accordance with ASC 815-15.

The identified embedded features were determined to be clearly and closely related to the debt host and not subject to bifurcation.

The present value of the Secured Notes’ cash flows at issuance were estimated to be $ 149.5 million, the discount was amortized to result in recognition of a level effective interest rate.

The Secured Notes Indenture contained affirmative and negative covenants consistent with those in the Exit Facility and the New Secured Convertible Notes Indenture (as defined below) that, among other things, limited the ability of the Company and, in certain cases, certain of the Company’s subsidiaries to incur more indebtedness;

pay dividends, redeem stock or make other

Core Scientific, Inc.

Notes to Consolidated Financial Statements

distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with its affiliates.

The Secured Notes Indenture contained certain events of default, including, without limitation, nonpayment of principal, nonpayment of fees, interest or other obligations after three business days, violations of the covenants (subject, in the case of certain affirmative covenants, to certain grace periods), and bankruptcy events of the Company or any of its subsidiaries.

New Secured Convertible Notes Indenture;

Interest Payment and Mandatory Conversion

The New Secured Convertible Notes (as defined below) were mandatorily converted as of July 10, 2024 and are no longer outstanding.

On the Effective Date, under the terms of the Plan of Reorganization, the Company issued $ 260.0 million aggregate principal amount of secured convertible notes due 2029 (the “New Secured Convertible Notes”) pursuant to a secured convertible notes indenture (the “New Secured Convertible Notes Indenture”) among (i) Core Scientific, Inc., as the issuer, (ii) the guarantors party thereto and (iii) Wilmington Trust, National Association, as trustee and as collateral agent for the New Secured Convertible Notes (in such capacity, the “Secured Convertible Notes Agent”).

The New Secured Convertible Notes were issued to holders of the Company’s Convertible Notes.

The maturity date of the New Secured Convertible Notes was January 23, 2029.

The New Secured Convertible Notes bore interest payable quarterly on March 15, June 15, September 15 and December 15, beginning on June 15, 2024, at the Company’s option, (i) in cash at a rate of 10.0 % per annum, or (ii) in cash at a rate of 6.0 % of per annum and in stock at a rate of 6.0 % of per annum (the “Cash/PIK Interest”);

provided that the payable-in-stock portion of the Cash/PIK Interest was payable in New Common Stock using a price equal to the volume weighted average price of the New Common Stock for the 20 consecutive trading day period immediately preceding the date that was three business days prior to the applicable interest payment date.

The Company exercised its option to make the June 15, 2024 interest payment 6 % in cash for approximately $ 6.0 million and 6 % in stock and issued 881,610 shares of its New Common Stock to the holders of the New Secured Convertible Notes on that date for total interest expense of approximately $ 9.8 million.

Prior to the mandatory conversion on July 10, 2024, $ 26.4 million of New Secured Convertible Notes including interest were voluntarily converted for 4.5 million shares of New Common Stock.

On July 5, 2024, the mandatory conversion feature of the New Secured Convertible Notes pursuant to the Indenture, dated as of January 23, 2024 (the “Indenture”), by and among the Company, as issuer, Wilmington Trust, National Association (“Wilmington Trust”), as trustee and collateral agent, and the other parties thereto, was triggered when the trading price of the Company’s New Common Stock on a daily volume weighted average basis (“VWAP”) exceeded the applicable threshold specified in the Indenture for the 20 th consecutive trading day.

In connection with the mandatory conversion of the Notes, which took place on July 10, 2024, each registered holder of the New Secured Convertible Notes was entitled to receive (1) a number of shares of the Company’s New Common Stock equal to the aggregate principal amount of his, her or its notes outstanding, divided by the conversion price of $ 5.8317 (not including fractional shares), and (2) an amount of cash equal to the number of the resulting fractional shares, multiplied by the closing trading price of the Company’s New Common Stock on July 9, 2024.

Following the mandatory conversion of the New Secured Convertible Notes, 40.1 million shares of the Company’s New Common Stock in the aggregate were issued in exchange for $ 233.6 million aggregate principal amount of the New Secured Convertible Notes.

Description of the New Secured Convertible Notes Indenture Prior to the Mandatory Conversion

Below is a description of the New Secured Convertible Notes prior to their mandatory conversion on July 10, 2024.

There are currently no outstanding New Secured Convertible Notes.

The New Secured Convertible Notes were secured by a valid and perfected third lien and security interest on substantially all assets of the Company and the guarantors thereof, and which liens were junior in priority to liens securing the Exit Facility and Secured Notes and were subject to the terms of the New Intercreditor Agreement.

The New Secured Convertible Notes were guaranteed by all direct and indirect subsidiaries of the Company.

Upon the occurrence of a Fundamental Change (as such term is defined in the New Secured Convertible Notes Indenture), the holders of the New Secured Convertible Notes had the right to require the Company to purchase all or any portion of such holder’s New Secured Convertible Notes at the principal amount thereof plus accrued interest to the repurchase date.

Holders could elect to convert the New Secured Convertible Notes into shares of New Common Stock at any time prior to maturity at an initial conversion rate of 171.48 shares of New Common Stock per $1,000 principal amount of New Secured Convertible Notes (equal to a conversion price of $ 5.8317 per share of New Common Stock), which the Company could deliver in cash, New Common Stock or a combination

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The conversion price was subject to anti-dilution adjustments upon (among other triggering events) the occurrence of certain dilutive transactions, including share dividends, splits, combinations and reclassification.

The New Secured Convertible Notes also automatically converted into New Common Stock if the volume weighted average price for each day for any 20 consecutive trading days was greater than or equal to 133.6 % of the as-adjusted conversion price of $ 7.79 .

At issuance, the Company identified embedded features in the New Secured Convertible Notes and evaluated them for potential bifurcation in accordance with ASC 815-15.

The conversion feature was determined to be indexed to the Company’s own stock and would be classified in equity if it were freestanding meeting a scope exception from derivative accounting under ASC 815.

The other identified embedded features were determined to be clearly and closely related to the debt host and not subject to bifurcation.

Convertible debt instruments not specifically addressed in other GAAP are accounted for in accordance with ASC 470-20.

Under that guidance a substantial premium is presumed to attributable to the conversion feature.

A conversion feature which is not bifurcated as a derivative is initially recognized in equity as additional paid-in capital.

The New Secured Convertible Notes were estimated to have a present value of $ 293.2 million on issuance.

$ 260.0 million was initially recognized as debt and $ 33.2 million was initially recognized as additional paid-in capital.

Under the relevant guidance, neither balance was subject to recognition of recurring remeasurements.

The New Secured Convertible Notes Indenture contained affirmative and negative covenants consistent with those in the Exit Facility and the Secured Notes Indenture that, among other things, limited the ability of the Company and, in certain cases, certain of the Company’s subsidiaries to incur more indebtedness;

pay dividends, redeem stock or make other distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with its affiliates.

The New Secured Convertible Notes Indenture contained certain events of default, including, without limitation, nonpayment of principal, nonpayment of interest, fees or other obligations after three business days, and bankruptcy events of the Company or any of its subsidiaries.

Kentucky Note —In December 2018, the Company entered into a five-year secured promissory note agreement for $ 2.4 million in connection with the acquisition of property in Kentucky for datacenter development (“Kentucky note”).

The note bears interest at a rate per annum of 5 % and the Company is required to make monthly payments of principal and interest.

Interest expense on the note has been recognized based on an effective interest rate of 5 %.

The loan is secured by the underlying property purchased.

The note bore interest at a rate per annum of 5 % and the Company was required to make monthly payments of principal and interest.

Interest expense on the note was recognized based on an effective interest rate of 5 %.

The loan was secured by the underlying property purchased.

NYDIG Loan —In October 2020, the Company entered into a master equipment finance agreement with NYDIG and received a loan of $ 0.8 million to finance the Company’s acquisition of blockchain computing equipment.

In March 2021, the Company received $ 3.8 million of additional loans under the master equipment finance agreement with NYDIG to finance the Company’s acquisition of blockchain computing equipment.

The loans bear an interest rate of 15 % and have a term of 24 months from issuance.

Interest expense on the loans has been recognized based on an effective interest rate of 16 %.

The loans are secured by the blockchain computing equipment financed by the loans.

In May 2021, the Company received $ 13.4 million of additional loans under the master equipment finance agreement with NYDIG to finance the Company’s acquisition of blockchain computing equipment that bear an interest rate of 14.25 % and have a term of 24 months from issuance.

Interest expense on the loans issued in May 2021 has been recognized based on an effective interest rate of 17 %.

In July 2021, the Company received blockchain computing equipment from NYDIG (which had been concurrently acquired by NYDIG from Blockcap in exchange for settlement of Blockcap’s debt with NYDIG) in exchange for $ 26.1 million of additional loans under the master equipment finance agreement with NYDIG that bear an interest rate of 14.25 % and have a term of 24 months from issuance.

Interest expense on the loans issued in July 2021 has been recognized based on an effective interest rate of 16 %.

In November 2021, the Company received blockchain computing equipment from NYDIG in exchange for $ 33.4 million of additional loans under the master equipment finance agreement with NYDIG that bear an interest rate of 11 % and have a term of 24 months from issuance.

Interest expense on the loans issued in November 2021 has been recognized based on an effective interest rate of 11 %.

As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, under the NYDIG Order, the final shipment of miners that served as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $ 20.8 million Gain on extinguishment of debt in the Company’s Consolidated Statements of Operations.

The loans bore an interest rate of 15 % and had a term of 24 months from issuance.

Interest expense on the loans was recognized based on an effective interest rate of 16 %.

The loans were secured by the blockchain computing equipment financed by the loans.

In May 2021, the Company received $ 13.4 million of additional loans under the master equipment finance agreement with NYDIG to finance the Company’s acquisition of blockchain computing equipment that bore an interest rate of 14.25 % and had a term of 24 months from issuance.

Interest expense on the loans issued in May 2021 was recognized based on an effective interest rate of 17 %.

In July 2021, the Company received blockchain computing equipment from NYDIG (which had been concurrently acquired by NYDIG from Blockcap in exchange for settlement of Blockcap’s debt with NYDIG) in exchange for $ 26.1 million of additional loans under the master equipment finance agreement with NYDIG that bore an interest rate of 14.25 % and had a term of 24 months from issuance.

Interest expense on the loans issued in July 2021 was recognized based on an effective interest rate of 16 %.

In November 2021, the Company received blockchain computing equipment from NYDIG in exchange for $ 33.4 million of additional loans under the master equipment finance agreement with NYDIG that bore an interest rate of 11 % and had a term of 24 months from issuance.

Interest expense on the loans issued in November 2021 was recognized based on an effective interest rate of 11 %.

As discussed in Note 3 — Chapter 11 Filing and Emergence from Bankruptcy, under the NYDIG Order, the final shipment of miners that served as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $ 20.8 million Gain on extinguishment of debt in the Company’s Consolidated Statements of Operations.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Stockholder Loan —In January 2021, the Company borrowed $ 10.0 million from a stockholder for the purchase of blockchain computing equipment.

The loan bears interest at 10 % per annum over a two-year term.

The loan bore interest at 10 % per annum over a two-year term.

The loan was issued with a warrant to purchase 0.2 million shares of common stock at an exercise price of $ 4.21 per share.

The warrant has a two-year term.

The warrant had a two-year term.

The Company allocated proceeds of $ 9.5 million to the notes and $ 0.5 million to the warrants on a relative fair value basis.

Interest expense on the loan has been recognized based on an effective interest rate of 20 %.

The loan is secured by the blockchain computing equipment financed by the loan.

Interest expense on the loan was recognized based on an effective interest rate of 20 %.

The loan was secured by the blockchain computing equipment financed by the loan.

Trinity Loan —In August 2021, the Company entered into a $ 30.0 million master equipment finance facility agreement with Trinity Capital Inc.

(“Trinity”) to finance the Company’s acquisition of blockchain computing equipment and received a loan of $ 1.0 million at close.

The loan has a term of 36 months from issuance.

Interest expense on the loan has been recognized based on an effective interest rate of 11.0 %.

The loan had a term of 36 months from issuance.

Interest expense on the loan was recognized based on an effective interest rate of 11.0 %.

In November and December 2021, the Company borrowed $ 14.0 million and $ 5.0 million, respectively.

The remaining balance of $ 10.0 million was drawn in February 2022.

The loan is secured by the blockchain computing equipment financed by the loan.

The loan was secured by the blockchain computing equipment financed by the loan.

Bremer Loan —In October 2021, the Company entered into a lending agreement with Bremer Bank, National Association to borrow up to $ 16.2 million in two tranches through May 22, 2022, for the purchase of blockchain mining equipment and for improvements to data center and infrastructure.

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In April 2022, the Company borrowed an additional $ 0.7 million from Bremer to finance the construction of our North Dakota facility.

The loans bear interest at 5.5 % annually and are due at the earlier of the date of sale of the underlying mining equipment or 60 months from issuance.

Interest expense on the loans has been recognized based on an effective interest rate of 5.6 %.

The loans require the Company to maintain the following financial covenants:

(1) a minimum debt service

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

coverage ratio (defined in the agreement as EBITDA divided by scheduled principal and interest payments) of not less than 1.2 :1, measured annually beginning December 31, 2022;

The loans bore interest at 5.5 % annually and were due at the earlier of the date of sale of the underlying mining equipment or 60 months from issuance.

Interest expense on the loans was recognized based on an effective interest rate of 5.6 %.

The loans required the Company to maintain the following financial covenants:

(1) a minimum debt service coverage ratio (defined in the agreement as EBITDA divided by scheduled principal and interest payments) of not less than 1.2 :1, measured annually beginning December 31, 2022;

and (2) a fixed charge coverage ratio (defined in the agreement as EBITDA minus net distributions divided by scheduled principal and interest payments) of 1 :1, measured annually beginning December 31, 2022.

The loans are secured by a first priority security interest in certain of the assets financed by the loans.

The loans were secured by a first priority security interest in certain of the assets financed by the loans.

Additionally, an interest buydown agreement was made between Grand Forks Growth Fund and the Bank of North Dakota acting on behalf of the PACE Program for the purpose of a buydown on the interest for certain of the Company’s loans financed through Bremer Bank.

The total amount of interest buydown over the term of the loan is $ 0.8 million.

In order to receive the interest buydown incentive, the Company must (a) continue operation in the jurisdiction for a minimum of five years from the benefit date, (b) employ 13 new full-time employees within two years of receiving the incentive and continue to keep them employed for the duration of the agreement and (c) continue to make debt payments and no event of default should occur.

If the Company discontinues operation in the jurisdiction within the next five years , it is obligated to repay the incentive back to the Bank of North Dakota.

If after two years , the Company does not employ 13 new full-time employees, the interest buydown will be prorated to reflect any partial fulfillment and the Company, at a minimum, is required to pay back the value of the incentive to the Bank of North Dakota.

The total amount of interest buydown over the term of the loan was $ 0.8 million.

In order to receive the interest buydown incentive, the Company had to (a) continue operation in the jurisdiction for a minimum of five years from the benefit date, (b) employ 13 new full-time employees within two years of receiving the incentive and continue to keep them employed for the duration of the agreement and (c) continue to make debt payments and no event of default should occur.

If the Company discontinued operation in the jurisdiction within the next five years , it was obligated to repay the incentive back to the Bank of North Dakota.

If after two years , the Company did not employ 13 new full-time employees, the interest buydown would be prorated to reflect any partial fulfillment and the Company, at a minimum, was required to pay back the value of the incentive to the Bank of North Dakota.

For the years ended December 31, 2023, 2022 and 2021, there was no interest buydown.

Blockfi Loan —In December 2021, the Company entered into two lending agreements with Blockfi Lending, LLC to borrow up to $ 110.0 million for the purchase of blockchain mining equipment.

The first agreement consists of $ 10.0 million and bears interest at 9.7 % with a term of 24 months from issuance.

Interest expense on the loans issued in December 2021 has been recognized based on an effective interest rate of 10.1 %.

The second agreement consists of $ 100.0 million and bears interest at 13.1 % with a term of 24 months from issuance.

The first agreement consisted of $ 10.0 million and bore interest at 9.7 % with a term of 24 months from issuance.

Interest expense on the loans issued in December 2021 was recognized based on an effective interest rate of 10.1 %.

The second agreement consisted of $ 100.0 million and bore interest at 13.1 % with a term of 24 months from issuance.

The Company borrowed the first tranche totaling $ 60.0 million across the two loans in December 2021 and borrowed the second tranche of $ 20.0 million in January 2022.

The remaining $ 30.0 million expired unused in March 2022.

Interest expense on the loans issued in December 2021 has been recognized based on an effective interest rate of 13.1 %.

The loans are secured by a first priority security interest in certain of the assets financed by the loans.

Interest expense on the loans issued in December 2021 was recognized based on an effective interest rate of 13.1 %.

The loans were secured by a first priority security interest in certain of the assets financed by the loans.

Anchor Labs Loan —In March 2022, the Company entered into a $ 20.0 million equipment loan and security agreement with Anchorage Lending CA, LLC.

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The Company borrowed $ 20.0 million in March 2022.

The loan has a term of 24 months from issuance.

Interest expense on the loan has been recognized based on an effective interest rate of 12.5 %.

The loan had a term of 24 months from issuance.

Interest expense on the loan was recognized based on an effective interest rate of 12.5 %.

In May 2022, the Company entered into a $ 11.7 million equipment loan and security agreement with Anchor Labs to finance the Company’s purchase of blockchain computing equipment.

The Company borrowed $ 11.7 million in May 2022.

The loan has a term of 24 months from issuance.

Interest expense on the loan has been recognized based on an effective interest rate of 12.5 %.

The loans are secured by a first priority security interest in certain of the assets financed by the loans.

The loan had a term of 24 months from issuance.

Interest expense on the loan was recognized based on an effective interest rate of 12.5 %.

The loans were secured by a first priority security interest in certain of the assets financed by the loans.

Mass Mutual Barings Loans —In March 2022, the Company entered into a $ 100.0 million equipment loan and security agreement with Barings BDC, Inc., Barings Capital Investment Corporation and Barings Private Credit Corp.

(“Mass Mutual Barings”) to finance the Company’s purchase of blockchain computing equipment.

(“Mass Mutual

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Barings”) to finance the Company’s purchase of blockchain computing equipment.

The Company borrowed the first tranche of $ 30.0 million in March 2022 and borrowed the second tranche of $ 39.6 million in April 2022.

On June 30, 2022, the remaining $ 30.4 million funding commitment expired unused.

The loans under the agreement have a term of 36 months from issuance.

Interest expense on the loans have been recognized based on an effective interest rate of 9.8 %.

The loans are secured by certain blockchain computing equipment.

The loans under the agreement had a term of 36 months from issuance.

Interest expense on the loans was recognized based on an effective interest rate of 9.8 %.

The loans were secured by certain blockchain computing equipment.

In August 2022, the Company amended the Mass Mutual Barings loans to defer principal payments for a period of six months beginning with payments due in August 2022.

The amendments result in no change to the term of the loans and the remaining principal will amortize over the remaining life of the loans beginning in February 2023.

The amendments also require an additional amount of blockchain computing equipment to be provided as collateral.

Interest expense on the amended loans has been recognized based on an effective interest rate of 13.0 %.

The amendments resulted in no change to the term of the loans and the remaining principal would amortize over the remaining life of the loans beginning in February 2023.

The amendments also required an additional amount of blockchain computing equipment to be provided as collateral.

Interest expense on the amended loans was recognized based on an effective interest rate of 13.0 %.

In August 2022, the Company issued 0.3 million shares of Common Stock to Mass Mutual Barings as an amendment fee.

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Riley Commercial Capital, LLC (the “Bridge Notes”) maturing in December 2022.

Interest expense on the Bridge Notes has been recognized based on an effective interest rate of 7.0 %.

Interest expense on the Bridge Notes was recognized based on an effective interest rate of 7.0 %.

In August 2022, the Company amended the Bridge Notes to, among other things, extend the maturity date to June 2023 (the “Amended Bridge Notes”).

Under the terms of the modified agreement, $ 37.5 million of principal payments previously due in the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

second half of 2022 are now due in the first half of 2023.

The Amended Bridge Notes require the proceeds of (i) any equity issuances (other than issuances consummated for purposes of making tax payments in connection with the vesting of restricted stock and restricted stock units and equity line of credit under the Equity Line of Credit discussed in Note 12 — Stockholders' (Deficit) Equity (“ELOC”) sales), (ii) any secured debt incurred on or after April 7, 2022 (other than purchase money debt) in excess of $ 500 million and (iii) any ELOC sales in an amount equal to 25 % of the net cash proceeds received from any such ELOC sale, in each case, to be applied by us to repay the outstanding principal amount of the Amended Bridge Notes.

Under the terms of the modified agreement, $ 37.5 million of principal payments previously due in the second half of 2022 were now due in the first half of 2023.

The Amended Bridge Notes required the proceeds of (i) any equity issuances (other than issuances consummated for purposes of making tax payments in connection with the vesting of restricted stock and restricted stock units and equity line of credit under the Equity Line of Credit discussed in Note 12 — Stockholders' Deficit (“ELOC”) sales), (ii) any secured debt incurred on or after April 7, 2022 (other than purchase money debt) in excess of $ 500 million and (iii) any ELOC sales in an amount equal to 25 % of the net cash proceeds received from any such ELOC sale, in each case, to be applied by us to repay the outstanding principal amount of the Amended Bridge Notes.

On August 1, 2022, the Company issued a total of 0.4 million shares of Common Stock to B.

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The Company borrowed $ 11.0 million in April 2022.

The loan has a term of 24 months from issuance.

Interest expense on the loan has been recognized based on an effective interest rate of 10.6 %.

The loans are secured by a first priority security interest in the equipment purchased.

The loan had a term of 24 months from issuance.

Interest expense on the loan was recognized based on an effective interest rate of 10.6 %.

The loans were secured by a first priority security interest in the equipment purchased.

HMC Note - In August 2023, in addition to a cash payment of $ 2 million, the Company entered into a $ 15.5 million secured promissory note agreement with Huband-Mantor Construction, Inc (the “HMC note”) in connection with its settlement and release from all claims.

The note bears interest at a contractual rate per annum of 5.0 % and has a term of 36 months from issuance, The Company is required to make monthly payments of principal and interest.

Interest expense on the note has been recognized based on an effective interest rate of 15.0 %.

The loan is secured by a security interest in the underlying property leased.

The note bears interest at a contractual rate per annum of 5.0 % and has a term of 36 months from issuance, The Company was required to make monthly payments of principal and interest.

Interest expense on the note was recognized based on an effective interest rate of 15.0 %.

The loan was secured by a security interest in the underlying property leased.

ACM Financing - In September 2023, the Company entered into a $ 7.5 million equipment finance agreement with ACM ELF ST LLC (the “ACM Loan”) in settlement and satisfaction of a previous equipment finance agreement.

The finance agreement has a term of 26 months from issuance.

Interest expense on the finance agreement has been recognized based on an effective rate of 15.0 %.

The finance agreement is secured by a security interest in the underlying equipment.

Interest expense on the finance agreement was recognized based on an effective rate of 15.0 %.

The finance agreement was secured by a security interest in the underlying equipment.

First Insurance Loan - In August 2023, the Company entered into an unsecured $ 5.0 million Insurance Premium Financing Agreement with First Insurance Funding, a Division of Lake Forest Bank & Trust Company (the “First Insurance loan”) to finance the renewal premium of property insurance policies.

Under the agreement, a down payment was paid in the amount of $ 2.1 million, and the Company will pay the balance in eight monthly installments commencing on September 24, 2023.

The contractual annual percentage interest rate is 0 %.

Interest expense on the note has been recognized based on an effective interest rate of 7.6 %

The contractual annual percentage interest rate was 0 %.

Interest expense on the note was recognized based on an effective interest rate of 7.6 %

Replacement DIP Credit Agreement - On July 4, 2023, the Debtors, the Administrative Agent and the Replacement DIP Lenders entered into a First Amendment to the Replacement DIP Credit Agreement (the “First Amendment”).

The First Amendment, among other things, provides (i) that the Debtors may make certain transfers or payments in connection with settlements of certain third-party claims as described in the First Amendment and (ii) for a reduction in the excess cash threshold amount to the sum of $ 40.0 million and an amount (which shall not be less than zero ) equal to $ 5.0 million less the amount of any payments on account of prepetition claims, liens or cure costs made by any Obligor after June 30, 2023.

This excess cash threshold amount reduction resulted in the Debtors making additional mandatory prepayments of $ 28.9 million under the Replacement DIP Credit Agreement during the year ended December 31, 2023.

Trilogy Note - As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, the Company entered into a settlement agreement with Trilogy LLC which resulted in the issuance of an unsecured Promissory note (the “Trilogy Note”) with a principal amount of $ 2.9 million dated October 6, 2023.

The First Amendment, among other things, provided (i) that the Debtors may make certain transfers or payments in connection with settlements of certain third-party claims as described in the First Amendment and (ii) for a reduction in the excess cash threshold amount to the sum of $ 40.0 million and an amount (which shall not be less than zero ) equal to $ 5.0 million less the amount of any payments on account of prepetition claims, liens or cure costs made by any Obligor after June 30, 2023.

This excess cash threshold amount reduction resulted

Core Scientific, Inc.

Notes to Consolidated Financial Statements

in the Debtors making additional mandatory prepayments of $ 28.9 million under the Replacement DIP Credit Agreement during the year ended December 31, 2023.

Trilogy Note - As discussed in Note 3 — Chapter 11 Filing and Emergence from Bankruptcy, the Company entered into a settlement agreement with Trilogy LLC which resulted in the issuance of an unsecured Promissory note (the “Trilogy Note”) with a principal amount of $ 2.9 million dated October 6, 2023.

The note bears interest at a contractual rate per annum of 5.0 % and has a term of 30 months from issuance.

The Company is required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Didado Note - As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, the Company entered into a settlement agreement with J.W.

The Company was required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Didado Note - As discussed in Note 3 — Chapter 11 Filing and Emergence from Bankruptcy, the Company entered into a settlement agreement with J.W.

Didado Electric, LLC, (“Didado”) which resulted in the issuance of an unsecured Promissory note (the “Didado Note”) with a principal amount of $ 13.0 million dated October 6, 2023.

The note bears interest at a contractual rate per annum of 5.0 % and has a term of 36 months from issuance.

The Company is required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Harper Note - As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, the Company entered into a settlement agreement with Harper Construction Company, Inc, (“Harper”) which resulted in the issuance of an unsecured Promissory note (the “Harper Note”) with a principal amount of $ 4.7 million dated November 9, 2023.

The Company was required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Harper Note - As discussed in Note 3 — Chapter 11 Filing and Emergence from Bankruptcy, the Company entered into a settlement agreement with Harper Construction Company, Inc, (“Harper”) which resulted in the issuance of an unsecured Promissory note (the “Harper Note”) with a principal amount of $ 4.7 million dated November 9, 2023.

The note bears interest at a contractual rate per annum of 5.0 % and has a term of 30 months from issuance.

The Company is required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Convertible Notes - As discussed in Note 8 — Fair Value Measurements, the Company had elected to measure its Convertible Notes at fair value prior to the Petition Date and accordingly recognized $ 13.1 million of debt issuance costs as incurred at the time of issuance within interest expense, net in the Company’s Consolidated Statements of Operations for the year ended December 31, 2022.

The Company was required to make monthly payments of principal and interest with interest being recognized using an effective interest rate of 15.0 %.

Convertible Notes - The Company had elected to measure its Convertible Notes at fair value prior to the Petition Date and accordingly recognized $ 13.1 million of debt issuance costs as incurred at the time of issuance within interest expense, net in the Company’s Consolidated Statements of Operations for the year ended December 31, 2022.

The Company presented changes in fair value of the Convertible Notes during the periods prior to the Petition Date as follows:

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and (3) other fair value changes were presented within Non-operating expenses, net on the Consolidated Statements of Operations.

The fair value option is not available to liabilities subject to compromise as they are recorded at their expected allowed amount.

The fair value option was not available to liabilities subject to compromise as they are recorded at their expected allowed amount.

At the Petition Date, the accumulated fair value adjustment on the Convertible Notes was $ 130.3 million and the Accumulated other comprehensive loss related to changes in fair value attributable to the Company’s own credit risk was $ 72.6 million.

These amounts were derecognized for a gain of $ 202.9 million reported in Reorganization items, net when the Convertible Notes were reclassified as Liabilities subject to compromise during the year ended December 31, 2022.

The fair value of the Company’s Convertible Notes as of December 31, 2021, included the effect of a negotiation discount, which is a calibration adjustment that reflects the illiquidity of the instruments and the Company's negotiating position.

The fair value of the Company’s Convertible Notes as of December 31, 2021, included the effect of a negotiation discount, which was a calibration adjustment that reflected the illiquidity of the instruments and the Company's negotiating position.

Since the transaction was an orderly transaction, the Company deemed that the fair value equaled the transaction price at initial recognition.

However, the closing of the merger of XPDI (which represents the occurrence of a qualified financing event as defined by the terms of the notes) in January 2022 resulted in the elimination of the negotiation discount along with other changes in fair value resulted in a significant increase in the fair value of the convertible notes (excluding interest expense and instrument-specific credit risk) for the year up until the Petition Date.

However, the closing of the merger of XPDI (which represented the occurrence of a qualified financing event as defined by the terms of the notes) in January 2022 resulted in the elimination of the negotiation discount along with other changes in fair value resulted in a significant increase in the fair value of the convertible notes (excluding interest expense and instrument-specific credit risk) for the year up until the Petition Date.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The Convertible Notes did not have any fair value adjustments or recognized debt issuance costs in fiscal 2023.

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Debt issuance costs Reorganization items, net $ 2,788

The principal amount of the Convertible Notes as of December 31, 2023, reflects the proceeds received plus any PIK interest added to the principal balance of the notes.

Upon the closing of the Merger Agreement with XPDI in January 2022, the conversion price for the Convertible Notes became fixed at 80 % of the financing price ($ 8.00 per share of common stock) and the holders now have the right to convert at any time until maturity.

At maturity, any Secured Convertible Notes not converted will be owed two times the original face value plus accrued interest;

any other Convertible Notes (other than the Secured Convertible Notes) not converted will be owed the original face value plus accrued interest.

In addition, at any time (both before and after the merger with XPDI), the Company has the right to prepay the Secured Convertible Notes at the minimum payoff of two times the outstanding face value plus accrued interest and for other Convertible Notes the outstanding face value plus accrued interest.

All of the Convertible Notes, totaling $ 560.0 million as of December 31, 2023, are scheduled to mature on April 19, 2025, which includes $ 237.6 million for the face value of the Secured Convertible Notes which have payoff at maturity of two times the face value of the note plus accrued interest.

The total amount that would be owed on the Secured Convertible Notes outstanding as of December 31, 2023, if held to maturity was $ 475.2

The principal amount of the Convertible Notes as of December 31, 2023, reflected the proceeds received plus any PIK interest added to the principal balance of the notes.

At maturity, any Secured Convertible Notes not converted would be owed two times the original face value plus accrued interest;

any other Convertible Notes (other than the Secured Convertible Notes) not converted would be owed the original face value plus accrued interest.

In addition, at any time (both before and after the merger with XPDI), the Company had the right to prepay the Secured Convertible Notes at the minimum payoff of two times the outstanding face value plus accrued interest and for other Convertible Notes the outstanding face value plus accrued interest.

All of the Convertible Notes, totaling $ 560.0 million as of December 31, 2023, were scheduled to mature on April 19, 2025, which included $ 237.6 million for the face value of the Secured Convertible Notes which had payoff at maturity of two times the face value of the note plus accrued interest.

The total amount that would be owed on the Secured Convertible Notes outstanding as of December 31, 2023, if held to maturity was $ 475.2 million.

The total amount that would be owed on the Convertible Notes if prepaid as of December 31, 2023, was $ 797.6 million.

CONTINGENT VALUE RIGHTS AND WARRANT LIABILITIES

Contingent Value Rights Agreement

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into the Contingent Value Rights Agreement and recorded the liabilities at fair value as of the Effective Date.

Pursuant to the Contingent Value Rights Agreement, the Company issued 51,783,625 CVRs to holders of the Company’s Convertible Notes who received New Common Stock (in such capacity, the “Payees”) in an aggregate amount of 51,783,625 shares of New Common Stock (the “Corresponding New Common Stock”).

The CVRs require the Company to make payments to each Payee, of:

• (i) at the first testing date, cash equal to such Payee’s pro rata share (the “Year 1 Contingent Payment Obligation”) of the lesser of (a) $ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 and (2) the fair market value of the Corresponding New Common Stock (the “First Anniversary Payment Amount”);

provided that the Year 1 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $ 260,000,000 with respect to the first testing date;

as of December 31, 2024, the fair market value of the Corresponding New Common Stock was in excess of $ 260,000,000 .

On January 23, 2025, the first testing date, the fair market value of the Corresponding New Common Stock was in excess of $ 260,000,000 and the Year 1 Contingent Payment Obligation was extinguished.

• (ii) at the second testing date, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 2 Contingent Payment Obligation”) of the lesser of (a) $ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 minus the First Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Second Anniversary Payment Amount”);

provided that the Year 2 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $ 260,000,000 minus the First Anniversary Payment Amount, if any, with respect to the second testing date;

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The total amount that would be owed on the Convertible Notes if prepaid as of December 31, 2023, was $ 797.6 million.

See Note 8 — Fair Value Measurements for further information on fair value measurement of the Convertible Notes.

• (iii) at the third testing date, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 3 Contingent Payment Obligation”) of the lesser of (a) $ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 minus the sum of the First Anniversary Payment Amount and the Second Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Third Anniversary Payment Amount”);

provided that the Year 3 Contingent Payment Obligation will be extinguished if the fair market value of the Corresponding New Common Stock is equal to or in excess of $ 260,000,000 minus (1) the First Anniversary Payment amount, if any and (2) the Second Anniversary Payment Amount, if any, with respect to the third testing date.

GUC Contingent Value Rights and Extinguishment

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued (i) 20,335,491 shares of New Common Stock to holders of allowed general unsecured claims (the “GUC Equity Distribution”) and (ii) GUC CVRs to holders of allowed general unsecured claims.

The terms of the GUC CVRs provided that unless the value of the GUC Equity Distribution, as implied by the volume weighted average (“VWAP”) of the closing price during any 20 trading days over any consecutive 30 trading day period during the period beginning on the Effective Date and ending on the date 18 months following the Effective Date (the “ GUC CVR Testing Period”), is equal to or in excess of the GUC Equity Distribution at Plan Value, the Company would be required to pay to each GUC Payee New Common Stock in an amount equal to the lesser of (i) such GUC Payee’s pro rata share of the New Common Stock with an aggregate value, based on Plan Value, of $ 7,100,000 and (ii) the difference between (a) the GUC Equity Distribution at Plan Value and (b) the value of the GUC Equity Distribution as implied by the volume weighted average of the closing price of the GUC Equity Distribution during the 60 trading days prior to the GUC CVR Testing Date.

On July 1, 2024, the GUC CVR obligations were extinguished pursuant to their terms when the VWAP of the Company’s New Common Stock on Nasdaq National Market System exceeded $ 5.02 for 20 trading days within the applicable 30 consecutive trading day period.

Derivative Warrant Liabilities

As of December 31, 2023, the Company had 14.9 million warrants outstanding, including:

(a) 8.6 million Public Warrants and (b) 6.3 million Private Placement Warrants issued to XPDI Sponsor LLC (“Sponsor”) and certain institutional investors (“Anchor Investors”).

All of these warrants were cancelled without any payment therefore pursuant to the Plan of Reorganization.

Prior to the warrants’ cancellation under the Plan of Reorganization, each Public Warrant and Private Placement Warrant were exercisable 30 days following the Closing Date of the XPDI Merger for one share of common stock at an exercise price of $ 11.50 per share for the five years from the Closing Date (January 19, 2027).

Redemption of Private Placement Warrants

The Private Placement Warrants were also cancelled without payment pursuant to the Plan of Reorganization.

The terms of redemption of the Private Placement Warrants were identical in all respects to those for the Public Warrants except that, so long as they are held by the Sponsor, Anchor Investors or their permitted transferees they were not redeemable, except when the price per share of common stock equaled or exceeded $ 10.00 .

If the Private Placement Warrants were held by someone other than the Sponsor, the Anchor Investors or their respective permitted transferees, the Private Placement Warrants were redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Effect of Chapter 11 Filing

As discussed in Note 3 — Chapter 11 Filing and Emergence from Bankruptcy, liabilities that may be affected by the Plan of Reorganization must be classified as liabilities subject to compromise at the amounts expected to be allowed by the Bankruptcy Court.

The warrants were classified as liabilities subject to compromise at their expected allowed amount of zero as of December 31, 2023.

Their fair value of $ 0.3 million was derecognized as a gain in Reorganization items, net in the Company’s Consolidated Statements of Operations for the year ended December 31, 2022.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Warrant Agreement

On the Effective Date and pursuant to the Plan of Reorganization and the Confirmation Order, the Company entered into a warrant agreement (the “Warrant Agreement”) providing for the issuance of 98,313,313 warrants, each exercisable for one share of New Common Stock at an exercise price of $ 6.81 per share (the “Tranche 1 Warrants”) and (ii) an aggregate of 81,927,898 warrants, each exercisable for one share of New Common Stock at an exercise price of $ 0.01 per share (the “Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”).

Pursuant to the Plan of Reorganization, holders of the Company’s previous common stock received, for each share of the Company’s previous stock held, 0.253244 Tranche 1 Warrants and 0.211037 Tranche 2 Warrants.

Each whole Tranche 1 Warrant entitles the registered holder to purchase one whole share of New Common Stock at an exercise price of $ 6.81 per share (the “Tranche 1 Exercise Price”).

Each whole Tranche 2 Warrant entitles the registered holder to purchase one whole share of New Common Stock at an exercise price of $ 0.01 per share at any time following the time the volume weighted average price per share of New Common Stock equals or exceeds $ 8.72 per share on each trading day for 20 consecutive trading days (the “Triggering Event”), which event occurred on July 11, 2024.

The Tranche 1 and Tranche 2 Exercise Prices are subject to adjustment for specific events as set forth in the Warrant Agreement.

The Tranche 1 Warrants will expire on January 23, 2027, and the Tranche 2 Warrants will expire on January 23, 2029, each at 5:00 p.m., New York City time, or earlier upon the occurrence of certain events as set forth in the Warrant Agreement.

The Warrant Agreement provides that the Warrant Agreement, with respect to the Tranche 1 Warrants or Tranche 2 Warrants, may be amended with the prior written consent of holders holding a majority of the shares then issuable upon exercise of the Tranche 1 Warrants or Tranche 2 Warrants then outstanding, as applicable;

provided, however, that any amendment or supplement to the Warrant Agreement that would reasonably be expected to materially and adversely affect any right of a holder of Warrants shall require the written consent of such holder.

In addition, the consent of each holder of Warrants affected shall be required for any amendment pursuant to which the applicable exercise price would be increased, the number of shares issuable upon exercise of Warrants would be decreased (other than pursuant to adjustments provided in the Warrant Agreement) or the applicable expiration date would be revised to an earlier date;

provided, however, that the Company and the Warrant Agent may amend the Warrant Agreement without the consent of holders of Warrants to (i) to cure any ambiguity;

(ii) correct any defective provision;

or (iii) make any other provisions with respect to matters or questions arising under the Warrant Agreement as long as the new provisions do not adversely affect (other than a de minimis adverse effect) the interest of holders of Warrants.

The Warrants may be exercised upon prior written notice of such election, payment of the applicable exercise price (together with any applicable taxes and governmental charges) and, with respect to Warrants held through the book-entry facilities of the Depository (as defined in the Warrant Agreement), surrender of the warrant certificate on or prior to the settlement date.

The Tranche 2 Warrants may be exercised on a cashless basis, pursuant to which the holder shall be entitled to receive a number of shares of New Common Stock equal to one share of New Common Stock multiplied by a fraction equal to (x) the fair market value (as of the business day immediately preceding the date on which the exercise notice was delivered) of one share of New Common Stock, minus the applicable exercise price, divided by (y) such fair market value.

Holders of Warrants do not have the rights or privileges of holders of New Common Stock or any voting rights until they exercise their Warrants and receive shares of New Common Stock.

After the issuance of shares of New Common Stock upon exercise of the Warrants, each holder will be entitled to the same rights as holders of New Common Stock.

Pursuant to the Warrant Agreement, holders of Warrants may exercise their Warrants only for a whole number of shares of New Common Stock.

If, upon exercise, a holder would be entitled to receive a fractional interest in a share, such fractional interest will be rounded to the next higher whole number of the number of shares of New Common Stock to be issued to the holder.

Effective January 24, 2024, the Tranche 1 Warrants and Tranche 2 Warrants began trading on the Nasdaq Global Select Market under the symbols “CORZW” and “CORZZ,” respectively.

During the year ended December 31, 2024, 0.6 million Tranche 1 Warrants were exercised, which resulted in cash receipts of $ 4.4 million.

The Tranche 2 Warrants became exercisable as of the close of trading on July 11, 2024, when the daily volume weighted average trading price of the Company’s New Common Stock exceeded $ 8.72 per share for the 20 th consecutive trading day pursuant to the Warrant Agreement.

During the year ended December 31, 2024, 60.9 million Tranche 2 Warrants were exercised, which resulted in cash receipts of $ 0.6 million.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

FAIR VALUE MEASUREMENTS

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After the Petition Date, the Public Warrants and Private Placement Warrants were transferred to Liabilities subject to compromise at the expected allowed amount of zero dollars.

A gain of $ 0.3 million from the derecognition of the prior fair value is reported in Reorganization items, net.

A gain of $ 0.3 million from the derecognition of the prior fair value is reported in Reorganization items, net for the year ended December 31, 2022.

The Company had elected prior to the Petition Date to measure its Convertible Notes at fair value on a recurring basis because the Company believed it better reflected the underlying economics of the Convertible Notes, which contain multiple embedded derivative features.

4 unchanged sentences

Due to the occurrence of the SPAC merger and the subsequent significant decline in the Company’s stock price below the conversion price, the fair value of the Company’s convertible notes beginning with the three months ended June 30, 2022 was determined using a discounted cash flow model that considered the principal and interest payments, including the minimum payoff at maturity of two times the face value of the note plus accrued interest for the Secured Convertible Notes and the value of the call option

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

that includes certain unobservable inputs that may be significant to the fair value measurement such as expected term and volatility of the call option.

As of December 31, 2022, there were no recurring fair value measurements.

Refer to Energy Forward Purchase Contract in Note 2 — Summary of Significant Accounting Policies for fair value measurements as of December 31, 2023.

Level 3 Recurring Fair Value Measurements

The following presents a rollforward of the activity for the Convertible Notes measured at fair value on a recurring basis using Level 3 inputs for the year ended December 31, 2022 (in thousands):

Convertible Notes

Balance at December 31, 2021 $ 557,007

Issuances (PIK principal recorded) 31,382

Settlements (including interest payments and conversions) ( 23,144 )

Unrealized gains 186,853

Transfers out of Level 3 ( 752,098 )

Balance at December 31, 2022 $ —

Securities are transferred from Level 2 to Level 3 when observable market prices for similar securities are no longer available and unobservable inputs become significant to the fair value measurement.

All transfers into and out of Level 3 are assumed to occur at the beginning of the quarterly reporting period in which they occur.

As of December 31, 2023, there were no Level 3 financial instruments.

During the year ended December 31, 2022, the Convertible Notes were transferred from Level 3 out of recurring fair value measurements.

Nonrecurring fair value measurements

The Company’s non-financial assets, including digital assets, property, plant and equipment, goodwill, and intangible assets are measured at estimated fair value on a nonrecurring basis.

These assets are adjusted to fair value only when an impairment is recognized, or the underlying asset is held for sale.

Refer to Note 2 — Summary of Significant Accounting Policies and Note 5 — Property, Plant and Equipment, Net, for more information regarding fair value considerations when measuring impairment.

The estimated fair value of the Company’s digital assets as of December 31, 2023 and 2022, was $ 2.3 million and $ 0.7 million, respectively.

We estimate the fair values of our digital assets based on quoted prices in active markets (Level 1).

No non-financial assets were classified as Level 3 as of December 31, 2023 or December 31, 2022.

Fair value of financial instruments

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, net, digital assets, accounts payable, notes payable and certain accrued expenses and other liabilities.

The carrying amount of these financial instruments materially approximate their fair values.

The Company has entered into non-cancellable operating and finance leases for offices, data facilities, mining and networking equipment, electrical infrastructure and office equipment, with lease periods expiring through 2035.

In addition, certain leases contain bargain renewal options extending through 2051.

The Company recognizes lease expense for these leases on a straight-line basis over the lease term, which includes any bargain renewal options.

The Company recognizes rent expense on a straight-line basis over the lease period.

In addition to minimum rent, certain leases require payment of real estate taxes, insurance, common area maintenance charges, and other executory costs.

Differences between rent expense and rent paid are recognized as adjustments to operating lease right-of-use assets on the Company’s Consolidated Balance Sheets.

For certain leases, the Company receives lease incentives, such as tenant improvement allowances, and records those as adjustments to operating lease right-of-use assets and operating lease liabilities

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

on the Company’s Consolidated Balance Sheets and amortizes the lease incentives on a straight-line basis over the lease term as an adjustment to rent expense.

The components of operating and finance leases are presented on the Company’s Consolidated Balance Sheets as follows (in thousands):

Financial statement line item December 31, 2023 December 31, 2022

Operating lease right-of-use assets Operating lease right-of-use assets $ 7,844 $ 20,430

Finance lease right-of-use assets Property, plant and equipment, net $ 16,268 $ 31,213

Operating lease liabilities,

current portion Operating lease liabilities, current portion $ 77 $ 769

Operating lease liabilities, net

of current portion Operating lease liabilities, net of current portion $ 1,512 $ 720

Finance lease liabilities, current portion Finance lease liabilities, current portion $ 19,771 $ —

Finance lease liabilities, net of

current portion Finance lease liabilities, net of current portion $ 35,745 $ —

Operating and finance lease liabilities subject to compromise Liabilities subject to compromise $ — $ 84,664

The components of lease expense were as follows (in thousands):

Year Ended December 31,

Financial statement line item 2023 2022

Operating lease expense General and administrative expenses $ 1,024 $ 1,937

Short-term lease expense General and administrative expenses — 24

Finance lease expense:

Amortization of right-of-use assets Cost of revenue 11,424 31,372

Interest on lease liabilities Interest expense, net 1,787 7,080

Total finance lease expense 13,211 38,452

Total lease expense $ 14,235 $ 40,413

In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate.

Our incremental borrowing rate is based on an estimated secured rate with reference to recent borrowings of similar collateral and tenure when available.

Determining our incremental borrowing rate, especially if there are insufficient observable borrowings near the time of lease commencement, may require significant judgment.

Information relating to the lease term and discount rate is as follows:

December 31, 2023 December 31, 2022

Weighted Average Remaining Lease Term (Years)

Operating leases 16.7 10.5

Finance leases 2.2 2.1

Weighted Average Discount Rate

Operating leases 11.7 % 6.5 %

Finance leases 12.9 % 12.4 %

The CVRs, GUC CVRs and Warrants are recognized as derivative liabilities in accordance with ASC 815 and are initially and subsequently measured at fair value with changes in fair value reflected in Net loss.

When these instruments were recognized on the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The following table summarizes the Company’s supplemental cash flow information (in thousands):

Year Ended December 31,

Lease Payments

Operating lease payments $ 956 $ 726

Finance lease payments $ 4,459 $ 36,740

Supplemental Noncash Information

Operating lease right-of-use assets obtained in exchange for lease obligations 1

Finance lease right-of-use assets obtained in exchange for lease obligations

(Decrease) increase in finance lease right-of-use assets as a result of lease modification

$ ( 11,644 ) $ 693

Decrease in finance lease liability as a result of lease modification

$ ( 11,644 ) $ —

Decrease in right-of-use assets due to lease termination

$ ( 13,144 ) $ —

Decrease in lease liability due to lease termination

Effective Date, observable market data was not available.

As of December 31, 2024, observable Level 1 market data was available for the CVRs and Warrants.

On the Effective Date, the CVRs and GUC CVRs were recognized at their fair value of $ 86.3 million.

During the year ended December 31, 2024, a decrease in fair value of $ 82.1 million was included in Change in fair value of warrant and contingent value rights on the Company’s Consolidated Statements of Operations.

On the Effective Date, the warrants were recognized at their fair value of $ 345.9 million.

During the year ended December 31, 2024, an increase in fair value of $ 1.45 billion was included in Change in fair value of warrant and contingent value rights on the Company’s Consolidated Statements of Operations.

The following presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 (in thousands):

Fair Value Hierarchy

Level 1 Level 2 Level 3 Fair value

Cash and cash equivalents

Money market funds

$ 832,213 $ — $ — $ 832,213

1 Includes operating lease right-of-use assets of $ 6.7 million that were recorded upon adoption of Topic 842 on January 1, 2022.

Refer to Note 2 — Summary of Significant Accounting Policies for additional information.

Operating Leases

Finance Leases

Digital assets

23,893 — — 23,893

Total assets measured at fair value on a recurring basis

$ 856,106 $ — $ — $ 856,106

Thereafter 2,054 —

Total lease payments 3,216 64,724

imputed interest 1,627 9,208

Liabilities subject to compromise — —

Total $ 1,589 $ 55,516

Operating Leases

In September 2021, the Company entered into operating lease agreements with Minnkota Power Cooperative to develop a hosting facility in Grand Forks, North Dakota as well as enter into a power supply purchase agreement to purchase 100 megawatts of power supply once construction of the facility is complete.

As a result of the agreements being entered into contemporaneously and in contemplation of one another, the agreements are considered to be a single unit of account and consideration has been allocated between lease and non-lease components based on relative standalone selling price with approximately $ 5.3 million allocated to the lease components and $ 2.6 million allocated to the non-lease components.

Substantially all of the payments for the intended leases would be for a five-year to thirty-year term (comprising an initial five-year term with five five-year bargain renewal options to renew) with purchase options exercisable at any time for approximately $ 5.6 million less any rent paid to date and subject to certain other adjustments.

In addition to the above, in December 2021, the Company entered into an agreement to lease office space for its new corporate headquarters that commenced in July of 2022.

The lease includes base rent of approximately $ 14.0 million to be paid over a period of 130 months.

On November 11, 2022, the landlord notified the Company that it was terminating the lease.

Finance Leases

In December 2021, the Company entered into finance lease agreements with Liberty Commercial Finance LLC totaling $ 40.9 million for the purchase of bitcoin mining equipment, with a weighted average term of 3.2 years.

The leases bear interest at a

Contingent value rights $ 4,272 $ — $ — $ 4,272

Warrants 1,097,285 — — 1,097,285

Total liabilities measured at fair value on a recurring basis $ 1,101,557 $ — $ — $ 1,101,557

Level 2 Recurring Fair Value Measurements

The energy forward purchase contract is not designated as a hedging instrument for accounting.

The Energy Derivatives are recognized as derivatives in accordance with ASC 815 initially and subsequently measured at fair value with changes in value reflected in Netloss.

The Company measures the fair value of its energy forward purchase contract using the discounted cash flow model and uses Intercontinental Exchange forward curves and risk-free rates as observable market inputs.

The following table summarizes the fair value of the energy forward purchase contract on the Company’s Consolidated Balance Sheets (in thousands):

Fair Value (Level 2)

Financial statement line item

2024 December 31,

Energy forward purchase contract

Accrued expenses and other current liabilities

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

weighted average rate per annum of 12.6 % and the Company is required to make monthly payments of principal and interest.

Interest expense on the lease has been recognized based on a weighted average effective interest rate of 12.6 %.

In December 2021, the Company entered into finance lease agreements with MassMutual Asset Finance LLC totaling $ 50.0 million for the purchase of bitcoin mining equipment, with a weighted average term of 3.2 years.

The leases bear interest at a rate per annum of 10 % and the Company is required to make monthly payments of principal and interest.

Interest expense on the leases has been recognized based on an effective interest rate of 10 %.

In August 2022, the Company amended the finance lease agreements with MassMutual Asset Finance LLC to defer lease payments for a period of six months beginning with payments due in August 2022.

The amendments result in no change to the term of the finance leases and the remaining principal will amortize over the remaining life of the leases beginning in February 2023.

The amendments also requires an additional amount blockchain computing equipment to be provided as collateral.

The leases under the amended agreements bear interest at a rate of 13.0 % per annum.

Interest expense on the amended leases has been recognized based on an effective interest rate of 12.5 %.

As a result of the lease modification, the lease liabilities decreased by $ 7.7 million with a corresponding decrease to finance lease right-of assets of $ 7.7 million.

Balance Sheet Classification

As discussed in Note 7 — Notes Payable, in October 2022, the Company determined not to make certain payments with respect to several of its debt facilities, equipment financing facilities and leases and other financings, including its two bridge promissory notes.

As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods (which have passed) and pursuant to any confirmed plan of reorganization, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment, increasing interest rates to default rates, or taking action with respect to collateral, where applicable.

Remedies available under these debt facilities are stayed while the Company is under Chapter 11 protections.

The Company recorded the following losses related to the energy forward purchase contract on the Company’s Consolidated Statements of Operations (in thousands):

Year Ended December 31,

Financial statement line item

Energy forward purchase contract

Change in fair value of energy derivatives $ ( 2,757 ) $ ( 3,918 )

Nonrecurring Fair Value Measurements

The Company’s non-financial assets, including property, plant and equipment, and intangible assets (other than digital assets) are measured at estimated fair value on a nonrecurring basis and are adjusted only upon impairment or when held for sale.

Prior to the adoption of ASU 2023-08, digital assets were subject to nonrecurring fair value adjustments only when impairment was recognized.

Refer to Note 2 — Summary of Significant Accounting Policies and Note 5 — Property, Plant, and Equipment, for more information regarding fair value considerations when measuring impairment.

No non-financial assets were classified as Level 3 as of December 31, 2024 or December 31, 2023.

The Company’s financial instruments, that are not subject to recurring fair value measurements, include cash and cash equivalents (other than money market funds), restricted cash, accounts receivable, accounts payable, leases, notes payable and certain accrued expenses and other liabilities.

Except for the 2029 Convertible Notes and 2031 Convertible Notes, the carrying amount of these financial instruments materially approximate their fair values.

As of December 31, 2024, the fair value of the 2029 Convertible Notes and 2031 Convertible Notes using Level 1 active market price was $ 703.1 million and $ 615.8 million, respectively.

COMMITMENTS AND CONTINGENCIES

In October 2023, the Company entered into a purchase agreement to acquire S21 miners with a combined exahash of 2.52 or approximately 12,900 miners from Bitmain for approximately $ 50.4 million, of which $ 2.4 million was paid as of December 31, 2023, and included in other current assets on the Company's consolidated balance sheets.

Delivery of the miners is expected between the first and second quarters of 2024.

In September 2023, the Company entered into a purchase agreement to acquire S19 XP miners with a combined exahash of 4.08 or 28,400 miners from Bitmain for approximately $ 77.1 million, of which $ 4.1 million was paid as of December 31, 2023.

As of December 31, 2023, the Company had received approximately 22,700 miners.

The remaining miners were received in January 2024.

As of the reporting date of this Annual Report on Form 10-K, we have completed payment on all new bitcoin miners ordered for 2024.

Legal Proceedings —The Company is subject to legal proceedings arising in the ordinary course of business.

As of December 31, 2024, the Company was contractually committed for approximately $ 1.14 billion of capital expenditures, primarily related to infrastructure modifications, equipment procurement, and labor associated with the conversion of a significant portion of its data centers to deliver hosting services for HPC.

Of this amount, $ 899.3 million is reimbursable by our customer under our agreements.

These capital expenditures are expected to occur over the next year.

Legal Proceedings

The Company is subject to legal proceedings arising in the ordinary course of business.

The Company accrues losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

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Plaintiff subsequently withdrew its claims against Core.

A lead plaintiff was appointed in April 2023 and proofs of claim were filed in the Company’s Chapter 11 Cases.

After the Company filed its motion to dismiss and a subsequent motion for consideration with respect to remaining claims not dismissed, all remaining claims in the complaint against the individual defendants were subsequently dismissed without prejudice in April 2024.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

On April 14, 2023, the Court appointed lead plaintiff for the purported class in Pang, individually and on behalf of a class of claimants, filed proofs of claim against the Company in its Chapter 11 Cases in the United States Bankruptcy Court, Southern District (Houston) of Texas based upon the allegations set forth in Pang and Core filed an objection to the proofs of claim.

On December 7, 2023, the United States Bankruptcy Court for the Southern District of Texas in Houston, sustained the Company’s objection to the filed class proof of claim without prejudice to re-file a proof of claim on an individual basis by December 20, 2023;

2 unchanged sentences

On January 29, 2024, plaintiff filed a notice of appeal of the order confirming the Company’s Plan of Reorganization.

Following Core’s motion to dismiss in the District Court case, the Court dismissed without prejudice the 10(b) claim in its entirety for failure to plead scienter and loss causation and all but a single statement under Section 11 and Section 14 of the Exchange Act.

The Court also held that none of the Defendants other than Michael Levitt were control persons under Section 15 (even though Mr.

Levitt was not even named as a Defendant under Section 15).

Core filed a motion for reconsideration of the Court’s failure to dismiss the remaining Section 11 claim and filed an answer to the Plaintiff’s remaining claim.

On June 7, 2024, Plaintiff refiled its complaint asserting that the individual defendants violated the Securities Exchange Act by allegedly failing to disclose to investors that among other things the Company failed to disclose known trends or uncertainties that would have an impact on the Company’s financial performance.

The Company’s motion to dismiss the refiled complaint is pending with the United States District Court in Austin, Texas.

Purported Shareholder Class Action (“Ihle”)

On July 24, 2023, Plaintiff Brad Ihle filed a purported class action complaint against certain officers and directors of Power & Digital Infrastructure Acquisition Corp.

(the former name of the current corporate entity operating our business, or “XPDI”) and XMS Sponsor LLC et al, in the Court of Chancery State of Delaware.

The complaint alleges breach of fiduciary duties arising out of the merger of XPDI and the entity that conducted our business operations prior to the merger (“Legacy Core”) and the marketing and solicitation of shareholders pursuant to that merger agreement dated July 20, 2021.

Certain of the defendants have notified the Company of their intention to seek defense and indemnification in this matter pursuant to Delaware law and the Company’s bylaws.

Employment Claim

14 unchanged sentences

Dean, the Company failed to honor the terms of his employment agreement upon his resignation.

Following the Company’s filing of the Chapter 11 Cases, Dean filed proofs of claim in the Chapter 11 Cases alleging the Company breached Mr.

Following the Company’s filing of the Chapter 11 Cases, Mr.

Dean filed proofs of claim in the Chapter 11 Cases alleging the Company breached Mr.

Dean’s employment agreement and various equity award agreements.

3 unchanged sentences

Dean filed a reply in support of his claim and moved for summary judgment on October 19.

Adjudication of the validity and value of Dean’s proof of claim is pending.

As a general unsecured creditor under the Plan of Reorganization, any amount determined to be owed to plaintiff will be paid in common shares of the Company as provided in the Plan of Reorganization.

On January 24, 2025, the Company reached a settlement with Mr.

Dean for $ 2.8 million and agreed to issue 561,866 shares of common stock to resolve the matter.

The shares issued in settlement were drawn from the shares of New Common Stock held in reserve for disputed claims as described in Note 12 — Stockholders' Deficit and do not represent a new issuance of shares.

Contract Claims

5 unchanged sentences

As a general unsecured creditor under the Plan of Reorganization, any amount determined to be owed to plaintiff will be paid in common shares of the Company as provided in the Plan of Reorganization.

Celsius filed the Celsius Chapter 11 Cases in the United States Bankruptcy Court for the Southern District of New York under the Bankruptcy Code.

Celsius was one of the Company’s largest host-mining customers in July 2022.

Prior to the Celsius Chapter 11 Cases, Celsius paid the Company certain PPT Charges invoiced to Celsius pursuant to the Master Services Agreements between Celsius and the Company (the “Celsius Contracts”).

After commencing the Celsius Chapter 11 Cases, Celsius refused to pay all PPT Charges the Company invoiced to Celsius;

Celsius and the Company filed competing motions, pleadings, and proofs of claims and engaged in protracted litigation, discovery, and mediation.

On September 14, 2023, the Debtors and Celsius entered into a PSA that provides in addition to a full mutual release of claims asserted against each party in the respective bankruptcy cases for a cash payment by Celsius to the Company of $ 14.0 million and a full and final release of all claims of Celsius against the Debtors related to the Celsius Contracts, in exchange for the Debtors’, (i) sale to Celsius of the Debtors’ Cedarvale Facility and certain related assets, (ii) grant to Celsius of a perpetual, non-transferable (except as described in Section 14 of the PSA), non-exclusive limited license to use identified Company intellectual property solely as and to the extent necessary to (x) finish construction and development of the Cedarvale Facility, (y) develop and construct other

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

mining facilities on other properties owned or leased by Celsius similar in type and scope to the Cedarvale Facility, and (z) operate all of the foregoing, (iii) assumption and assignment to Celsius of certain executory contracts, and (iv) unequivocal release of claims against Celsius asserted by the Company in connection with the Celsius Chapter 11 Cases and the Company’s Chapter 11 Cases.

On November 2, 2023, the Company received the payment of $ 14.0 million from Celsius in connection with the PSA.

In November 2022, Sphere 3D Corp.

filed a demand for arbitration with JAMS alleging the existence and breach of a contract for hosting services.

The arbitration demand alleges that the Company has failed to provide contracted for services and to return prepayments allegedly made by Sphere 3D for such services.

The arbitration demand was stayed by the filing of the Company Parties’ Chapter 11 Cases.

In April 2023, Sphere 3D Corp.

filed a proof of claim against the Debtors in the Chapter 11 Cases alleging a claim for approximately $ 39.5 million allegedly pursuant to a contract for services as to which the Debtors were allegedly a party and failed to perform and other claims related thereto.

On January 16, 2024, the Bankruptcy Court entered an order granting Sphere 3D Corp.

(“Sphere”) an allowed $ 10 million general unsecured claim and a complete and final release of all claims of Sphere and Gryphon Digital Mining, Inc.

(“Gryphon”) against the Debtors related to the hosting contracts.

As part of the resolution, all miners have been returned to the client.

Furthermore, the adversary proceeding was dismissed with prejudice, against both Gryphon and Sphere.

The satisfaction of the settlement resulted in a gain of $ 23.3 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the year ended December 31, 2023.

In November 2022, McCarthy Building Companies, Inc.

filed a complaint against the Company in the United States District Court for the Eastern District of Texas, alleging breach of contract for failing to pay when due certain payments allegedly owing under a contract for construction entered into between the parties.

The case has been stayed as a result of the Company’s filing of a petition for relief under chapter 11 of the United States Bankruptcy Code.

On January 18, 2024, the Bankruptcy Court entered the McCarthy Order approving the parties’ agreement to settle all claims and release all liens of McCarthy against the Company.

See Note 3 — Chapter 11 Filing and Other Related Matters for further details.

As of December 31, 2023 and 2022, there were no other material loss contingency accruals for legal matters.

Leases —See Note 9 — Leases for further information.

Loss on legal settlements —The Company recognized a loss of $ 2.6 million during the year ended December 31, 2021, with respect to the resolution of legal actions for damages resulting from the early termination of agreements by former customers.

DERIVATIVE WARRANT LIABILITIES

As of December 31, 2023, the Company had 14.9 million warrants outstanding, including:

(a) 8.6 million Public Warrants and (b) 6.3 million Private Placement Warrants issued to XPDI Sponsor LLC (“Sponsor”) and certain institutional investors (“Anchor Investors”).

All of these warrants were cancelled without any payment therefore pursuant to the Plan of Reorganization.

Redemption of Private Placement Warrants

The Private Placement Warrants were also cancelled without payment pursuant to the Plan of Reorganization.

Effect of Chapter 11 Filing

As discussed in Note 3 - Chapter 11 Filing and Other Related Matters, liabilities that may be affected by the Plan of Reorganization must be classified as liabilities subject to compromise at the amounts expected to be allowed by the Bankruptcy Court.

The warrants were classified as liabilities subject to compromise at their expected allowed amount of zero as of December 31, 2023

On January 28, 2025, the Company reached a settlement with GEM for $ 4.0 million and agreed to issue 817,775 shares of common stock to resolve the matter.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Their fair value of $ 0.3 million was derecognized as a gain in Reorganization items, net in the Company’s Consolidated Statements of Operations for the year ended December 31, 2022.

STOCKHOLDERS' (DEFICIT) EQUITY

Authorized Capital— As of December 31, 2023, the Company was authorized to issue 10.0 billion shares of common stock, $ 0.00001 par value.

The holders of the Company’s common stock are entitled to one vote per share.

In January 2021, in connection with a stockholder loan, the Company issued a warrant to the stockholder to purchase up to 0.2 million shares of common stock at an exercise price of $ 4.21 per share.

The warrant expired unexercised in January 2023.

As of December 31, 2024 and December 31, 2023, there were no other material loss contingency accruals for legal matters.

Leases —See Note 7 — Leases for additional information.

STOCKHOLDERS' DEFICIT

Pre-emergence from Bankruptcy

Authorized Capital

As of December 31, 2023, the Company was authorized to issue 10.0 billion shares of common stock, $ 0.0001 par value.

The holders of the Company’s common stock were entitled to one vote per share.

As a result of the Business Combination, all of XPDI’s Class A Common Stock and Class B Common Stock automatically converted into 30.8 million shares of Core common stock on a one -for-one basis.

1 unchanged sentence

Following the Business Combination with XPDI, each share of common stock or warrant was converted to shares of Core common stock or a warrant to purchase shares of Core common stock based on an exchange ratio of 1.60015286880 .

On January 15, 2024, the Debtors filed with the Bankruptcy Court the Plan of Reorganization, and on January 16, 2024, the Bankruptcy Court entered the Confirmation Order.

On the Effective Date, the Plan of Reorganization became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.

On the Effective Date, in connection with the effectiveness of, and pursuant to the terms of, the Plan of Reorganization and the Confirmation Order, the Company’s common stock outstanding immediately before the Effective Date was canceled and is of no further force or effect, and the new organizational documents of the Company became effective, authorizing the issuance of shares of common stock, par value $ 0.00001 per share (the “New Common Stock”).

In accordance with the foregoing, on the Effective Date, the Company, as reorganized on the Effective Date and in accordance with the Plan of Reorganization, issued the:

(i) New Common Stock, (ii) Warrants, (iii) CVRs, (iv) Secured Convertible Notes, (v) Secured Notes and (vi) the GUC CVRs (each, as defined below).

Such securities, rights, or interests were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by section 1145 of the Bankruptcy Code.

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued, or will issue:

• 176,266,782 shares of New Common Stock;

• 180,241,211 Warrants;

• New Secured Convertible Notes in an aggregate principal amount of $ 260.0 million;

• New Secured Notes in an aggregate principal amount of $ 150.0 million;

• 51,783,625 CVRs;

Equity Line of Credit

1 unchanged sentence

Pursuant to the Equity Line of Credit, the Company had the right to sell to B.

Riley, up to $ 100.0 million of shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), subject to certain limitations and conditions set forth in the Equity Line of Credit, from time to time during the term of the Equity Line of Credit.

Sales of Common Stock pursuant to the Equity Line of Credit, and the timing of any sales, were solely at the Company’s option, and the Company is under no obligation to sell any securities to B.

Riley, up to $ 100.0 million of shares of the Company’s common stock, par value $ 0.0001 per share (the “ELOC Common Stock”), subject to certain limitations and conditions set forth in the Equity Line of Credit, from time to time during the term of the Equity Line of Credit.

Sales of ELOC Common Stock pursuant to the Equity Line of Credit, and the timing of any sales, were solely at the Company’s option, and the Company was under no obligation to sell any securities to B.

Riley under the Equity Line of Credit.

2 unchanged sentences

Riley’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Equity Line of Credit, upon execution of the Equity Line of Credit in July 2022, the Company issued 0.6 million shares to B.

Riley with a fair value of $ 1.1 million at issuance which was recorded within other non-

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

operating expenses, net on the Company’s Consolidated Statements of Operations and presented as equity line of credit expenses on the Consolidated Statements of Cash Flows.

Riley with a fair value of $ 1.1 million at issuance which was recorded within other non-operating expenses, net on the Company’s Consolidated Statements of Operations and presented as equity line of credit expenses on the Consolidated Statements of Cash Flows.

In addition, the Company reimbursed $ 0.1 million of reasonable legal fees and disbursements of B.

9 unchanged sentences

The warrants were for an aggregate of 0.2 million shares at an exercise price of $ 4.27 per share.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

During the year ended December 31, 2022, 4.4 million of the warrants were exercised in a cashless exercise resulting in 3.0 million net shares issued to the warrant holders.

1 unchanged sentence

Convertible Note Exercises

As discussed in Note 7 — Notes Payable, the Company issued $ 514.8 million of Convertible Notes in 2021 along with issuing an additional $ 31.4 million from issuance through December 31, 2022, as payment-in-kind interest on convertible notes outstanding.

As discussed in Note 8 — Convertible and Other Notes Payable, the Company issued $ 514.8 million of Convertible Notes in 2021 along with issuing an additional $ 31.4 million from issuance through December 31, 2022, as payment-in-kind interest on convertible notes outstanding.

The Convertible Notes became convertible into common shares at the option of the holder at a conversion price equal to $ 8.00 per share upon the closing of the Merger Agreement with XPDI in January 2022.

2 unchanged sentences

SPAC Vesting Shares

1.7 million common shares are subject to vesting requirements, as described further in Note 4 — Business Combinations, Acquisitions and Restructuring.

1.7 million common shares are subject to vesting requirements, as described further in Note 4 — Business Combination and Restructuring.

These contingently issuable shares do not require future service in order to vest and do not result in stock-based compensation expense.

The SPAC Vesting Shares are accounted for as an equity contract, and meet the criteria for equity classification.

The Company has recorded the SPAC Vesting Shares within additional paid-in capital on the Company’s Consolidated Balance Sheets as of December 31, 2023 and 2022.

The Company has recorded the SPAC Vesting Shares within additional paid-in capital on the Company’s Consolidated Balance Sheets as of December 31, 2023.

Vendor Settlement

In March 2022, the Company issued 1.6 million shares of the Company’s common stock related to a vendor liability that had been assumed by the Company in July 2021 as part of the Blockcap acquisition.

In addition, the vendor liability requires settlement in cash based on the difference between the weighted average of the closing price of the Company’s common stock for each day there was a closing price during the thirty consecutive days immediately prior to the expiration of the lockup period (defined in the agreement as 180 days from the date from the closing of the XPDI merger) and the $ 21.3 million contractual amount of the liability.

In addition, the vendor liability required settlement in cash based on the difference between the weighted average of the closing price of the Company’s common stock for each day there was a closing price during the thirty consecutive days immediately prior to the expiration of the lockup period (defined in the agreement as 180 days from the date from the closing of the XPDI merger) and the $ 21.3 million contractual amount of the liability.

During the year ended December 31, 2022, we recorded $ 9.5 million, within Other non-operating expenses, net on the Consolidated Statements of Operations related to changes in the fair value of the vendor liability.

There were no changes in the fair value of the vendor liability during the year ended December 31, 2023.

As of December 31, 2023 and 2022, the fair value of the liability of $ 18.1 million was recorded within Liabilities subject to compromise on the Consolidated Balance Sheets.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

As of December 31, 2023, the fair value of the liability of $ 18.1 million was recorded within Liabilities subject to compromise on the Consolidated Balance Sheets.

Equity Incentive Plans

The Company has outstanding awards under the 2018 Omnibus Incentive Plan (the “2018 Plan”).

No new awards can be made under the 2018 Plan subsequent to the XPDI Merger, as described below.

Awards that were granted under the 2018 Plan included incentive stock options (must meet all statutory requirements), non-qualified stock options and restricted stock units.

Awards granted under the 2018 Plan were subject to a minimum vesting period of at least one year commencing from the date of grant.

Additionally, options granted under the plan must expire within ten years of the grant date and were required to be granted with exercise prices of no less than the fair value of the common stock on the grant date, as determined by the Company’s Board of Directors (the “Board of Directors”).

In July 2021, the Company acquired Blockcap.

Under the terms of the Blockcap merger agreement, (i) each stock option granted, whether vested or unvested, and each award of restricted stock under the Blockcap, Inc.

Equity Incentive Plan (the “Legacy Blockcap Plan”) was assumed by the Company.

In addition, the Radar Relay, Inc.

Amended and Restated 2018 Equity Incentive Plan (the “RADAR Plan”) provides for the grant of stock options, restricted stock awards, and other awards to eligible employees, non-employee directors and consultants.

On June 4, 2021, prior to its acquisition by the Company, Blockcap entered into an agreement and plan of merger with RADAR for all the issued and outstanding equity interests of RADAR, which merger closed on July 1, 2021 (the “Blockcap/RADAR Merger”).

The RADAR Plan was assumed by us upon the closing of the Blockcap/RADAR Merger and the Blockcap acquisition.

No new awards may be made under the Legacy Blockcap Plan and the RADAR Plan (the “Blockcap Plans”) subsequent to the closing of the Blockcap acquisition.

At the Special Meeting in connection with the XPDI Merger, the stockholders of XPDI approved the Core Scientific, Inc.

6 unchanged sentences

As of the Effective date of the Plan of Reorganization, the Company no longer grants equity incentive awards under the 2021 Plan.

Stock-Based Compensation

Stock-based compensation expense relates primarily to expense for restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and stock options.

As of December 31, 2023, we had unvested or unexercised stock-based awards outstanding representing approximately 60.9 million shares of our common stock, consisting of approximately 38.4 million RSAs and RSUs and options to purchase approximately 22.6 million shares of our common stock.

On June 8, 2022, the compensation committee (the “Compensation Committee”) of the Board of Directors of the Company approved an amendment to the Company’s award agreement for the RSUs outstanding under the 2018 Plan, to provide for the waiver and elimination of the requirement that the Company undergo a “change in control” or a “public offering” for full vesting of the previously outstanding time-vested award (the “RSU Amendment”).

Although the mergers that the Company underwent did not satisfy the event-based vesting requirement, they significantly reduced the possibility of the requirement being met as contemplated under the 2018 Plan.

The RSU Amendment was authorized and approved by the Board of Directors and the Compensation Committee as necessary, desirable, and in the best interest of the Company and its stockholders.

As a result of the RSU Amendment, all outstanding RSUs under the 2018 Plan are subject only to time-based vesting, of which RSUs covering approximately 42.0 million shares of Common Stock were net settled, with approximately 15.0 million shares of Common Stock to be canceled and forfeited to satisfy tax withholding obligations in June 2022.

The Company recognizes the cost of services received in exchange for awards of equity instruments based upon the fair value of those awards on the grant date.

For the years ended December 31, 2023, 2022 and 2021, the Company’s consolidated operating results included $ 28.9 million, $ 36.6 million, and $ 0.9 million of stock-based compensation expense related to restricted stock units issued to employees, respectively, and $ 30.0 million, $ 146.3 million and $ 5.8 million of stock-based compensation expense related to stock options issued to employees and consultants, respectively.

In addition, for the year ended December 31, 2021, the Company recognized $ 32.2 million of post-combination expense for share-based compensation awards related to the Blockcap acquisition

Equity Rights Offering

On November 20, 2023, the Company commenced an equity rights offering (the “Equity Rights Offering”) of common shares of the reorganized Company (the “ERO Shares”) in an aggregate amount of $ 55 million.

On the Effective Date, the Company issued 15,648,896 shares on account of the Equity Rights Offering in exchange for the cash proceeds.

Also, on November 16, 2023, the Company entered into an agreement (the “Backstop Commitment Letter”) with the parties named therein (the “Commitment Parties”), pursuant to which the Commitment Parties agreed to severally and not jointly backstop $ 37.1 million of the Equity Rights Offering (the “Backstop Commitment”), subject to the terms and conditions of the Backstop Commitment Letter.

The subscription period for the ERO expired on January 5, 2024.

The Equity Rights Offering was oversubscribed and the aggregate subscriptions (including over subscriptions) exceeded the number of ERO Shares offered to be purchased as part of the Equity Rights Offering.

The results of the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

described in Note 4 — Business Combinations, Acquisitions and Restructuring.

The total tax benefit related to stock-based compensation was nil , nil , and $ 6.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021 is included in the Company’s Consolidated Statements of Operations as follow:

Year Ended December 31,

Equity Rights Offering rendered the previously arranged Backstop Commitment unnecessary, however, on the Effective Date, the Company issued 2,111,178 New Common Stock shares on account of the underlying backstop fee associated with the Backstop Commitment.

Emergence from Bankruptcy

As disclosed in Note 1 — Organization and Description of Business, on December 21, 2022, the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code.

On January 15, 2024, the Debtors filed with the Bankruptcy Court the Plan of Reorganization, and on January 16, 2024, the Bankruptcy Court entered the Confirmation Order.

On the Effective Date, the Plan of Reorganization became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.

In accordance with the foregoing, on the Effective Date, the Company, as reorganized on the Effective Date and in accordance with the Plan of Reorganization, issued the:

(i) New Common Stock, (ii) Warrants, (iii) CVRs, (iv) New Secured Convertible Notes, (v) Secured Notes and (vi) the GUC CVRs (each, as defined below).

On the Effective Date, all equity interests in the Company that existed immediately prior to the Effective Date were cancelled, including the Company’s then-existing common stock and warrants, and the Company issued or caused to be issued the New Common Stock in accordance with the terms of the Plan of Reorganization.

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued or held in reserve as issuable:

• 176,266,782 shares of New Common Stock;

• 4,725,091 shares of New Common Stock held in reserve for disputed claims;

• 180,241,211 Warrants, composed of 98,313,313 Tranche 1 Warrants and 81,927,898 Tranche 2 Warrants;

• 51,783,625 CVRs;

The 4,725,091 shares of New Common Stock held in reserve for disputed claims will be distributed in settlement of previously disputed claims which become allowed by the Bankruptcy Court.

On the one-year anniversary from the Effective Date, or at such earlier date as all disputed claims are considered resolved, any reserved shares not distributed in settlement of previously disputed claims which become allowed will be issued to holders of the common stock immediately prior to the Effective Date.

As these shares will be issued and only the recipient is contingent, the Company accounts for these shares as outstanding in its Consolidated Balance Sheets and in the Basic and Diluted Weighted average shares outstanding in its Consolidated Statements of Operations.

Shares estimated by the Company to be issued to disputed claims are included in the gain on satisfaction of the GUC claims reported in Reorganization items, net.

New Common Stock and Preferred Stock

The Company is authorized to issue 10,000,000,000 shares of New Common Stock and 2,000,000,000 shares of preferred stock (the “Preferred Stock”), each having a par value of $ 0.00001 per share.

The rights and preferences of the New Common Stock shall at all times be subject to the rights of the Preferred Stock as may be set forth in one or more certificates of designations filed with the Secretary of State of the State of Delaware from time to time in accordance with the Delaware General Corporation Law and the Charter.

The Charter authorized the Board of Directors to provide for the issuance of a share or shares of Preferred Stock in one or more series and to fix for each such series (i) the number of shares constituting such series and the designation of such series, (ii) the voting powers (if any) of the shares of such series, (iii) the powers, preferences, and relative, participating, optional or other special rights of the shares of each such series, and (iv) the qualifications, limitations, and restrictions thereof.

The authority of the Board of Directors

Core Scientific, Inc.

Notes to Consolidated Financial Statements

with respect to the Preferred Stock shall include, but not be limited to, determination of (i) the number of shares constituting any series, (ii) the dividend rate or rates on the shares of any series, (iii) the voting rights, if any, of such series and the number of votes per share, (iv) conversion privileges, (v) whether the shares of any series shall be redeemable, (vi) whether any series shall have a sinking fund for the redemption or purchase of shares of such series, (vii) the rights of the shares in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company and (viii) any other powers, preferences, rights, qualifications, limitations and restrictions of any series.

Incentive Plan

In accordance with the Plan of Reorganization, the Company adopted an equity-based management incentive plan on April 26, 2024 (the “Incentive Plan”).

The Incentive Plan provides for the grant of non-qualified stock options, stock appreciation rights, shares of restricted stock, restricted stock units, performance awards, dividend equivalent rights and other stock-based awards.

The Incentive Plan provides for grants of up to 40,000,000 shares of the Company’s Common Stock in respect of awards, subject to adjustment as provided in the Incentive Plan, and limits the aggregate compensation that may be paid to the Company’s non-employee directors in respect of any single fiscal year (including awards under the Incentive Plan) to a total of $ 800,000 .

The form of outstanding grants under the Incentive Plan currently includes RSUs and MSUs.

The participants in the Incentive Plan, the timing and allocations of the awards to participants, and the other terms and conditions of such awards (including, but not limited to, vesting, exercise prices, base values, hurdles, forfeiture, repurchase rights and transferability) is determined by the Compensation Committee of the Board of Directors in its discretion, as plan administrator.

Under the Incentive Plan, certain executives have been granted MSUs which are subject to the achievement of market-based share price goals and the executives’ continued service until the relevant vesting date.

The number of shares which vest as of the end of each measurement period on each vesting date are conditioned on the highest 20 -day volume weighted average price of the Company's share price achieved during the tranche’s measurement vesting period since grant.

The MSU vesting schedule is proportionate over a three-year service period where such proportions are identified as tranches with separate service conditions and measurement periods for the market conditions.

If certain market-based share price goals are not met during certain tranche measurement periods, the ability to satisfy such goals apply in subsequent measurement periods and permit vesting if such market conditions are then met (and the service conditions are then satisfied).

The following table presents additional information relating to each MSU award:

Core Scientific, Inc.

Notes to Consolidated Financial Statements

Share Price Goal

Incremental Units

Tranche Cumulative Units

December 31, 2024 Vesting:

$ 3.14 144,041 144,041

Cost of revenue $ 5,050 $ 25,779 $ 4,084

Research and development 1,337 22,093 1,140

Sales and marketing 4,929 9,401 836

General and administrative 1

$ 5.00 144,041 288,082

Total stock-based compensation expense 1

$ 8.00 144,041 432,123

1 Includes $ 1.0 million of stock-based compensation that was provided in severance as part of restructuring charges incurred during the year ended December 31, 2022.

Stock Options —Stock options granted under the 2018 Plan are granted at a price per share not less than the fair value at date of grant.

Options granted to date generally vest over 4 years and are exercisable for up to 10 years.

Determining the fair value of stock options at the grant date requires judgment, including estimating the expected term, expected volatility, risk-free interest rate, and expected dividends.

Expected Term — The Company’s expected term is determined using the simplified method and represents the midpoint between the vesting period and the contractual term of the awards.

Expected Volatility —The Company’s volatility factor is estimated using comparable public company volatility for similar terms.

Risk-Free Interest Rate— The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield currently available on US Treasury zero coupon issues with an equivalent remaining term.

Where the expected term of the Company’s stock-based awards does not correspond with the term for which an interest rate is quoted, the Company performs a straight-line interpolation to determine the rate from the available term maturities.

$ 10.00 144,041 576,164

$ 12.00 144,041 720,205

$ 14.00 144,041 864,246

December 31, 2025 Vesting:

$ 3.14 144,041 144,041

$ 5.00 144,041 288,082

$ 8.00 144,041 432,123

$ 10.00 144,041 576,164

$ 12.00 144,041 720,205

$ 14.00 144,041 864,246

December 31, 2026 Vesting:

$ 3.14 144,041 144,041

$ 5.00 144,041 288,082

$ 8.00 144,041 432,123

$ 10.00 144,041 576,164

$ 12.00 144,041 720,205

$ 14.00 144,041 864,246

Stock-Based Compensation

Stock Options —Stock options granted under the 2018 Plan were granted at a price per share not less than the fair value at the date of grant.

Options granted vest over 4 years and are exercisable for up to 10 years.

No stock options were granted during the years ended December 31, 2024, and 2023.

Determining the fair value of stock options at the grant date required judgment, including estimating the expected term, expected volatility, risk-free interest rate, and expected dividends.

Expected Term — The Company’s expected term was determined using the simplified method and represents the midpoint between the vesting period and the contractual term of the awards.

Expected Volatility —The Company’s volatility factor was estimated using comparable public company volatility for similar terms.

Risk-Free Interest Rate— The Company based the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield currently available on US Treasury zero coupon issues with an equivalent remaining term.

Where the expected term of the Company’s stock-based awards did not correspond with the term for which an interest rate was quoted, the Company performed a straight-line interpolation to determine the rate from the available term maturities.

Expected Dividends — The Company has no history of paying cash dividends and has no present intention to pay common stock cash dividends in the future;

as a result, the expected dividend yield is 0 % as of December 31, 2023 and 2022.

as a result, the expected dividend yield was 0 % for the stock options that were granted.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

5 unchanged sentences

(in years) Aggregate

Options outstanding - January 1, 2023

Forfeited ( 674 ) 11.47

Options outstanding - December 31, 2023

22,575 8.88 6.9 $ —

Options vested and expected to vest as of December 31, 2023

Cancellation of common stock in connection with emergence

( 22,575 ) 8.88

Options vested and exercisable as of December 31, 2023

Issuance of new common stock in connection with emergence

Options outstanding - Effective Date

Forfeited or cancelled

( 1,888 ) 94.09

The weighted-average grant date fair value of options granted was nil as no options were granted during the years ended December 31, 2023 and 2022.

The total fair value of stock options vested during the years ended December 31, 2023 and 2022, was nil and $ 0.6 million, respectively.

As of December 31, 2023, total unrecognized stock-based compensation expense related to unvested stock options was approximately $ 55.4 million, which is expected to be recognized over a weighted-average time period of 2.1 years.

Restricted Stock Units —Restricted stock units (“RSUs”) granted in 2018 required that the holder elect before the date of grant whether the RSUs will vest either:

• Over a 4-year service period, or

• Over a 4-year service period and upon either i) completion of an initial public offering of the Company’s common stock, or ii) upon consummation of a transaction resulting in a change in control of the Company.

RSUs granted in 2022 generally vest over a 4-year service period and upon either i) completion of an initial public offering of the Company’s common stock, or ii) upon consummation of a transaction resulting in a change in control of the Company.

A summary of RSU activity for the year ended December 31, 2023, is as follows (amounts in thousands, except per share amounts):

Options outstanding - December 31, 2024

369 $ 62.12 3.6 $ 372

Options expected to vest as of December 31, 2024

— $ 127.39 3.2 $ —

Options exercisable as of December 31, 2024

369 $ 61.61 3.6 $ 372

No options were granted or vested during the years ended December 31, 2024 and 2023.

As of December 31, 2024, total unrecognized stock-based compensation expense related to unvested stock options was immaterial .

Restricted Stock Units — RSUs granted in 2024 generally vest over a 3-year service period.

Market Condition Restricted Stock Units — See Incentive Plan above for the vesting conditions of the Market condition restricted stock units (“MSUs”).

A summary of RSU and MSU activity for the year ended December 31, 2024, is as follows (amounts in thousands, except per share amounts):

Restricted Stock Units

Market Condition Restricted Stock Units

Shares Weighted-Average

Grant Date Fair

Unvested - January 1, 2023

Value Number of

Shares Weighted-Average

Grant Date Fair

Unvested - December 31, 2023

38,358 2.69 — —

Cancellation of common stock in connection with emergence

( 38,358 ) 2.69 — —

Issuance of new common stock in connection with emergence

3,836 26.93 — —

Unvested - Effective Date

3,836 26.93 — —

20,914 6.70 2,843 6.07

( 3,857 ) 15.71 ( 879 ) 6.11

( 2,552 ) 16.42 ( 236 ) 3.99

Unvested - December 31, 2024

18,341 $ 7.68 1,728 $ 6.11

As of December 31, 2023, the Company had approximately $ 55.6 million of unrecognized stock-based compensation expense related to RSUs, of which $ 44.8 million is expected to be recognized over a weighted-average time period of 2.1 years and $ 10.8 million is related to RSUs for which some or all of the requisite service had been provided under the service condition but had performance conditions that had not yet been achieved.

For RSUs subject to both the service and performance conditions, the unrecognized compensation expense will be recognized as expense when it is probable that the performance conditions will be achieved.

The performance conditions for the RSUs are satisfied upon the earlier of a change in control or an initial public offering.

The performance condition can be met in future years only with respect to a change in control or waiver of the condition by the Company’s Board of Directors and is not expected to occur, if at all, prior to expiration of the applicable lock-up period.

If the performance conditions become probable of being achieved before the end of the requisite service period, the unrecognized

As of December 31, 2024, the Company had approximately $ 111.7 million of unrecognized stock-based compensation expense related to RSUs, which is expected to be recognized over a weighted average time period of 2.4 years, and an additional $ 7.4 million of unrecognized stock-based compensation expense related to MSUs for which some or all of the requisite service has been provided

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

compensation expense for which requisite service has not been provided will be recognized as expense prospectively on an accelerated attribution basis over the remaining requisite service period.

under the service conditions but had market conditions that had not yet been achieved.

The unrecognized stock-based compensation expense related to MSUs is expected to be recognized over a weighted average time period of 2.0 years.

Stock-based compensation expense for the years ended December 31, 2024, 2023 and 2022, is included in the Company’s Consolidated Statements of Operations as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Cost of revenue $ 7,950 $ 5,050 $ 25,779

Research and development 2,810 1,337 22,093

Sales and marketing 5,846 4,929 9,401

General and administrative

35,318 47,576 125,621

Stock-based compensation expense, net of amounts capitalized

51,924 58,892 182,894

Capitalized stock-based compensation 1

Total stock-based compensation cost

$ 52,411 $ 58,892 $ 182,894

1 Represents the amounts of stock-based compensation capitalized to property, plant, and equipment.

Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities.

1 unchanged sentence

Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.

The Company had $ 0.7 million of income tax expense, $ 17.1 million income tax benefit and $ 15.8 million income tax expense for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company had $ 0.9 million and $ 0.7 million of income tax expense, and $ 17.1 million of income tax benefit for the years ended December 31, 2024, 2023 and 2022, respectively.

The income tax expense and effective income tax rate for the years ended December 31, 2024, 2023 and 2022 were as follows:

Year Ended December 31,

5 unchanged sentences

Federal — — ( 18,532 )

State — 11 ( 1,690 )

Total deferred tax — — ( 18,521 )

2 unchanged sentences

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

3 unchanged sentences

2024 2023 2022

federal statutory income tax (benefit) expense applied to loss before income taxes

federal statutory income tax benefit applied to loss before income taxes

$ ( 275,971 ) $ ( 51,619 ) $ ( 454,316 )

5 unchanged sentences

Reorganization costs

1,508 40,572 —

Non-deductible expenses — — 288

15 unchanged sentences

Stock-based compensation 6,705 17,614 16,917

Unrealized capital loss — — —

Property, plant and equipment, net

17 unchanged sentences

( 24,903 ) ( 1,791 ) ( 4,885 )

Property, plant and equipment, net

— — ( 75,759 )

Deferred tax liabilities, net

1 unchanged sentence

Total net deferred tax assets (liabilities)

$ — $ — $ ( 18,531 )

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

5 unchanged sentences

Change related to current net operating losses and impairments 16,612 ( 561 ) 241,892

Net change related to generation of tax attributes — — ( 695 )

Change related to deferred tax adjustments ( 29,217 ) ( 37,485 ) 37

1 unchanged sentence

6,409 8,851 —

Acquisition deferred tax liabilities — — ( 9,003 )

Change related to restructuring

( 30,196 ) — —

Ending Balance

3 unchanged sentences

After reviewing the positive and negative evidence available, the Company has recorded a valuation allowance of $ 183.1 million.

The valuation allowance primarily relates to deferred tax assets for fixed assets, net operating loss carryforwards and capital loss carryforwards.

The valuation allowance primarily relates to deferred tax assets for fixed assets, deferred interest carryforwards, net operating loss carryforwards and capital loss carryforwards.

As of December 31, 2024, the Company has federal and state net operating loss carryforwards in the amount of $ 312.4 million and $ 128.1 million, respectively.

1 unchanged sentence

The federal net operating loss can be carried forward indefinitely, however the utilization of the federal net operating loss for a tax year is equal to the lesser of (1) the aggregate of the net operating loss carryovers to such year, plus the net operating carrybacks to such tax year, or (2) 80% of taxable income determined without regard to the deduction.

The Company's state net operating loss carryforwards range from 2033 to indefinite.

The Company's state net operating loss carryforwards expiration periods range from 2035 to indefinite.

As of December 31, 2024, the Company had U.S.

3 unchanged sentences

Similar provisions may subject the capital loss carryforwards to utilization limitation.

The Company completed a Section 382 study related to the acquired Blockcap tax attributes and determined there are no limitations on future utilization of the acquired attributes.

At December 31, 2023, we recorded a total amount of unrecognized tax benefit of $ 0.3 million.

The Company had no unrecognized income tax benefits as of December 31, 2022.

At December 31, 2024 and 2023, the Company had an unrecognized tax benefit of $ 0.6 million and $ 0.3 million, respectively.

Accrued interest and penalties related to unrecognized tax benefits are recorded as income tax expense.

5 unchanged sentences

federal and state examination.

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average common shares outstanding for the period.

Diluted EPS presents the dilutive effect on a per-share basis from the potential conversion of convertible securities or the exercise of options and/or warrants;

the dilutive impacts of potentially convertible securities are calculated using the if-converted method;

the potentially dilutive effect of options or warrants are computed using the treasury stock method.

Securities that potentially have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the diluted EPS calculation.

Upon the closing of the Merger Agreement with XPDI in January 2022, the Convertible Notes became convertible into common shares at the option of the holder at a conversion price equal to $ 8.00 per share and also began to meet the definition of a participating security.

On or after the closing of the Business Combination, dividend payments made to equity holders of the Company are also made ratably to holders of the Convertible Notes on an as-converted basis.

As a result, the Convertible Notes meet the

NET LOSS PER SHARE

Basic earnings per share (“EPS”) is measured as the income or loss available to common stockholders divided by the weighted average common shares outstanding for the period.

Upon exercise of the Tranche 2 Warrants, shares are issuable for little or no consideration, sometimes referred to as “penny warrants”.

Under ASC 260-10-45-13, those issuable shares are considered outstanding in the computation of basic EPS whether or not related warrants have been exercised.

At December 31, 2024, approximately 21.1 million shares of common stock remain issuable upon the exercise of the Tranche 2 Warrants and are included in the number of outstanding shares used for the computation of basic EPS for the year then ended.

Additionally, the basic EPS numerator includes an adjustment to eliminate the changes in fair value that have been recognized in Net loss from the close of trading on July 11, 2024 through December 31, 2024, the period in which the Tranche 2 Warrants were exercisable and therefore included in weighted average share calculations.

Changes in fair value from Emergence through the close of trading on July 11, 2024 remain in Net loss for the year ended December 31, 2024.

Diluted EPS includes and presents the dilutive effect on EPS from the potential issuance of shares from unvested restricted stock units, conversion of convertible securities, or the exercise of options and/or warrants.

The potentially dilutive effect of convertible securities are calculated using the if-converted method.

The potentially dilutive effect of options or warrants are computed

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

definition of participating securities based on their respective rights to receive dividends and they are treated as a separate class of securities in computing basic EPS using the two-class method.

Under the two-class method, all earnings (distributed and undistributed) are allocated to common stock and participating securities.

However, undistributed losses are not allocated to the Convertible Notes under the two-class method because holders of the Convertible Notes do not have a contractual obligation to share in the losses of the Company.

Diluted EPS for the Convertible Notes is calculated under both the two-class and if-converted methods, and the more dilutive amount is reported.

Restricted stock awards assumed from the SPAC Vesting Shares issued as part of the XPDI Merger in January 2022 also have non-forfeitable rights to receive dividends, if declared, and meet the definition of participating securities.

Because these instruments do not have a contractual obligation to share in the losses of the Company, undistributed losses are not allocated to them.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share (in thousands, except per share amounts):

using the treasury stock method.

When potentially dilutive securities have an anti-dilutive effect (i.e., increase income per share or decrease loss per share), they are excluded from the diluted EPS calculation.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share (in thousands, except per share amounts):

Year Ended December 31,

2024 2023 2022

Net (loss) income $ ( 246,487 ) $ ( 2,146,318 ) $ 47,312

Weighted average shares outstanding - basic 379,863 340,647 207,263

Dilutive share-based compensation awards — — 26,042

Weighted average shares outstanding - diluted 379,863 340,647 233,305

Net (loss) income per share - basic

Net loss $ ( 1,315,005 ) $ ( 246,487 ) $ ( 2,146,318 )

Change in fair value of Tranche 2 Warrants

Basic and diluted net loss

$ ( 1,122,420 ) $ ( 246,487 ) $ ( 2,146,318 )

Net (loss) income per share - diluted

Weighted average shares outstanding - basic and diluted

255,832 379,863 340,647

On January 23, 2024, the Company emerged from bankruptcy, which resulted in various transactions that affected the capital structure of the Company.

Refer to Note 17 — Subsequent Events for more details.

Pote ntially dilutive securities includes securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive and contingently issuable shares for which all necessary conditions for issuance had not been satisfied by the end of the period.

Potentially dilutive securities are as follows (in common stock equivalent shares, in thousands):

Net loss per share - basic and diluted

$ ( 4.39 ) $ ( 0.65 ) $ ( 6.30 )

Pote ntially dilutive securities include securities excluded from the calculation of diluted EPS because to do so would be anti-dilutive.

Shares which may be issued from potentially dilutive securities are as follows (in thousands):

Year Ended December 31,

2 unchanged sentences

369 22,575 23,915

14,892 18,311 —

Restricted stock

Tranche 1 Warrants

Restricted stock units

18,341 38,358 45,217

Market condition restricted stock units

Warrants — 14,892 18,311

Convertible Notes 69,611 69,998 69,998

69,998 69,998 —

Share settled liability — — 1,943

SPAC Vesting Shares — 1,725 1,725

Total potentially dilutive shares

Total shares issuable from potentially dilutive securities

187,722 147,548 159,166

1 unchanged sentence

The Company’s operating segments are aggregated into reportable segments only if they exhibit similar economic characteristics and have similar business activities.

The Company has two operating segments:

“Hosting” which consists primarily of its blockchain infrastructure and third-party hosting business;

and “Mining” consisting of digital asset mining for its own account.

The blockchain hosting business generates revenue through the sale of consumption-based contracts for its hosting services which are recurring in nature.

During 2022, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”.

The Mining segment generates revenue from operating owned computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks.

The Company now has three operating segments:

“Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account;

“Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining;

and “HPC Hosting”, consisting of providing hosting services to third parties for GPU-based HPC operations.

The Company’s HPC operations met the criteria to be considered a new segment during the second quarter of 2024.

The Digital Asset Self-Mining segment generates revenue from operating owned digital infrastructure and computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks.

In exchange for these services, the Company receives digital assets.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The primary financial measures used by the chief operating decision maker (“CODM”) to evaluate performance and allocate resources are revenue and gross profit.

The Digital Asset Hosted Mining business generates revenue through the sale of consumption-based contracts for its digital asset hosted mining services which are recurring in nature.

The HPC Hosting business generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis.

The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”).

The CODM uses gross profit to evaluate performance and allocate resources.

Gross profit is used to evaluate actual results against expectations, which are based on comparable prior results, current budget, and current forecast.

Gross profit is also used in deciding how profits and cash flows will be reinvested or otherwise deployed.

The Company adopted ASU 2023-07 on January 1, 2024.

The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the CODM.

Power fees, depreciation expense, employee compensation and facility operations expense were determined to be significant segment expenses.

The CODM does not evaluate performance or allocate resources based on segment asset or liability information;

accordingly, the Company has not presented a measure of assets by segment.

The segments’ accounting policies are the same as those described in the summary of significant accounting policies.

The Company excludes certain operating expenses and other expense from the allocations to operating segments.

The segments’ accounting policies are the same as those described in the summary of

Core Scientific, Inc.

Notes to Consolidated Financial Statements

significant accounting policies.

The Company excludes certain operating expenses and other expenses from the allocations to operating segments.

Core Scientific, Inc.

Notes to Consolidated Financial Statements

The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):

1 unchanged sentence

2024 2023 2022

Hosting Segment 1

Hosting revenue $ 112,067 $ 159,688 $ 79,323

Equipment sales — 82,829 248,235

Total revenue 112,067 242,517 327,558

Cost of revenue:

Cost of hosting services 87,245 169,717 77,678

Cost of equipment sales — 67,114 177,785

Total cost of revenue 87,245 236,831 255,463

$ 24,822 $ 5,686 $ 72,095

Gross margin 2

22 % 2 % 22 %

Mining Segment

Digital asset mining revenue

$ 390,333 $ 397,796 $ 216,925

Total revenue

Digital Asset Self-Mining Segment

(in thousands, except percentages)

Digital asset self-mining revenue

$ 408,740 $ 390,333 $ 397,796

Cost of revenue

Cost of digital asset self-mining:

Power fees 160,833 165,848 144,117

Depreciation expense 108,499 88,628 212,944

Employee compensation 26,129 16,853 23,574

Facility operations expense 13,274 14,055 9,554

Other segment items 5,600 6,312 4,893

Total cost of digital asset self-mining 314,335 291,696 $ 395,082

Digital Asset Self-Mining gross profit

$ 94,405 $ 98,637 $ 2,714

Digital Asset Self-Mining gross margin 23 % 25 % 1 %

Digital Asset Hosted Mining Segment

Digital asset hosted mining revenue from customers $ 77,554 $ 112,067 $ 242,517

Cost of digital asset hosted mining services:

Power fees 35,408 62,366 125,859

Depreciation expense 3,604 6,806 10,630

Employee compensation 4,933 6,337 20,587

Facility operations expense 2,765 5,285 8,344

Other segment items 6,848 6,451 71,411

Total cost of digital asset hosted mining services 53,558 87,245 $ 236,831

Digital Asset Hosted Mining gross profit

$ 23,996 $ 24,822 $ 5,686

Gross margin 2

Digital Asset Hosted Mining gross margin 31 % 22 % 2 %

HPC Hosting Segment

HPC hosting revenue:

$ 17,498 $ — $ —

Maintenance and other

Licensing revenue

Power fees passed through to customer

Total HPC hosting revenue

Cost of HPC hosting services:

Depreciation expense 3 — —

Employee compensation

Facility operations expense 11,907 — —

Other segment items 478 — —

Cost of licensing revenue

Power fees passed through to customer

Total cost of HPC hosting services 21,709 — —

HPC Hosting gross profit $ 2,669 $ — $ —

HPC Hosting licensing gross margin

HPC Hosting gross margin

Consolidated total revenue $ 510,672 $ 502,400 $ 640,313

$ 502,400 $ 640,313 $ 544,483

Consolidated cost of revenue

3 unchanged sentences

Consolidated gross margin 24 % 25 % 1 %

25 % 1 % 44 %

1 During the year ended December 31.

2022, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”.

2 Gross margin is calculated as gross profit as a percentage of total revenue.

For the years ended December 31, 2023, 2022 and 2021, cost of revenue included depreciation expense of $ 6.9 million, $ 12.1 million and $ 7.4 million, respectively for the Hosting segment.

For the years ended December 31, 2023, 2022 and 2021, cost of revenue included depreciation expense of $ 88.5 million, $ 214.8 million and $ 24.3 million , respectively for the Mining segment.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

3 unchanged sentences

The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, in order to limit the exposure to credit risk.

As of December 31, 2023 and 2022, all of the Company’s fixed assets were located in the United States.

For the years ended December 31, 2023 and 2022, 100 % and 99 % of the Company’s revenue was generated in the United States, respectively.

For the years ended December 31, 2023 and 2022, 78 % and 62 %, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin, which is subject to extreme price volatility.

As of December 31, 2023 and 2022, substantially all of our digital assets were held by two third-party digital asset services.

For the years ended December 31, 2023, 2022 and 2021, the concentration of customers comprising 10% or more of the Company’s total revenue are as follows:

Year Ended December 31, Year Ended December 31,

As of December 31, 2024 and December 31, 2023, all of the Company’s fixed assets were located in the United States.

For the years ended December 31, 2024, 2023 and 2022, all of the Company’s revenue was generated in the United States.

For the years ended December 31, 2024, 2023 and 2022, 80 %, 78 % and 62 %, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin from one customer.

As of December 31, 2024 and 2023, substantially all of our digital assets were held by one third-party digital asset service.

For the years ended December 31, 2024, 2023 and 2022, the concentration of customers comprising 10% or more of the Company’s Digital Asset Self-Mining, Digital Asset Hosted Mining, and HPC Hosting segment revenue were as follows:

Year Ended December 31, Year Ended December 31, Year Ended December 31,

2024 2023 2022 2024 2023 2022 2024 2023 2022

Percent of total revenue:

Percent of Hosting segment revenue:

N/A N/A 15 % N/A N/A 26 %

N/A N/A 14 % N/A N/A 23 %

N/A 14 % N/A N/A 38 % N/A

11 % N/A N/A 49 % N/A N/A

Percent of Digital Asset Self-Mining segment revenue:

Percent of Digital Asset Hosted Mining segment revenue:

Percent of HPC Hosting segment revenue:

E (related party)

N/A N/A N/A N/A N/A 38 % N/A N/A N/A

N/A N/A N/A 61 % 49 % N/A N/A N/A N/A

100 % 100 % 100 % N/A N/A N/A N/A N/A N/A

N/A N/A N/A 21 % 15 % N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A 100 % N/A N/A

1 On the Effective Date, Customer F became a minority shareholder of the Company.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

A reconciliation of the reportable segment gross profit to (loss) income before income taxes included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, is as follows (in thousands):

A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 , is as follows (in thousands):

Year Ended December 31,

2 unchanged sentences

$ 121,070 $ 123,459 $ 8,400

(Loss) gain on legal settlement

— — ( 2,636 )

Gain from sales of digital assets

Change in fair value of digital assets ( 1,052 ) — —

Gain from sale of digital assets

— 3,893 44,298

Impairment of digital assets — ( 4,406 ) ( 231,315 )

Change in fair value of derivative instruments ( 3,918 ) — —

Change in fair value of energy derivatives

( 2,757 ) ( 3,918 ) —

Impairment of goodwill and other intangibles — — ( 1,059,265 )

1 unchanged sentence

Losses on exchange or disposal of property, plant and equipment ( 4,210 ) ( 1,956 ) ( 28,025 )

Operating expense:

Operating expenses:

Research and development

4 unchanged sentences

110,448 93,908 213,280

Total operating expense

108,111 252,973 72,222

Operating income (loss)

Total operating expenses

132,247 108,111 252,973

Non-operating expense, net:

(Gain) loss on debt extinguishment and other

Operating (loss) income ( 19,196 ) 8,961 ( 2,109,553 )

Non-operating expenses (income), net:

Loss (gain) on debt extinguishment

487 ( 20,065 ) 287

4 unchanged sentences

Reorganization items, net ( 111,439 ) 191,122 ( 197,405 )

Other non-operating (income) expenses, net

( 2,530 ) 5,232 2

Total non-operating expense, net

Change in fair value of warrants and contingent value rights 1,369,157 — —

Other non-operating (income) expense, net ( 325 ) ( 2,530 ) 5,232

Total non-operating expenses, net

1,294,950 254,765 53,856

(Loss) income before income taxes

Loss before income taxes

$ ( 1,314,146 ) $ ( 245,804 ) $ ( 2,163,409 )

RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company enters into various transactions with related parties.

The Company had agreements to provide hosting services to various entities that are managed and invested in by individuals that were directors and executives of the Company in 2023.

For the years ended December 31, 2023 and 2022, the Company recognized hosting revenue from the contracts with these entities of $ 10.1 million and $ 29.5 million , respectively.

In the ordinary course of business, the Company from time to time has entered into various transactions with related parties.

The Company previously had agreements to provide digital asset hosted services to various entities that are managed and invested in by individuals that were directors and executives of the Company.

For the years ended December 31, 2023 and 2022, the Company recognized digital asset hosted revenue from the contracts with these entities of $ 10.1 million and $ 29.5 million , respectively.

In addition, for the years ended December 31, 2023 and 2022, there was equipment sales revenue recognized of nil and $ 71.4 million to these same various ent ities.

Receivables from these entities were nil as of December 31, 2023, and a no minal amount as of December 31, 2022 .

In 2022, the Company reimbursed its former chief executive officer, and its co-founder and director, for use of a personal aircraft for flights taken on Company business.

We did not make such reimbursements in fiscal 2023.

For the years ended December 31, 2023 and 2022, the Company incurred reimburseme nts of nil and $ 1.9 million , respectively.

Nominal amounts were payable at December 31, 2023 and 2022.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

SUBSEQUENT EVENTS

Payoff of DIP

On January 4, 2024, the Company pre-paid the outstanding balance of $ 4.5 million on the Replacement DIP Facility provided by B.

Riley Financial, the Company’s DIP lender.

The $ 4.5 million payment included exit fees of approximately $ 0.2 million.

The Replacement DIP was terminated on the Effective Date.

Equity Rights Offering

The subscription period for the ERO expired on January 5, 2024.

The Equity Rights Offering was oversubscribed and the aggregate subscriptions (including oversubscriptions) exceeded the number of ERO Shares offered to be purchased as part of the Equity Rights Offering.

The results of the Equity Rights Offering render the previously arranged Backstop Commitment unnecessary.

Emergence from Bankruptcy

On January 15, 2024, the Debtors filed with the Bankruptcy Court the Plan of Reorganization, and on January 16, 2024, the Bankruptcy Court entered the Confirmation Order.

On the Effective Date, the Plan of Reorganization became effective in accordance with its terms and the Debtors emerged from the Chapter 11 Cases.

In accordance with the foregoing, on the Effective Date, the Company, as reorganized on the Effective Date and in accordance with the Plan of Reorganization, issued the:

(i) New Common Stock, (ii) Warrants, (iii) CVRs, (iv) Secured Convertible Notes, (v) Secured Notes and (vi) the GUC CVRs (each, as defined below).

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued:

• 176,266,782 shares of New Common Stock (as defined below);

• 180,241,211 Warrants, composed of 98,313,313 Tranche 1 Warrants (as defined below) and 81,927,898 Tranche 2 Warrants (as defined below)

• 51,783,625 CVRs;

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued the following debt instruments, which are defined and described in further detail below (in thousands):

Principal Balance

Exit Credit Agreement

Secured Notes Indenture $ 150,000

Secured Convertible Notes Indenture

Miner Equipment Lender Agreements

In addition, approximately $ 4.6 million of finance lease liabilities and $ 15.0 million of debt were reinstated pursuant to the Plan of Reorganization.

Exit Credit Agreement

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into a credit and guaranty agreement, dated as of January 23, 2024 (the “Exit Credit Agreement”), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent, consisting of an $ 80 million first-lien credit facility with certain holders of the Company’s April Convertible Notes and August Convertible Notes (in such capacity, the “Exit Lenders”) equal to (i) a $ 40 million term loan comprised of (x) a $ 20 million initial term loan and (y) a $ 20 million delayed-draw term loan and (ii) a $ 40 million roll-up of the outstanding balance of the April Convertible Notes and August Convertible Notes (the “Exit Facility”).

The Exit Facility will mature on January 23, 2027.

From the Effective Date, cash borrowings under the Exit Facility bear interest at 9.0 % per annum, payable on the first business day of each Fiscal Quarter (as defined in the Exit Credit Agreement), commencing on April 1, 2024.

The Exit Facility amortizes in equal quarterly installments of $ 1.25 million beginning on January 1, 2026.

Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the Exit Credit Agreement), the obligations under the Exit Facility shall automatically bear interest at a rate equal to an additional 2.0 % per annum over the rate otherwise applicable, with such interest being payable in cash on each interest payment date (unless the administrative agent demands prior payment).

Obligations under the Exit Credit Agreement are secured by a valid and perfected lien and security interest on substantially all assets and property of the Company and the guarantors thereof, including a first-priority lien on all new, unencumbered miner equipment purchased by the Company or any subsidiary thereof other than the following, which are each secured by a second priority lien on, (i) Equipment Priority Collateral (as defined below) and (ii) future financed equipment.

Obligations under the Exit Credit Agreement are guaranteed by all direct and indirect subsidiaries of the Company.

The Exit Facility provides for affirmative, negative and financial covenants, that, among other things, limit the ability of the Company and, in certain cases, certain of the Company’s subsidiaries, to incur more indebtedness;

pay dividends, redeem stock or make other distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with our affiliates.

The Exit Facility also imposes financial maintenance covenants in the form of a maximum leverage ratio and minimum liquidity requirements.

The Exit Facility contains certain events of default, including, without limitation, nonpayment of principal, nonpayment of interest, fees or other obligations after three business days, bankruptcy events of the Company or any of its subsidiaries and certain changes of control.

Secured Notes Indenture

The maturity date of the Secured Notes is January 23, 2028.

The Secured Notes bear interest at a rate of 12.5 % per annum, payable on March 15, June 15, September 15 and December 15 of each year, beginning on June 15, 2024.

There is no amortization on the New Secured Notes prior to maturity.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Secured Notes are secured by a valid and perfected second lien and security interest on substantially all assets of the Company and the guarantors thereof, which liens are junior in priority to liens securing the Exit Facility and are subject to the terms of the New Intercreditor Agreement.

The Secured Notes are guaranteed by all direct and indirect subsidiaries of the Company.

The Company is entitled to prepay the notes prior to maturity.

If the notes are prepaid after the first year (including in the event that the notes are accelerated), or if the notes are not paid when due at the stated maturity, the Company is required to pay a premium on the outstanding principal amount equal to:

(a) 1.00 % of the aggregate principal amount of the notes then outstanding, if the notes are prepaid on or after the first anniversary of the Issue Date (as such term is defined in the Secured Notes Indenture) and prior to the second anniversary of the Issue Date, (b) 2.00 % of the aggregate principal amount of the notes then outstanding, if the notes are prepaid on or after the second anniversary of the Issue Date and prior to the third anniversary of the Issue Date and (c) 3.00 % of the aggregate principal amount of the notes then outstanding, if the notes are prepaid on or after the third anniversary of the Issue Date or if the notes are not paid when due at maturity, in each case whether such payment is made before or after an event of default or an acceleration (including any acceleration as a result of an insolvency proceeding) of all or part of the notes.

No prepayment premium shall be applicable in connection with any prepayment, repayment or refinancing that occurs prior to the first anniversary of the Issue Date.

The Secured Notes Indenture contains affirmative and negative covenants consistent with those in the Exit Facility and the Secured Convertible Notes Indenture that, among other things, limit the ability of the Company and, in certain cases, certain of the Company’s subsidiaries to incur more indebtedness;

pay dividends, redeem stock or make other distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with its affiliates.

The Secured Notes Indenture contains certain events of default, including, without limitation, nonpayment of principal, nonpayment of fees, interest or other obligations after three business days, violations of the covenants (subject, in the case of certain affirmative covenants, to certain grace periods), and bankruptcy events of the Company or any of its subsidiaries.

Secured Convertible Notes Indenture

On the Effective Date, under the terms of the Plan of Reorganization, the Company issued $ 260.0 million aggregate principal amount of secured convertible notes due 2029 (the “Secured Convertible Notes”) pursuant to a secured convertible notes indenture (the “Secured Convertible Notes Indenture”) among (i) Core Scientific, Inc., as the issuer, (ii) the guarantors party thereto and (iii) Wilmington Trust, National Association, as trustee and as collateral agent for the Secured Convertible Notes (in such capacity, the “Secured Convertible Notes Agent”).

The Secured Convertible Notes were issued to holders of the Company’s April Convertible Notes and August Convertible Notes.

The maturity date of the Secured Convertible Notes is January 23, 2029.

The Secured Convertible Notes bear interest payable quarterly on March 15, June 15, September 15 and December 15, beginning on June 15, 2024, at the Company’s option, (i) in cash at a rate of 10 % per annum, or (ii) in cash at a rate of 6 % of per annum and in stock at a rate of 6 % of per annum (the “Cash/PIK Interest”);

provided that the payable-in-stock portion of the Cash/PIK Interest is payable in New Common Stock using a price equal to the volume weighted average price of the New Common Stock for the 20 -consecutive trading day period immediately preceding the date that is three business days prior to the applicable interest payment date.

The Secured Convertible Notes are secured by a valid and perfected third lien and security interest on substantially all assets of the Company and the guarantors thereof, and which liens are junior in priority to liens securing the Exit Facility and Secured Notes and are subject to the terms of the New Intercreditor Agreement.

The Secured Convertible Notes are guaranteed by all direct and indirect subsidiaries of the Company.

Upon the occurrence of a Fundamental Change (as such term is defined in the Secured Convertible Notes Indenture), the holders of the Secured Convertible Notes have the right to require the Company to purchase all or any portion of such holder’s Secured Convertible Notes at the principal amount thereof plus accrued interest to the repurchase date.

Holders may elect to convert the Secured Convertible Notes into shares of New Common Stock at any time prior to maturity at an initial conversion rate of 171.48 shares of New Common Stock per $1,000 principal amount of Secured Convertible Notes (equal to a conversion price of $ 5.8317 per share of New Common Stock), which the Company may deliver in cash, New Common Stock or a combination thereof.

The conversion price is subject to anti-dilution adjustments upon (among other triggering events) the occurrence of certain dilutive transactions, including share dividends, splits, combinations and reclassification.

The Secured Convertible Notes also automatically convert into New Common Stock if the volume weighted average price for each day for any 20 consecutive trading days is greater than or equal to 133.6 % of the as-adjusted conversion price.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Secured Convertible Notes Indenture contains affirmative and negative covenants consistent with those in the Exit Facility and the Secured Notes Indenture that, among other things, limit the ability of the Company and, in certain cases, certain of the Company’s subsidiaries to incur more indebtedness;

pay dividends, redeem stock or make other distributions;

make investments;

grant or permit certain liens;

transfer or sell assets;

merge or consolidate;

and enter into certain transactions with its affiliates.

The Secured Convertible Notes Indenture contains certain events of default, including, without limitation, nonpayment of principal, nonpayment of interest, fees or other obligations after three business days, and bankruptcy events of the Company or any of its subsidiaries.

Miner Equipment Lender Agreements

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into separate New Miner Equipment Lender Agreements (Election 2) with each Holder of an Allowed Miner Equipment Lender Secured Claim that is a Settling Miner Equipment Lender that elected on its Ballot (as defined in the RSA) to receive and is receiving the Miner Equipment Lender Treatment Election 2 (the “Election 2 Miner Equipment Facility Lenders”), in each case, in the principal amount of eighty percent ( 80 %) of each applicable Holders’ Allowed Miner Equipment Lender Claim as of the Effective Date (the “Miner Equipment Lender Facility”).

The maturity date on the Miner Equipment Lender Facility is January 23, 2029.

Loans issued under the Miner Equipment Lender Facility shall accrue interest (1) from the Effective Date to and including the second anniversary of the Effective Date, (x) if the Company does not deliver an Election Notice (as defined below), at a rate of 13.0 % per annum and shall be payable 3.0 % in cash interest and 10.0 % paid-in-kind, and (y) if the Company delivers a written notice to the Election 2 Miner Equipment Facility Lenders five (5) business days prior to the due date of any interest payment during this period (an “Election Notice”), the Company may elect to have interest accrue at either (a) 12.0 % per annum, payable 5.0 % in cash and 7.0 % paid-in-kind or (ii) 8.0 % per annum, payable in cash and (2) following the second anniversary of the Effective Date, at a rate of 10.0 % per annum, payable in cash.

Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the New Miner Equipment Lender Agreements (Election 2)), the obligations under the Miner Equipment Lender Facility may, at the option of the Election 2 Miner Equipment Facility Lenders, accrue interest at a rate equal to an additional 2.0 % per annum over the rate otherwise applicable, with such interest being payable in cash on demand.

Loans issued under the Miner Equipment Lender Facility are secured by a first-priority, duly-perfected and validly enforceable lien on (i) the collateral securing each Election 2 Miner Equipment Facility Lenders’ existing equipment loan/lease and (ii) new, non-financed miners acquired by the Company after the Effective Date, in an aggregate amount of up to $ 18,204,559 (collectively, the “Equipment Priority Collateral”).

On the Effective Date, under the terms of the Plan of Reorganization, each Miner Equipment Facility Lender entered into a separate intercreditor agreement with the Secured Convertible Notes Agent (as defined below), the Secured Notes Agent (as defined below) and the Exit Agent with respect to the Equipment Priority Collateral.

The Miner Equipment Lender Facility contains customary covenants, representations and warranties.

Warrant Agreement

On the Effective Date and pursuant to the Plan of Reorganization and the Confirmation Order, the Company entered into a warrant agreement dated as January 23, 2024, (the “Warrant Agreement”) among the Company and Computershare Inc., a Delaware corporation and its affiliate, Computershare Trust Company, N.A., a federally chartered trust company (collectively, in such capacity, the “Warrant Agent”).

Pursuant to the Warrant Agreement, the Company was authorized to issue (i) an aggregate of 98,313,313 warrants, each exercisable for one share of New Common Stock at an exercise price of $ 6.81 per share (the “Tranche 1 Warrants”) and (ii) an aggregate of 81,927,898 warrants, each exercisable for one share of New Common Stock at an exercise price of $ 0.01 per share (the “Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”).

Each whole Tranche 1 Warrant entitles the registered holder to purchase one whole share of New Common Stock at an exercise price of $ 6.81 per share (the “Tranche 1 Exercise Price”).

The Tranche 1 Exercise Price and the price per share used to determine a TEV Triggering Event are subject to certain adjustments as set forth in the Warrant Agreement.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

provided, however, that the Company and the Warrant Agent may amend the Warrant Agreement without the consent of holders of Warrants to (i) to cure any ambiguity;

(ii) correct any defective provision;

Holders of Warrants do not have the rights or privileges of holders of New Common Stock or any voting rights until they exercise their Warrants and receive shares of New Common Stock.

After the issuance of shares of New Common Stock upon exercise of the Warrants, each holder will be entitled to the same rights as holders of New Common Stock.

Pursuant to the Warrant Agreement, holders of Warrants may exercise their Warrants only for a whole number of shares of New Common Stock.

Effective January 24, 2024, the Nasdaq Stock Market LLC has approved listing of the Tranche 1 Warrants and Tranche 2 Warrants on the Nasdaq Global Market, which will trade under the symbols “CORZW” and “CORZZ,” respectively.

Contingent Value Rights Agreement

On the Effective Date, under the terms of the Plan of Reorganization, the Company entered into a contingent value rights agreement (the “Contingent Value Rights Agreement”) among (i) the Company and (ii) Computershare Inc., a Delaware corporation and its affiliate, Computershare Trust Company, N.A., a federally chartered trust company (collectively, in such capacity, the “CVR Agent”).

Pursuant to the Contingent Value Rights Agreement, the Company issued 51,783,625 contingent value rights (the “CVRs”) to holders of the Company’s April Convertible Notes and August Convertible Notes who received New Common Stock pursuant to the Convertible Noteholders Equity Distribution (in such capacity, the “Payees”) in an aggregate amount of 51,783,625 shares of New Common Stock (the “Corresponding New Common Stock”).

The CVRs require the Company to make payments to each Payee, of:

(i) at the first testing date, cash equal to such Payee’s pro rata share (the “Year 1 Contingent Payment Obligation”) of the lesser of (a) $ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 and (2) the fair market value of the Corresponding New Common Stock (the “First Anniversary Payment Amount”);

(ii) at the second testing date, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 2 Contingent Payment Obligation”) of the lesser of (a) $ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 minus the First Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Second Anniversary Payment Amount”);

(iii) at the third testing date, cash or New Common Stock (or a combination of cash and New Common Stock), in the Company’s sole discretion, equal to such Payee’s pro rata share (the “Year 3 Contingent Payment Obligation”) of the lesser of (a)

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

$ 43,333,333.33 and (b) the difference between (1) $ 260,000,000 minus the sum of the First Anniversary Payment Amount and the Second Anniversary Payment Amount and (2) the fair market value of the Corresponding New Common Stock (the “Third Anniversary Payment Amount”);

In each case, the fair market value of the Corresponding New Common Stock is determined by the product of (i) the volume weighted average of the closing price calculated based on the weighted average price in the consecutive 60-day period immediately prior to the applicable testing date, multiplied by (ii) Corresponding New Common Stock as of the applicable testing date.

Equity Interests

Debt Securities and Agreements

On the Effective Date, the obligations of the Company under the Company’s April Convertible Notes, August Convertible Notes, replacement debtor-in-possession credit agreement, stock certificates, book entries, and any other certificate, share, note, bond, indenture, purchase right, option, warrant, or other instrument or document, directly or indirectly, evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors giving rise to any claim or interest (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in, the Debtors that are specifically reinstated pursuant to the Plan of Reorganization) were cancelled, and the duties and obligations of all parties thereto were deemed satisfied in full, canceled, released, discharged, and of no force or effect.

New Common Stock and Preferred Stock

The Company is authorized to issue 10,000,000,000 shares of New Common Stock and 2,000,000,000 shares of preferred stock (the “Preferred Stock”), each having a par value of $ 0.00001 per share.

The rights and preferences of the New Common Stock shall at all times be subject to the rights of the Preferred Stock as may be set forth in one more certificates of designations filed with the Secretary of State of the State of Delaware from time to time in accordance with the Delaware General Corporation Law and the Charter.

The number of authorized shares of Preferred Stock and New Common Stock may be increased or decreased from time to time by the affirmative vote of the holders of at least a majority of the voting power of the Company’s then outstanding shares of stock entitled to vote thereon, voting together as a single class, and no vote of the holders of any of the New Common Stock or the Preferred Stock voting separately as a class or series shall be required therefor.

The authority of the Board of Directors with respect to the Preferred Stock shall include, but not be limited to, determination of (i) the number of shares constituting any series, (ii) the dividend rate or rates on the shares of any series, (iii) the voting rights, if any, of such series and the number of votes per share, (iv) conversion privileges, (v) whether the shares of any series shall be redeemable, (vi) whether any series shall have a sinking fund for the redemption or purchase of shares of such series, (vii) the rights of the shares in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company and (viii) any other powers, preferences, rights, qualifications, limitations and restrictions of any series.

Management Incentive Plan

In accordance with the Plan of Reorganization, the Board of Directors will adopt an equity-based management incentive plan (the “Management Incentive Plan”), under which up to ten percent of the New Common Stock issued and outstanding, on a fully diluted basis, on the date of the Effective Date may be issued to members of the Company’s management.

The Confirmation Order authorized and approved any (i) necessary action with respect to the Management Incentive Plan and (ii) reservation for issuance or share issuances pursuant to the Management Incentive Plan.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

The Board of Directors will adopt the Management Incentive Plan on or as soon as reasonably practicable after the Effective Date, but in any event no later than ninety days after the Effective Date.

The participants in the Management Incentive Plan, the timing and allocations of the awards to participants, and the other terms and conditions of such awards (including, but not limited to, vesting, exercise prices, base values, hurdles, forfeiture, repurchase rights and transferability) shall be determined by the Board of Directors in its discretion.

GUC Contingent Value Rights

On the Effective Date, pursuant to the Plan of Reorganization, the Company issued (i) 20,232,308 shares of New Common Stock, with an aggregate value, based on Plan Value, of $ 101,584,257 , to holders of Allowed General Unsecured Claims (the “GUC Equity Distribution”) and (ii) contingent value rights (the “GUC CVRs”) to Holders of Allowed General Unsecured Claims (in such capacity, the “GUC Payees”).

Within 45 days of the GUC CVR Testing Date (as defined below), the Company will be required to pay to each GUC Payee New Common Stock in an amount equal to the lesser of (i) such GUC Payee’s pro rata share of the New Common Stock with an aggregate value, based on Plan Value, of $ 7,100,000 and (ii) the difference between (a) the GUC Equity Distribution at Plan Value and (b) the value of the GUC Equity Distribution as implied by the volume weighted average of the closing price of the GUC Equity Distribution during the 60 trading days prior to the GUC CVR Testing Date;

provided that, to the extent that the value of the GUC Equity Distribution, as implied by the volume weighted average of the closing price during any 20 trading days over any consecutive 30 trading day period during the GUC CVR Testing Period, is equal to or in excess of the GUC Equity Distribution at Plan Value, the Company shall not owe any amounts to the GUC Payees and the GUC CVRs shall be immediately extinguished.

The testing period (the “GUC CVR Testing Period”) began on the Effective Date and will end on the date that is 18 months following the Effective Date (the “GUC CVR Testing Date”).

Federal Income Tax Consequences

An ownership change is not expected with the implementation of the Plan which would, if it occurred, limit our ability to utilize our NOL carryforwards under Sec.

382 of the Internal Revenue Code (the “Tax Code”).

However, certain future equity trading activity and other actions could result in an ownership change of the Tax Group independent of the Plan, which could adversely affect the ability of the Debtors to utilize their tax attributes.

In addition, as discussed below, in connection with and as a result of the implementation of the Plan, the amount of the Tax Group’s NOL carryforwards, and possibly certain other tax attributes, may be reduced.

Based on the Plan, the Tax Group is expected to incur COD income for U.S.

federal income tax purposes as a result of the implementation of the Plan and, thus, expect that the Tax Group’s NOL carryforwards or other tax attributes will be reduced as a result of any COD incurred.

163(l) generally disallows a corporate issuer's interest deductions with respect to debt instruments payable in equity of the issuer or a related party.

Pursuant to the current terms of certain new debts, the Debtors may pay a portion of the interest in stock and, under certain circumstances, require the conversion of such notes into stock.

In addition, a holder of the respective debts may at its option convert the notes into stock.

The proper application of Sec.

163(l) in the case of the new debts is subject to varying interpretations.

However, based on the current terms of the new debts, the Debtors expect disallowance of deductibility of certain interest with respect to the new debts under Sec.

CoreWeave Agreement

In March 2024, the Company entered into a hosting agreement with CoreWeave, Inc.

to supply up to 16 MW of data center infrastructure.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Consolidated Financial Statements

Austin Lease Agreement

In February 2024, the Company entered into a lease agreement for a data center in Austin, Texas with a current operating capacity of 12 MW (the “Austin Lease”).

The Austin Lease term is eight years .

Total lease payments are expected to be $ 97.8 million.

There were no such transactions during the year ended December 31, 2024.

Receivables from these entities were nil as of December 31, 2024 and 2023.

During the year ended December 31, 2022, the Company reimbursed its former chief executive officer, and its co-founder and director, for use of a personal aircraft for flights taken on Company business.

The Company did not make such reimbursements in fiscal 2024 and 2023.

For the year ended December 31, 2022, the Company incurred reimburseme nts of $ 1.9 million .

Nominal amounts were payable at December 31, 2023.

SUBSEQUENT EVENT

On February 26, 2025, the Company announced a new agreement with CoreWeave to deliver an additional 70 MW of infrastructure at the Company’s Denton, Texas facility.

Under the terms of this agreement, the Company is contractually committed to approximately $ 104 million in capital expenditures.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data