Core Scientific, Inc./tx 10-Q

Item 1. Financial Statements 6 Core Scientific, Inc. Condensed Consolidated Balance Sheets (in thousands, except par value) March 31, 2026 December 31, 2025 Assets (Unaudited) Current Assets: Cash and cash equivalents $ 1,005,148 $ 311,378 Restricted cash, current portion 60,244 — Digital assets 37,312 222,000 Customer funding receivable and other current assets 352,128 362,159 Total Current Assets 1,454,832 895,537 Property, plant and equipment, net 1,344,924 1,293,299 Operating lease right-of-use assets 105,986 108,484 Restricted cash, net of current portion 80,593 — Other noncurrent assets 83,229 50,324 Total Assets $ 3,069,564 $ 2,347,644 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable $ 218,857 $ 126,106 Accrued expenses 364,479 511,957 Deferred revenue 219,555 127,561 Notes payable, current portion 993,944 — Warrant liabilities, current portion 844,752 — Other current liabilities 20,196 15,777 Total Current Liabilities 2,661,783 781,401 Convertible and other notes payable, net of current portion 1,061,651 1,060,325 Warrant liabilities, net of current portion 116,495 936,107 Deferred revenue, net of current portion 434,672 428,290 Other noncurrent liabilities 100,649 104,261 Total Liabilities 4,375,250 3,310,384 Commitments and contingencies (Note 9) Stockholders’ Deficit: Preferred stock; $ 0.00001 par value; 2,000,000 shares authorized; none issued and outstanding at March 31, 2026 and December 31, 2025 — — Common stock; $ 0.00001 par value; 10,000,000 shares authorized at March 31, 2026 and December 31, 2025 ; 316,949 and 314,231 shares issued and outstanding at March 31, 2026 and December 31, 2025 , respectively 3 3 Additional paid-in capital 3,188,202 3,183,960 Accumulated deficit ( 4,493,891 ) ( 4,146,703 ) Total Stockholders’ Deficit ( 1,305,686 ) ( 962,740 ) Total Liabilities and Stockholders’ Deficit $ 3,069,564 $ 2,347,644 Certain prior year amounts have been reclassified for consistency with the current year presentation. See accompanying notes to unaudited condensed consolidated financial statements. 7 Core Scientific, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three Months Ended March 31, 2026 2025 Revenue: Colocation revenue $ 77,539 $ 8,573 Digital asset self-mining revenue 30,105 67,179 Digital asset hosted mining revenue from customers 7,600 3,773 Total revenue 115,244 79,525 Cost of revenue: Cost of colocation services 33,618 8,106 Cost of digital asset self-mining 47,189 61,170 Cost of digital asset hosted mining services 4,331 2,036 Total cost of revenue 85,138 71,312 Gross profit 30,106 8,213 Decrease in fair value of digital assets 6,558 10,688 Loss on disposal of property, plant and equipment 13,638 6 Impairment of property, plant and equipment 266,488 — Colocation organizational and site startup costs 8,665 11,667 Advisor fees 333 603 Selling, general and administrative 44,846 32,287 Operating loss ( 310,422 ) ( 47,038 ) Non-operating expenses (income), net: Interest expense (income), net 4,857 ( 2,187 ) Change in fair value of warrants and contingent value rights 30,799 ( 621,464 ) Loss on legal settlements 500 — Other non-operating expense, net 10 157 Total non-operating expense (income), net 36,166 ( 623,494 ) (Loss) income before income taxes ( 346,588 ) 576,456 Income tax expense 600 205 Net (loss) income $ ( 347,188 ) $ 576,251 Net (loss) income per share Basic $ ( 1.06 ) $ 1.42 Diluted $ ( 1.06 ) $ 1.24 Weighted average shares outstanding Basic 322,911 315,186 Diluted 322,911 363,314 See accompanying notes to unaudited condensed consolidated financial statements. 8 Core Scientific, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Deficit (in thousands) For the Three Months Ended March 31, 2026 Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Deficit Shares Amount Balance at January 1, 2026 314,231 3 3,183,960 ( 4,146,703 ) ( 962,740 ) Net loss — — — ( 347,188 ) ( 347,188 ) Stock-based compensation — — 18,387 — 18,387 Restricted stock awards issued 3,690 — 655 — 655 Restricted stock awards withheld for tax withholding obligations ( 1,359 ) — ( 21,651 ) — ( 21,651 ) Exercise of warrants 387 — 6,851 — 6,851 Balance at March 31, 2026 316,949 $ 3 $ 3,188,202 $ ( 4,493,891 ) $ ( 1,305,686 ) For the Three Months Ended March 31, 2025 Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Deficit Shares Amount Balance at January 1, 2025 292,606 3 2,915,035 ( 3,858,087 ) ( 943,049 ) Net income — — — 576,251 576,251 Stock-based compensation — — 16,405 — 16,405 Restricted stock awards issued 2,981 — ( 50 ) — ( 50 ) Exercise of warrants 3,500 $ — 41,625 — 41,625 Balance at March 31, 2025 299,087 $ 3 $ 2,973,015 $ ( 3,281,836 ) $ ( 308,818 ) See accompanying notes to unaudited condensed consolidated financial statements. 1 Proceeds from digital assets received as noncash revenue consideration liquidated upon management's discretion. 9 Core Scientific, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2026 2025 Cash flows from Operating Activities: Net (loss) income $ ( 347,188 ) $ 576,251 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 16,648 19,731 Loss on disposal of property, plant and equipment 13,638 6 Impairment of property, plant and equipment 266,488 — Change in right-of-use assets 3,169 2,676 Stock-based compensation 17,761 16,185 Digital asset self-mining ( 30,119 ) ( 67,441 ) Proceeds from sales of digital assets generated by self-mining revenues 1 208,249 — Decrease in fair value of digital assets 6,558 10,688 Change in fair value of warrant liabilities 31,835 ( 634,280 ) Change in fair value of contingent value rights ( 1,036 ) 12,816 Amortization of debt discount 1,675 1,732 Changes in operating assets and liabilities: Customer funding receivable and other current assets 10,107 ( 10,463 ) Accounts payable 5,874 ( 14,295 ) Accrued expenses ( 16,361 ) 2,712 Deferred revenue from colocation services 98,832 42,005 Deferred revenue from hosted mining services ( 456 ) 734 Other noncurrent assets and liabilities, net ( 35,797 ) ( 4,098 ) Net cash provided by (used in) operating activities 249,877 ( 45,041 ) Cash flows from Investing Activities: Purchases of property, plant and equipment ( 389,226 ) ( 83,980 ) Proceeds from sales of property and equipment 2,629 — Purchase of equity investments — ( 5,000 ) Investments in intangible assets ( 55 ) ( 36 ) Net cash used in investing activities ( 386,652 ) ( 89,016 ) Cash flows from Financing Activities: Principal repayments of finance leases ( 1,095 ) ( 509 ) Principal payments on debt — ( 3,955 ) Taxes paid related to net share settlement of equity awards ( 21,722 ) — Proceeds from exercise of warrants 81 266 Proceeds from the issuance of term loan facility, net 995,000 — Issuance costs for term loan facility ( 882 ) — Net cash provided by (used in) financing activities 971,382 ( 4,198 ) Net increase (decrease) in cash, cash equivalents and restricted cash 834,607 ( 138,255 ) Cash, cash equivalents and restricted cash—beginning of period 311,378 836,980 Cash, cash equivalents and restricted cash—end of period $ 1,145,985 $ 698,725 Certain prior year amounts have been reclassified for consistency with the current year presentation. See accompanying notes to unaudited condensed consolidated financial statements. 10 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Core Scientific, Inc. (“Core Scientific” or the “Company”) is a leader in designing, building and operating large scale, purpose- built data centers for high-density colocation (“HDC”) services. Core Scientific operates facilities for high-density colocation services serving artificial intelligence-related (“AI”) workloads and is a premier provider of digital infrastructure, software solutions and services to its third-party customers. The majority of the Company's revenue is derived from high-density colocation services, with the remainder derived from earning digital assets for the Company's own account and from digital asset mining hosting services. The Company is in the process of repurposing its remaining mining facilities to support its high-density colocation services business as circumstances allow. Core Scientific’s facilities are located in Alabama ( 1 ), Georgia ( 2 ), Kentucky ( 1 ), North Carolina ( 1 ), North Dakota ( 1 ), Oklahoma ( 1 ), and Texas ( 4 ). The Company had historically focused on designing, building and operating digital infrastructure to engage in digital asset mining for its own account and providing hosting solutions for third-party digital asset miners. In 2024, the Company announced its first high-density colocation contract with CoreWeave, Inc. (“CoreWeave), a provider of high-performance computing ("HPC") services. Core Scientific operates in three segments: “Colocation,” consisting of providing high-density colocation services to customers employing AI and HPC related workloads, “Digital Asset Self-Mining,” consisting of performing digital asset mining for its own account, and “Digital Asset Hosted Mining,” consisting of providing hosting services to third parties for digital asset mining . The Company’s high-density colocation services provide space, power, cooling, facilities operations, security and other services to third-party colocation customers to support workloads for machine learning and AI. Colocation segment revenue is concentrated with a single customer; see Note 13 — Segment Reporting . The Company’s digital asset hosted mining business provides a full suite of services to digital asset mining customers. The Company provides deployment, monitoring, troubleshooting, optimization and maintenance of customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary for customers to operate, maintain and efficiently mine digital assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the unaudited interim condensed consolidated financial statements. Basis of Presentation The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The results for the unaudited interim condensed consolidated statements of operations are not necessarily indicative of results to be expected for the year ending December 31, 2026 or for any future interim period. The unaudited interim condensed consolidated financial statements do not include all the information and notes required by GAAP for complete financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Use of Estimates The preparation of the Company’s condensed 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 in 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; therefore, actual results could differ from management’s estimates. 11 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include all cash balances and highly liquid investments, including money market funds, with original maturities of three months or less from the date of acquisition. As of March 31, 2026 and December 31, 2025 , substantially all cash and cash equivalents exceeded Federal Deposit Insurance Corporation insured limits. Restricted cash as of March 31, 2026 , consisted of funds held in escrow in connection with utility and other contractual arrangements. Digital Assets 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 three months ended March 31, 2026 and 2025 (in thousands): March 31, 2026 March 31, 2025 Digital assets, beginning of period $ 222,000 $ 23,893 Digital asset self-mining revenue, net of receivables 1 30,119 67,441 Proceeds from sales of digital assets and shared hosting ( 208,249 ) — Decrease in fair value of digital assets ( 6,558 ) ( 10,688 ) Digital assets, end of period $ 37,312 $ 80,646 1 As of March 31, 2026 , and December 31, 2025 , there was $ 0.3 million and $ 0.4 million , respectively, of digital asset receivable included in Customer funding receivable and other current assets on the Company’s condensed consolidated balance sheets. The following table presents the Company’s bitcoin holdings (in thousands, except for quantity) : Quantity Cost Basis Fair Value March 31, 2026 547 $ 43,725 $ 37,312 December 31, 2025 2,537 $ 254,694 $ 222,000 Property, Plant and Equipment, Net 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. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are capitalized at cost and amortized over the shorter of their estimated useful lives or the lease term. Future obligations related to finance leases are presented as Finance lease liabilities, current portion and Finance lease liabilities, net of current portion in the Company’s condensed consolidated balance sheets. Depreciation expense, including amortization of assets held under finance leases, is primarily included in Cost of revenue in the Company’s condensed 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 and other direct capital project costs. When management decides to abandon long-lived assets before the end of their previously estimated useful life, the Company considers whether an impairment of the related asset group has been triggered. If that asset group is no longer recoverable, an impairment is recognized for any excess of the asset group’s carrying value above its fair value. Thereafter, the estimated useful life, salvage value, and prospective depreciation of the affected assets are revised to reflect their shortened remaining useful life. The historical cost of assets, and related accumulated depreciation, are written off at the time that assets are removed from service. Long-Lived Asset Impairments The Company tests long-lived asset groups for recoverability whenever events or changes in circumstances have occurred that may affect recoverability or the estimated useful lives of long-lived assets. Long-lived assets include property, plant and equipment 12 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements and intangible assets subject to amortization. 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. Deferred Revenue Deferred revenue from colocation services relate to prepaid base license fees for colocation lease arrangements which are accounted for under Accounting Standards Codification (“ASC”) 842, Leases (“ASC Topic 842”) . Prepaid base license fees relate to capital expenditures on colocation facility site development funded by the customer. Deferred revenue from hosted mining services relates to customer contracts for digital asset hosted mining services which are accounted for under ASC 606, Revenue Recognition (“ASC Topic 606”). 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 colocation services. The following table presents a rollforward of deferred revenue for the periods presented (in thousands): Deferred Revenue from Colocation Services Deferred Revenue from Hosted Mining Services Total Deferred Revenue Balance at December 31, 2024 $ 17,785 $ 349 $ 18,134 Revenue recognized that was included in the deferred revenue balance as of the beginning of the year ( 5,124 ) ( 329 ) ( 5,453 ) Base license fee earned, not yet due ( 13,633 ) — ( 13,633 ) Additional customer funding received 554,850 1,953 556,803 Balance at December 31, 2025 $ 553,878 $ 1,973 $ 555,851 Revenue recognized that was included in the deferred revenue balance as of the beginning of the year ( 22,530 ) ( 1,973 ) ( 24,503 ) Base license fee earned, not yet due ( 8,590 ) — ( 8,590 ) Additional customer funding received 129,952 1,517 131,469 Balance at March 31, 2026 $ 652,710 $ 1,517 $ 654,227 Current portion at March 31, 2026 $ 219,555 Non-current portion at March 31, 2026 $ 434,672 Revenue Recognition - Colocation Revenue The Company’s Colocation segment generates revenue by licensing data center space to customers 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. The Company has elected the practical expedient available under ASC Topic 842, 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 the Company’s current licensing arrangements and the single combined component in these arrangements is accounted for under the operating lease guidance of ASC Topic 842. The Company has concluded that it is probable that substantially all of the payments will be collected over the term of the arrangements and recognizes the total combined component license payments under the agreements on a straight-line basis over the non-cancellable term. The difference between straight-line license revenue and amounts billed or received is recorded as deferred revenue in the condensed 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 13 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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 Colocation revenue in the condensed consolidated statements of operations . Revenue From Contracts With Customers - Digital Asset Self-Mining Revenue The Company recognizes revenue in accordance with ASC Topic 606. One of the Company’s ongoing major or central operations is to provide hash calculations to third-party pool operators as a participant in mining pools. The Company considers the third-party mining pool operators to be its customers under ASC Topic 606. Contract inception and the Company’s enforceable right to consideration begin when the Company commences providing hash calculation services to the mining pool operators. Each party to the contract has the unilateral right to terminate the contract at any time without any compensation to the other party for such termination. As such, the duration of a contract is less than a day and may be continuously renewed multiple times throughout the day. The implied renewal option is not a material right because there are no upfront or incremental fees in the initial contract and the terms, conditions, and compensation amount for the renewal options are at the then market rates. The Company is entitled to non-cash compensation based on the Full-Pay-Per-Share (“FPPS”) model of the mining pool in which it participates. FPPS pools pay block rewards and transaction fees, net of mining pool fees, and participants are entitled to non- cash consideration even if a block is not successfully validated by the mining pool operator. The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a daily 24-hour period beginning 00:00:00 UTC and ending 23:59:59 UTC. The non-cash consideration for providing hash calculations to the pool operator under the FPPS payout method is comprised of block rewards and transaction fees net of pool operator fees, determined as follows: • The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated on the Bitcoin Network for the daily 24-hour period beginning 00:00:00 UTC and ending 23:59:59 UTC in accordance with the following formula: the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin Network’s implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin Network block rewards expected to be generated for the same daily period. • The non-cash consideration in the form of transaction fees paid by transaction requestors is based on the share of total actual fees paid over the daily 24-hour period beginning 00:00:00 UTC and ending 23:59:59 UTC in accordance with the following formula: total actual transaction fees generated on the Bitcoin Network during the 24-hour period as a percent of total block rewards the Bitcoin Network actually generated during the same 24-hour period, multiplied by the block rewards the Company earned for the same 24-hour period noted above. • The block reward and transaction fees earned by the Company are reduced by mining pool fees charged by the operator for operating the pool based on a rate schedule per the mining pool contract. The mining pool fee is only incurred to the extent the Company performs hash calculations and generate revenue in accordance with the pool operator’s payout formula during the same daily 24-hour period. The above non-cash consideration is variable, since the amount of block reward earned depends on the amount of hash calculations the Company performs; the amount of transaction fees the Company is entitled to depends on the actual Bitcoin Network transaction fees over the same 24-hour period; and the operator fees for the same 24-hour period are variable since they are determined based on the total block rewards and transaction fees in accordance with the pool operator’s agreement. The Company estimates variable consideration at contract inception and includes amounts for which it is probable that a significant reversal in the amount of revenue recognized will not occur when the uncertainty is subsequently resolved. The Company recognizes the non-cash consideration on the same day that control is transferred of the underlying bitcoin, which is the same day as contract inception. 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. 14 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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 - Digital Asset Hosted Mining Services The Company generates revenue from contracts with customers from digital asset hosted mining services. The Company recognizes revenue when the promised service is performed. Revenue excludes any amounts collected on behalf of third parties, including sales and indirect taxes. Hosting Services The Company regularly enters contracts that include hosting services, for which revenue is recognized as services are performed on a variable basis. The Company performs hosting services that enable customers to run blockchain and other HPC operations. The Company’s performance obligation related to these services is satisfied over time. The Company recognizes revenue for services that are performed on a consumption basis, such as the amount of electricity used in a period, based on the customer’s use of such resources. The Company recognizes variable consumption usage hosting revenue each month as the uncertainty related to the consideration is resolved, hosting services are provided to the Company’s customers, and its customers utilize the hosting services (the customer simultaneously receives and consumes the benefits of the Company’s performance). The Company generally bills its customers in advance based on estimated consumption under the contract. The Company recognizes revenue based on actual consumption in the period and invoices adjustments in subsequent periods or retains credits toward future consumption. The term between invoicing and when payment is due typically does not exceed 30 days . Stock-Based Compensation The Company grants performance and market conditioned restricted stock units (“PSUs”) to certain executives as part of its long-term equity compensation program. Each PSU has service conditions and either market or performance conditions that are subject to respective graded vesting schedules. Each tranche in the respective graded vesting schedule is a separate award for accounting purposes and the Company applies the accelerated attribution method to recognize compensation expense. Compensation expense is recognized over the longer of the explicit service period or the performance measurement period of each tranche. PSU tranches with market conditions, such as the relative total shareholder return (“RTSR”) metric, are measured on the grant date using a Monte Carlo simulation model. PSU tranches with performance conditions are measured using the grant date fair value of the Company’s common stock and are expensed only when the performance condition is deemed probable of achievement. The Company reassesses the probability of achieving performance conditions at each reporting date and adjusts for actual forfeitures as they occur. Recently Adopted Accounting Standards In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”), which clarifies the accounting for certain settlements of convertible debt instruments as induced conversions versus extinguishments. The guidance is effective for fiscal years beginning after December 15, 2025. The Company adopted ASU 2024-04 as of January 1, 2026, and will apply the guidance prospectively. The adoption of ASU 2024-04 did not have a material impact on the Company’s consolidated financial statements and related disclosures. Accounting Standards Not Yet Adopted 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. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 for all public business entities. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied prospectively; retrospective application is also permitted. The Company is currently evaluating the impact these ASUs will have on its consolidated financial statements and related disclosures. 15 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 3. PROPERTY, PLANT, AND EQUIPMENT Property, plant and equipment, net as of March 31, 2026 and December 31, 2025 consist of the following (in thousands): March 31, 2026 December 31, 2025 Estimated Useful Lives Land and improvements 1 $ 74,906 $ 21,769 20 years Building and improvements 295,367 275,186 10 to 39 years Mining equipment 314,357 393,623 3 years Electrical and mechanical equipment 91,015 80,384 15 years Other property, plant and equipment 16,178 18,164 5 to 7 years Total 791,823 789,126 Less: accumulated depreciation and amortization 372,193 406,893 Total 419,630 382,233 Add: Construction in progress 925,294 911,066 $ 1,344,924 $ 1,293,299 1 Estimated useful life of improvements. Land is not depreciated. Depreciation expense for the three months ended March 31, 2026 and 2025 was $ 16.4 million and $ 19.5 million , respectively . During the three months ended March 31, 2026 and 2025 , $ 140.5 million and $ 1.6 million , respectively, of construction in progress was placed into service. As of March 31, 2026 and December 31, 2025, property, plant and equipment, net being leased to customers consisted of the following (in thousands): March 31, 2026 December 31, 2025 Land and improvements $ 63,809 $ 5,546 Building and improvements 261,208 146,082 Electrical and mechanical equipment 41,735 19,146 Other property, plant and equipment 224 226 Total 366,976 171,000 Less: accumulated depreciation and amortization 11,502 9,856 Property, plant and equipment, net leased to customers $ 355,475 $ 161,144 Depreciation expense for assets leased to customers for the three months ended March 31, 2026 , was $ 2.6 million . There were no assets leased to customer for the three months ended March 31, 2025 . During the three months ended March 31, 2026, the Company identified indicators of impairment of its mining equipment and mining infrastructure asset groups, including sustained declines in bitcoin prices, declines in bitcoin hashprice, and significant decreases in secondary market values for digital asset mining equipment. As a result, the Company performed a recoverability assessment of its mining-related asset groups in accordance with ASC Topic 360-10. The undiscounted future cash flows for each asset group was less than its carrying amount, indicating the assets were not recoverable. The Company measured the fair value of its mining equipment using a market approach based on observable secondary market pricing data for similar assets. The Company measured the fair value of its mining infrastructure assets using an income approach based on a discounted cash flow analysis reflecting the estimated future cash flows a market participant would expect from operating the assets as mining hosting facilities. During the three months ended March 31, 2026 , the Company recognized impairment charges of $ 266.5 million , consisting of $ 151.6 million related to mining equipment and $ 114.9 million related to mining infrastructure, which are included in Impairment of 16 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements property, plant and equipment in the condensed consolidated statements of operations. No impairment charges were recognized during the three months ended March 31, 2025 . 4. BALANCE SHEET COMPONENTS Customer funding receivable and other current assets as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands): March 31, 2026 December 31, 2025 Customer funding receivable $ 315,667 $ 337,158 Other 36,461 25,001 Total customer funding receivable and other current assets $ 352,128 $ 362,159 Customer funding receivable represents amounts due from the Company’s customer for construction-related payables and accrued expenses incurred on their behalf. The Company collects these amounts from the customer prior to payment to vendor s. Obligations related to customer items are paid soon after reimbursement. As of March 31, 2026 , $ 187.7 million of the related obligations were included in accrued expenses and $ 128.0 million were included in accounts payable, compared with $ 290.6 million in accrued expenses and $ 46.6 million in accounts payable as of December 31, 2025 . Accrued expenses as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands): March 31, 2026 December 31, 2025 Accrued customer funded construction $ 193,669 $ 290,603 Accrued capital expenditures 118,681 197,888 Other 52,129 23,466 Total accrued expenses $ 364,479 $ 511,957 Other noncurrent liabilities as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands): March 31, 2026 December 31, 2025 Operating lease liabilities, net of current portion $ 86,181 $ 89,011 Customer security deposit, net of current portion 11,040 11,040 Other 3,428 4,210 Total other noncurrent liabilities $ 100,649 $ 104,261 17 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 5. LEASES Lessee Accounting The components of operating and finance leases are presented on the Company’s condensed consolidated balance sheets as follows (in thousands): Financial statement line item March 31, 2026 December 31, 2025 Assets: Operating lease right-of-use assets Operating lease right-of-use assets $ 105,986 $ 108,484 Finance lease right-of-use assets Other noncurrent assets $ 1,748 $ 1,843 Liabilities: Operating lease liabilities, current portion Other current liabilities $ 12,873 $ 12,343 Operating lease liabilities, net of current portion Other noncurrent liabilities $ 86,181 $ 89,011 Finance lease liabilities, current portion Other current liabilities $ — $ — Finance lease liabilities, net of current portion Other noncurrent liabilities $ 860 $ 844 The components of lease expense were as follows (in thousands): Three Months Ended March 31, Financial statement line item 2026 2025 Operating lease expense Cost of colocation services $ 3,786 $ 3,407 Operating lease expense Cost of digital asset self-mining 102 85 Operating lease expense Cost of digital asset hosted mining services 12 5 Operating lease expense Selling, general and administrative 163 1,207 Short-term lease expense Cost of digital asset self-mining 142 286 Variable lease expense Cost of colocation services 385 269 Finance lease expense: Amortization of right-of-use assets Cost of digital asset self-mining 95 226 Interest on lease liabilities Interest expense, net 16 49 Total finance lease expense 111 275 Total lease expense $ 4,701 $ 5,534 Information relating to the lease term and discount rate is as follows: March 31, 2026 March 31, 2025 Weighted Average Remaining Lease Term (Years) Operating leases 7.3 8.3 Finance leases 4.7 0.5 Weighted Average Discount Rate Operating leases 8.5 % 8.5 % Finance leases 7.4 % 12.6 % 18 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Information relating to lease payments is as follows (in thousands): Three Months Ended March 31, 2026 2025 Lease Payments Operating cash flows from operating leases $ 5,058 $ 3,052 Operating cash flows from finance leases $ 5 $ 40 Financing cash flows from finance leases $ 1,095 $ 509 Supplemental Noncash Information Operating lease right-of-use assets obtained in exchange for lease obligations $ 1,988 $ — Decrease in operating right-of-use assets due to lease modification $ — $ ( 593 ) Decrease in operating right-of-use assets due to termination $ ( 1,318 ) $ — The Company’s minimum payments under noncancelable operating and finance leases having terms in excess of one year are as follows at March 31, 2026 , and thereafter (in thousands) : Operating Leases Finance Leases Remaining 2026 $ 15,418 $ — 2027 20,926 — 2028 21,215 257 2029 20,938 440 2030 21,079 403 Thereafter 33,239 — Total lease payments 132,815 1,100 Less: imputed interest 33,761 240 Total $ 99,054 $ 860 Lessor Accounting We generate revenue by leasing property to a customer under licensing agreements. The manner in which the Company recognizes these transactions in its financial statements is described in Note 2 — Summary of Significant Accounting Policies , Revenue Recognition — Colocation Segment . The components of lease revenue were as follows (in thousands): Three Months Ended March 31, 2026 2025 Lease Revenue Operating lease revenue $ 59,196 $ 5,995 Variable lease revenue 10,219 2,578 Total lease revenue $ 69,415 $ 8,573 19 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following table represents the maturity analysis of operating lease payments expected to be received at March 31, 2026 , and thereafter (in thousands): Operating Leases 1 Remaining 2026 $ 111,933 2027 153,848 2028 231,487 2029 302,930 2030 313,402 Thereafter 2,277,488 Total $ 3,391,088 1 O perating lease payments expected to be received exclude $ 5.8 billion in total future noncancellable operating lease payments expected to be received for operating leases that have not yet commenced as of March 31, 2026 , which have initial lease terms of 12 years from commencement. 6. DEBT Debt as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands): Stated Interest Rate Effective Interest Rates Maturities March 31, 2026 December 31, 2025 Term Loan Facility 1 6.2 % 6.9 % 2027 $ 1,000,000 $ — 2029 Convertible Notes 3.0 % 3.7 % 2029 460,000 460,000 2031 Convertible Notes — % 0.4 % 2031 625,000 625,000 Notes payable 2,085,000 1,085,000 Less: Unamortized discounts 29,405 24,675 Total notes payable, net 2,055,595 1,060,325 Less: current portion 993,944 — Convertible and other notes payable, net of current portion $ 1,061,651 $ 1,060,325 1 Interest rate is variable and resets monthly based on SOFR plus an applicable margin of 2.50 % per annum. As of March 31, 2026, the stated rate was 6.2 % and the effective interest rate was 6.9 % , which includes the amortization of debt issuance costs. Interest expense on the Company’s debt was as follows (in thousands): Three Months Ended March 31, 2026 2025 Coupon interest $ 6,810 $ 3,450 Amortization of debt discount and issuance costs 1,675 1,297 Interest incurred 8,485 4,747 Less: Capitalized interest ( 325 ) — Interest expense $ 8,160 $ 4,747 20 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Maturities on debt, gross of unamortized discounts, as of March 31, 2026, are as follows (in thousands): Convertible Notes Term Loan Facility Remaining 2026 $ — $ — 2027 — 1,000,000 2028 — — 2029 460,000 — 2030 — — Thereafter 625,000 — Total $ 1,085,000 $ 1,000,000 Convertible Notes On August 19, 2024, the Company issued $ 460.0 million in aggregate principal amount of 3.00 % Convertible Senior Notes due 2029 (t he “2029 Convertible Notes”). The 2029 Convertible Notes mature on September 1, 2029, unless earlier converted, redeemed or repurchased. The 2029 Convertible Notes are convertible at the option of the holders only upon the occurrence of certain events, including if the Company's common stock price exceeds 130 % of the conversion price (approximately $ 14.30 per share, based on the initial conversion price of approximately $ 11.00 per share) for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter. The stock price conversion condition for the 2029 Convertible Notes was first satisfied during the fourth quarter of 2025. As a result, the 2029 Convertible Notes were convertible at the option of the holders during the three months ended March 31, 2026 . No holders elected to convert during the period. This condition was also satisfied during the first quarter of 2026, and accordingly, the 2029 Convertible Notes remain convertible during the second quarter of 2026. 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. The 2031 Convertible Notes are convertible at the option of the holders only upon the occurrence of certain events, including if the Company’s common stock price exceeds 130 % of the conversion price (approximately $ 29.24 per share, based on the initial conversion price of approximately $ 22.49 per share) for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter. The stock price conversion condition for the 2031 Convertible Notes was not satisfied during any measurement period through March 31, 2026. Term Loan Facility On March 4, 2026, the Company entered into a loan facility Credit Agreement (the “Credit Agreement”) with the lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent (“MSSF”). The Credit Agreement provides for a senior secured loan facility (the “Term Loan Facility”) in an aggregate principal amount of $ 500.0 million , with an accordion feature that allowed up to an additional $ 500.0 million . The Company borrowed the full $ 500.0 million initially available on March 5, 2026. On March 18, 2026, the Company entered into Amendment No. 1 to the Credit Agreement (the “Incremental Amendment”) with MSSF and JPMorgan Chase Bank, N.A. as Amendment No. 1 Term Lender, which amended the Credit Agreement to increase the term loan commitments by $ 500.0 million , to $ 1.0 billion , pursuant to the accordion feature of the Credit Agreement. The Company borrowed the full $ 500.0 million incremental commitment on March 18, 2026. Loans under the Term Loan Facility bear interest at Term Secured Overnight Financing Rate (“SOFR”) (subject to a 0 % floor) plus an applicable margin of 2.50 % per annum. The Term Loan Facility matures 364 days after the closing date. The Company’s obligations are guaranteed by certain direct or indirect, wholly owned material domestic subsidiaries and secured by a first-priority lien on substantially all assets of the Company and the guarantors. As of March 31, 2026, $ 1.0 billion was outstanding under the Term Loan Facility. In connection with the Credit Agreement and the Incremental Amendment, the Company incurred approximately $ 6.4 million of debt issuance cost s, which are being amortized over the term of the Term Loan Facility. Secured Notes Offering On April 22, 2026, the Company's indirect wholly-owned subsidiary, Core Scientific Finance I LLC (“Core Scientific Finance”), priced a private offering of $ 3.30 billion aggregate principal amount of 7.75 % senior secured notes due 2031 at an issue price of 99.25 % of the principal amount. Core Scientific Finance used the net proceeds from the offering to fund a debt service reserve account, and the remaining proceeds to make a distribution to the Company, a portion of which the Company used to repay in full the 21 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements outstanding borrowings under the Term Loan Facility, including accrued interest thereon and fees and expenses in connection therewith. The offering closed on May 6, 2026. Upon such repayment, the Company terminated the Term Loan Facility. 7. WARRANT LIABILITIES On January 23, 2024 , 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 common stock at an exercise price of $ 6.81 per share (the “Tranche 1 Warrants”), and 81,927,898 warrants, each exercisable for one share of common stock at an exercise price of $ 0.01 per share (the “Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”). The Tranche 1 Warrants expire on January 23, 2027, and the Tranche 2 Warrants expire on January 23, 2029. During the three months ended March 31, 2026 , nominal Tranche 1 Warrants were exercised, which resulted in cash receipts of $ 0.1 million . As of March 31, 2026 , there were 96.7 million unexercised Tranche 1 Warrants. During the three months ended March 31, 2026 , 0.4 million Tranche 2 Warrants were exercised, which resulted in immaterial cash receipts. As of March 31, 2026 , there were 7.8 million unexercised Tranche 2 Warrants. 8. FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements During the three months ended March 31, 2026 and 2025 , a decrease of $ 1.0 million and an increase of $ 12.8 million , in fair value of CVRs, respectively, was included in Change in fair value of warrants and contingent value rights in the Company’s condensed consolidated statements of operations. During the three months ended March 31, 2026 and 2025 , an increase of $ 31.8 million and a decrease of $ 634.3 million , in fair value of Warrants, respectively, was included in Change in fair value of warrants and contingent value rights in the Company’s condensed 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 March 31, 2026 (in thousands): Fair Value Hierarchy Level 1 Level 2 Level 3 Fair value Assets: Cash and cash equivalents Money market funds $ 1,000,384 $ — $ — $ 1,000,384 Digital assets 37,312 — — 37,312 Total assets measured at fair value on a recurring basis $ 1,037,696 $ — $ — $ 1,037,696 Liabilities: Contingent value rights 1 $ 2,330 $ — $ — $ 2,330 Warrant liabilities, current portion 844,752 844,752 Warrant liabilities, net of current portion 116,495 — — 116,495 Total liabilities measured at fair value on a recurring basis $ 963,577 $ — $ — $ 963,577 1 The fair value of contingent value rights is included within Other current liabilities and Other noncurrent liabilities on the Company’s condensed consolidated balance sheets, based on the expected timing of settlement. 22 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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, 2025 (in thousands): Fair Value Hierarchy Level 1 Level 2 Level 3 Fair value Assets: Cash and cash equivalents Money market funds $ 267,721 $ — $ — $ 267,721 Digital assets 222,000 — — 222,000 Total assets measured at fair value on a recurring basis $ 489,721 $ — $ — $ 489,721 Liabilities: Contingent value rights 1 $ 3,366 $ — $ — $ 3,366 Warrant liabilities, net of current portion 936,107 — — 936,107 Total liabilities measured at fair value on a recurring basis $ 939,473 $ — $ — $ 939,473 1 The fair value of contingent value rights is included within Other current liabilities and Other noncurrent liabilities on the Company’s condensed consolidated balance sheets, based on the expected timing of settlement. Financial Instruments Not Carried at Fair Value The Convertible Notes are recorded at amortized cost in the condensed consolidated balance sheets. The fair value is disclosed for informational purposes only in accordance with ASC Topic 825-10, Financial Instruments, and is determined using trading activity in over-the-counter markets. The following tables present the carrying amounts and estimated fair values of the Convertible Notes as of March 31, 2026 and December 31, 2025 (in thousands): March 31, 2026 Carrying Amount Fair Value Fair Value Hierarchy 3.00 % Convertible Senior Notes due 2029 $ 460,000 $ 738,262 Level 1 0.00 % Convertible Senior Notes due 2031 $ 625,000 $ 686,413 Level 1 December 31, 2025 Carrying Amount Fair Value Fair Value Hierarchy 3.00 % Convertible Senior Notes due 2029 $ 460,000 $ 718,609 Level 1 0.00 % Convertible Senior Notes due 2031 $ 625,000 $ 657,735 Level 1 Nonrecurring Fair Value Measurements The Company measures certain non-financial assets at fair value on a nonrecurring basis when events or circumstances indicate that the carrying amount may not be recoverable. During the three months ended March 31, 2026 , the Company measured the fair value of its mining-related long-lived asset groups in connection with the impairment charges described in Note 3 — Property, Plant, and Equipment . 23 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following table presents the fair value of assets measured on a nonrecurring basis during the three months ended March 31, 2026 (in thousands): Level 1 Level 2 Level 3 Fair value Mining equipment $ — $ 30,564 $ — $ 30,564 Mining infrastructure $ — $ — $ 42,772 $ 42,772 The fair value of mining equipment was determined using a market approach based on observable pricing from published secondary market indices for digital asset mining hardware, classified as Level 2 within the fair value hierarchy. The fair value of mining infrastructure was determined using an income approach based on a discounted cash flow analysis of a hypothetical colocation hosting arrangement, classified as Level 3 within the fair value hierarchy. The following table presents the significant unobservable inputs used in the Level 3 measurement: Significant Unobservable Input Value Discount rate 15 % - 18 % Hosting rate ($/kW) $ 2.25 - $ 2.50 Projection period 10 years The Company’s financial instruments, which 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, debt and certain accrued expenses and other liabilities. Except for the 2029 Convertible Notes and 2031 Convertible Notes , the carrying amounts of these financial instruments materially approximate their fair values. 9. COMMITMENTS AND CONTINGENCIES Commitments As of March 31, 2026 , the Company had approximately $ 1.47 billion of expected future cash expenditures under its outstanding purchase and construction commitments, primarily related to infrastructure development costs, power utility deposits, equipment procurement, and labor. These commitments relate to the remaining build out at existing customer conversion sites, and new greenfield development undertaken for prospective customers. Of this amount, $ 434.0 million will be passed through to the Company’s customer as invoiced. Substantially all of these expenditures are expected to occur within the next 12 months. The Company routinely engages with construction vendors for the construction of its facilities. These engagements are governed by contracts containing standard terms and conditions, including certain milestones that obligate the Company to pay as work is completed. In the event of termination of any of these contracts by the Company, the Company would be liable for all work that has been completed or is in process, plus any applicable fees. The Company generally has the right to cancel open purchase orders prior to delivery or terminate the contracts without cause. 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. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued and could materially adversely affect the Company’s business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, the Company is unable to estimate reasonably possible losses in excess of any amounts accrued. Purported Shareholder Class Action (“Pang”) On November 14, 2022, Plaintiff Mei Pang filed a purported class-action complaint against Core Scientific, Inc., its former chief executive officer, Michael Levitt, and others in the United States District Court, Western District (Austin) of Texas asserting that the Company violated the Securities Act and Exchange Act by allegedly failing to disclose to investors that among other things the 24 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Company was vulnerable to litigation given its decision to pass power costs to its customers, that certain clients had breached their contracts, and that this impacted the Company’s profitability and ability to continue as a going concern. The complaint seeks monetary damages. Core filed a notice of suggestion of bankruptcy stating that its petition for bankruptcy—filed on December 21, 2022— operates as a stay to the continuation of this matter. 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. 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; and denied plaintiff’s Motion for Class Treatment under Fed. R. Bankr. P. 7023. No individual proof of claim was filed by any of the class representatives of the purported class action by December 20, 2023, and a separately filed objection to confirmation of Debtors’ Fourth Amended Chapter 11 Plan and Disclosure Statement was overruled by the Bankruptcy Court on January 16, 2024. On January 29, 2024, plaintiff filed a notice of appeal of the order confirming the Company’s Plan of Reorganization. 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. On March 7, 2025, the United States District Court for the Western District (Austin) of Texas referred Plaintiff's complaint to the United States Bankruptcy Court for the Southern District of Texas in Houston for determination of the issues raised by the Company's motion to dismiss, dismissed without prejudice Company's motion to dismiss as moot and administratively closed the case. On March 19, 2025, the United States Bankruptcy Court Southern District of Texas Houston Division dismissed Plaintiff's appeal of the order confirming the Company's Plan of Reorganization as it related to the Plaintiffs as moot in light of the administrative closure of the securities case brought by the Plaintiffs in the United States District Court Western District of Texas. On April 2, 2025, the Plaintiff's filed a Motion for Reconsideration of the orders entered in each of the United States District Court for the Southern District of Texas Houston Division and the United States District Court for the Western District of Texas (Austin) each of which was denied and as to which Plaintiff has appealed. Shareholder Class Action (“Ihle”) On July 24, 2023, Plaintiff Brad Ihle filed a 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 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. The matter was settled during the quarter ended December 31, 2025, with the Company’s payment in satisfaction of its existing indemnification obligation. This payment is reflected in the Loss on legal settlements in the Company’s condensed consolidated statements of operations. Patent Infringement Claim Malikie Innovations Ltd and Key Patents Innovations Ltd. (“Malikie”), filed suit in the United States District Court Eastern District of Texas Marshall Division against Core Scientific, Inc. (the “Company”) alleging infringement in the Company’s bitcoin mining business of U.S. Patent Nos. 8,788,827; 10,284,370; 8,666,062; 7,372,960; and 8,532,286. On July 20, 2025 the Company filed a motion to dismiss the claims on the basis that the patents are invalid under 35 U.S.C §101 and on July 25, 2025 the Company filed a motion to transfer the case to the United States District Court for the Western District of Texas (Austin). On November 14, 2025 Malikie filed a motion to amend the complaint to add allegations of infringement of U.S. Patent No. 8,712,039 by the Company’s bitcoin mining business and its HPC business. Malikie also asserted infringement of the previously asserted 8,532,286 patent against the Company’s HPC business. All motions are pending. The court set a trial date of January 25, 2027. Leases —See Note 5 — Leases for additional information. 25 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 10. INCOME TAXES 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. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized. The income tax expense and effective income tax rate for the three months ended March 31, 2026 and 2025 were as follows: Three Months Ended March 31, 2026 2025 (in thousands, except percentages) Income tax expense $ 600 $ 205 Effective income tax rate ( 0.2 ) % — % For the three months ended March 31, 2026 , the Company recorded $ 0.6 million of income tax expense which consisted of discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is ( 0.2 )% , compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance ( 17.5 )% , state taxes 0.7 % , non-deductible loss on warrant and contingent liabilities ( 3.2 )% and other items ( 1.2 )% . The Company has a full valuation allowance on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset. For the three months ended March 31, 2025 , the Company recorded $ 0.2 million of income tax expense which consisted of discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0 % , compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance 2.8 % , state taxes ( 0.1 )% , non-deductible loss on warrant and contingent liabilities ( 24.6 )% and other items 0.9 % . The Company has a full valuation allowance on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset. 11. STOCK-BASED COMPENSATION Incentive Plan The Company adopted an equity-based management incentive plan on April 26, 2024 (the “Incentive Plan”), which was amended and restated on May 12, 2025 to increase the number of shares authorized for issuance from 40,000,000 to 48,000,000 . Under the Incentive Plan, certain executives have been granted market condition restricted stock units (“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: Share Price Goal Incremental Units Tranche Cumulative Units December 31, 2026 Vesting: $ 3.14 142,049 142,049 $ 5.00 142,049 284,099 $ 8.00 142,049 426,148 $ 10.00 142,049 568,197 $ 12.00 142,049 710,247 $ 14.00 142,049 852,296 26 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Performance Share Units In April 2025, the Company granted PSUs to certain executive officers under the Incentive Plan. The PSUs are eligible to vest in three equal installments on April 15, 2026, March 15, 2027, and March 15, 2028, subject to satisfaction of the service condition and the achievement of three separate market or performance conditions during the respective performance measurement period (for a total of nine tranches). The performance measurement period is generally the calendar year preceding each vesting date. The number of shares earned at each vesting date range from 0 % to 300 % of target based on measures of satisfaction of the market or performance condition for each tranch e. Market conditions include RTSR metric, which is a measure of the performance of the Company’s own stock relative to the Russell 2000. Performance conditions include aggregate energized MW growth and colocation customer acquisition targets. Stock-Based Compensation Restricted Stock Units — RSUs granted in 2026 and 2025 generally vest over a 3 -year service period. Market Condition Restricted Stock Units — See “ Incentive Plan ” above for the vesting conditions of the MSUs. A summary of RSU, MSU and PSU activity for the three months ended March 31, 2026 , is as follows (amounts in thousands, except per share amounts) : Restricted Stock Units Market Condition Restricted Stock Units Performance Restricted Stock Units Number of Shares Weighted- Average Grant Date Fair Value Number of Shares Weighted- Average Grant Date Fair Value Number of Shares Weighted- Average Grant Date Fair Value Unvested - January 1, 2026 13,270 $ 8.58 844 $ 6.14 5,519 $ 11.57 Granted 928 16.36 8 3.99 — — Performance adjustment — — — — ( 1,472 ) 11.57 Vested ( 1,846 ) 9.99 — — ( 1,840 ) 15.71 Forfeited ( 77 ) 7.11 — — — Unvested - March 31, 2026 12,275 $ 8.90 852 $ 6.14 2,207 $ 13.18 As of March 31, 2026 , unrecognized compensation cost and the related weighted-average period over which the cost is expected to be recognized for each award type were as follows (in thousands): Unrecognized Compensation Cost Weighted-Average Recognition Period RSUs $ 91,517 1.9 years PSUs 18,178 2.0 years MSUs 1,485 0.8 years Total $ 111,180 27 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Stock-based compensation expense for the three months ended March 31, 2026 and 2025 , is included in the Company’s condensed consolidated statements of operations as follows (in thousands): Three Months Ended March 31, 2026 2025 Cost of revenue $ 853 $ 1,382 Colocation organizational and site startup costs 4,224 — Selling, general and administrative 12,684 14,803 Stock-based compensation expense, net of amounts capitalized 17,761 16,185 Capitalized stock-based compensation 1 626 220 Total stock-based compensation cost $ 18,387 $ 16,405 1 Represents the amounts of stock-based compensation capitalized to property, plant, and equipment. 12. NET (LOSS) INCOME 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 March 31, 2026 , approximately 7.8 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 three months then ended. Additionally, the basic EPS numerator includes an adjustment to eliminate the changes in fair value that have been recognized in net (loss) income. 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 is calculated using the if-converted method. The potentially dilutive effect of options or warrants are computed 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) income per share (in thousands, except per share amounts): Three Months Ended March 31, 2026 2025 Numerator: Net (loss) income $ ( 347,188 ) $ 576,251 Add: Change in fair value of Tranche 2 Warrants 4,750 ( 127,372 ) Basic and diluted net (loss) income $ ( 342,438 ) $ 448,879 Denominator: Weighted average shares outstanding - basic 322,911 315,186 Effect of dilutive securities: Tranche 1 Warrants — 39,232 RSUs, PSUs, and MSUs — 8,896 Weighted average shares outstanding - diluted 322,911 363,314 Net (loss) income per share - basic $ ( 1.06 ) $ 1.42 Net (loss) income per share - diluted $ ( 1.06 ) $ 1.24 28 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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): Three Months Ended March 31, 2026 2025 Convertible Notes 69,611 69,611 RSUs, PSUs, and MSUs 15,334 1,249 Stock options 344 321 Tranche 1 Warrants 96,654 — Total shares issuable from potentially dilutive securities 181,943 71,181 13. SEGMENT REPORTING 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 three operating segments: “Colocation”, consisting of providing high-density colocation services to customers employing AI and HPC related workloads; “Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account; and “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining. The Colocation operation generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis. 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. 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 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 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 expenses from the allocations to operating segments. 29 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands): Three Months Ended March 31, 2026 2025 (in thousands, except percentages) Colocation Segment Colocation revenue: License fees $ 59,195 $ 5,995 Power fees passed through to customer 21,059 2,586 Maintenance and other ( 2,715 ) ( 8 ) Total colocation revenue 77,539 8,573 Cost of colocation services: Power fees passed through to customer 21,059 2,586 Depreciation expense 2,075 67 Employee compensation 2,986 1,295 Facility operations expense 6,755 3,852 Other segment items 743 306 Total cost of colocation services 33,618 8,106 Colocation gross profit $ 43,921 $ 467 Colocation gross margin 57 % 5 % Digital Asset Self-Mining Segment Digital asset self-mining revenue $ 30,105 $ 67,179 Cost of digital asset self-mining: Power fees 27,271 30,319 Depreciation expense 13,909 19,259 Employee compensation 3,527 7,335 Facility operations expense 1,972 3,280 Other segment items 510 977 Total cost of digital asset self-mining 47,189 61,170 Digital Asset Self-Mining gross profit $ ( 17,084 ) $ 6,009 Digital Asset Self-Mining gross margin ( 57 ) % 9 % Digital Asset Hosted Mining Segment Digital asset hosted mining revenue from customers $ 7,600 $ 3,773 Cost of digital asset hosted mining services: Power fees 3,303 1,367 Depreciation expense 306 145 Employee compensation 427 332 Facility operations expense 234 148 Other segment items 61 44 Total cost of digital asset hosted mining services 4,331 2,036 Digital Asset Hosted Mining gross profit $ 3,269 $ 1,737 Digital Asset Hosted Mining gross margin 43 % 46 % Consolidated Consolidated total revenue $ 115,244 $ 79,525 Consolidated cost of revenue $ 85,138 $ 71,312 Consolidated gross profit $ 30,106 $ 8,213 Consolidated gross margin 26 % 10 % 30 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements A reconciliation of the reportable segment gross profit to (loss) income before income taxes included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 , is as follows (in thousands): Three Months Ended March 31, 2026 2025 Reportable segment gross profit $ 30,106 $ 8,213 Decrease in fair value of digital assets 6,558 10,688 Loss on disposal of property, plant and equipment 13,638 6 Impairment of property, plant and equipment 266,488 — Colocation organizational and site startup costs 8,665 11,667 Advisor fees 333 603 Selling, general and administrative 44,846 32,287 Operating loss ( 310,422 ) ( 47,038 ) Non-operating expenses (income), net: Interest expense (income), net 4,857 ( 2,187 ) Change in fair value of warrants and contingent value rights 30,799 ( 621,464 ) Loss on legal settlements 500 — Other non-operating expense, net 10 157 Total non-operating expense (income), net 36,166 ( 623,494 ) (Loss) income before income taxes $ ( 346,588 ) $ 576,456 Concentrations of Revenue and Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Credit risk with respect to accounts receivable is concentrated with a small number of customers. 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 March 31, 2026 and December 31, 2025 , all of the Company’s fixed assets were located in the United States. For the three months ended March 31, 2026 and 2025 , all of the Company’s revenue was generated in the United States. For the three months ended March 31, 2026 and 2025 , 26 % and 84 % , respectively, of the Company’s total revenue was generated from one customer in the Digital Asset Self-Mining segment. For the three months ended March 31, 2026 and 2025, 67 % and 11 % , respectively, of the Company's total revenue was generated from one customer in the Colocation segment. As of March 31, 2026 and December 31, 2025 , substantially all of the Company’s digital assets were held by one third-party digital asset service. 14. SUPPLEMENTAL CASH FLOW AND NONCASH INFORMATION The following table presents supplemental cash flow and non-cash information for the periods presented (in thousands): Three Months Ended March 31, 2026 2025 Supplemental disclosure of other cash flow information: Cash paid for interest $ 6,905 $ 7,822 Income tax (refunds) payments $ ( 1 ) $ 1 Supplemental disclosure of noncash investing and financing activities: Purchases of PP&E in accounts payable and accrued expense $ 205,232 $ 48,668 Noncash exercise of warrants $ 483 $ 18,776 Noncash asset retirement obligation addition $ 976 $ — 31 Core Scientific, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 15. SUBSEQUENT EVENTS Hunt County Acquisition On May 5, 2026, the Company completed its acquisition of 100 % of the membership interests of Telios Quinlan One, LLC, a Delaware limited liability company that owns approximately 260 acres of land in Hunt County, Texas, together with a related electric service agreement with Farmers Electric Cooperative, Inc. for an approximately 430 MW project, which the Company intends to develop as a future data center site. The aggregate purchase price was approximately $ 232.5 million in cash, of which a $ 2.0 million deposit was paid in January 2026 and is included in Other current assets on the condensed consolidated balance sheet as of March 31, 2026. In January 2026, in connection with the related electric service agreement, the Company posted $ 33.0 million of cash collateral to Farmers Electric Cooperative, Inc., which is included in Other noncurrent assets on the condensed consolidated balance sheet as of March 31, 2026. Polaris DS LLC Merger Agreement On May 5, 2026, the Company entered into an Agreement and Plan of Merger to acquire Polaris DS LLC, which owns an approximately 40 -acre site adjacent to the Company's existing Muskogee, Oklahoma data center operations and electric service agreements providing for up to 440 MW of gross utility power capacity. The aggregate purchase price is approximately $ 421 million in cash, subject to customary adjustments and certain contingent payments. Concurrently with execution, the Company deposited an additional $ 60 million into the existing escrow account, bringing the total deposit (recorded in restricted cash) to $ 120 million , which will be applied to the purchase price at closing. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2026. 32