Core Scientific, Inc./tx 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” “Core Scientific,” or “Core” refer to Core Scientific, Inc. and its subsidiaries. The following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to promote understanding of the results of operations and financial condition of the Company. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes to unaudited condensed financial statements (Part I, Item 1 of this Form 10-Q) as well as the financial and other information included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 2, 2026. This section generally discusses the results of operations for the three months ended March 31, 2026 , compared to March 31, 2025 . As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 2, 2026. Overview Core Scientific, Inc. (“we,” “us,” “our,” the “Company,” “Core Scientific,” or “Core”) designs, builds and operates large-scale purpose-built data centers that support high-density colocation services and digital asset mining for both our own account and to a lesser extent, third-party customers. Our data centers are optimized for power-intensive, mission-critical computing workloads, with a focus on artificial intelligence (“AI”) and other high-performance computing (“HPC”) applications. In 2024, we announced our first high-density colocation contract with CoreWeave, Inc. (“CoreWeave), a provider of HPC services, which was subsequently expanded to 590 megawatts (“MW”) of leased customer power capacity over the exercise of several contractual options. We believe leveraging our existing infrastructure for high-density colocation services will provide more stable and predictable revenue streams and represents substantially less risk over time than our traditional hosted bitcoin mining or self-mining operations. We are constructing, refurbishing, reallocating or converting our 11 facilities in Alabama (1), Georgia (2), Kentucky (1), North Carolina (1), North Dakota (1), Oklahoma (1), and Texas (4) to support artificial intelligence related workloads, in support of our existing colocation customer, but also to support our commitment to meeting the growing demand for high-density colocation solutions and diversifying our customer base. This will be done as circumstances allow and, in a manner, designed to retain access to electrical power under our control, maximize the value of our digital asset mining equipment to third parties, and fulfill existing obligations to suppliers and customers .   In addition to converting our existing portfolio, we are actively pursuing the acquisition of new sites, including land and power capacity, to expand our data center footprint beyond our current facilities. We will continue to mine digital assets and manage our self-mining fleet with a focus on power expense coverage and cash generation while we convert our data centers for alternative high-density colocation service business opportunities. We expect to increase revenue derived from high-density colocation (“HDC”) services as capacity gets delivered to our current end customer as well as when we sign and begin generating revenue from new colocation customers. As of March 31, 2026, we operated a diversified portfolio of ten data centers across seven U.S. states, representing approximately 1.9 gigawatts (“GW”) of gross utility power capacity, or approximately 1.3 G W of total leasable customer power capacity. We continue to be in active discussions with both our existing and future potential utility providers regarding additional power allocations. For the three months ended March 31, 2026 , total revenue increased to $115.2 million from $79.5 million for the prior period, primarily due to higher colocation revenue from incremental billable customer power capacity, partially offset by lower digital asset self-mining revenue driven by reduced bitcoin production and lower average bitcoin prices. Operating loss was $310.4 million for the three months ended March 31, 2026 , compared to $47.0 million in the prior period, primarily driven by $266.5 million of non-cash impairment charges on mining-related property, plant and equipment. Net loss was $347.2 million during the three months ended March 31, 2026 , compared to net income of $576.3 million in the prior period, and included significant non-cash items, including 33 changes of $30.8 million in the fair value of warrants and contingent value rights. Adjusted EBITDA increased to $4.4 million from $(6.1) million in the prior period. Adjusted EBITDA is a non-GAAP financial measure. See “ Key Business Operating Metrics and Non-GAAP Financial Measures ” below for our definition of, and additional information related to Adjusted EBITDA. Recent Developments Term Loan Facility On March 4, 2026, we entered into a loan facility Credit Agreement (the “Credit Agreement”), by and among us, as borrower, the lenders party thereto from time to time (the “Lenders”) and Morgan Stanley Senior Funding, Inc. (“MSSF”), as administrative agent and collateral agent. The Credit Agreement provides for a senior secured loan facility (the “Term Loan Facility”) in an aggregate principal amount of $500.0 million. The Credit Agreement also provides for an accordion feature that allowed us to request an increase in commitments under the Credit Agreement by up to an additional $500.0 million. Subject to certain customary conditions, we may borrow funds available under the Term Loan Facility, in up to ten separate advances, during the period commencing on May 4, 2026 and ending on the date that is one business day prior to the Maturity Date (as defined below). We borrowed the full $500.0 million initially available under the Credit Agreement on March 5, 2026. On March 18, 2026, we entered into an Amendment No. 1 to the Credit Agreement (the “Incremental Amendment”) with MSSF and JPMorgan Chase Bank, N.A. (“JPM”), as Amendment No. 1 Term Lender, which amends the Credit Agreement to increase the term loan commitments thereunder by $500.0 million, to $1.0 billion total, pursuant to the accordion feature. We borrowed the full $500.0 million incremental commitment on March 18, 2026. The Term Loan Facility will mature, and all obligations thereunder will become due and payable, on March 3, 2027 (the “Maturity Date”). Loans under the Term Loan Facility bear interest at a rate equal to term SOFR (subject to a 0% floor), plus an applicable margin of 2.50% per annum. Our obligations under the Credit Agreement are guaranteed by certain of our direct or indirect, wholly owned material domestic subsidiaries and are secured by a first-priority lien on substantially all our and the guarantors assets. In connection with the offering of $3.3 billion aggregate principal amount of 7.75% senior secured notes due 2031 by our indirect wholly-owned subsidiary, Core Scientific Finance I LLC, as described below, we used a portion of the proceeds from such offering that was distributed to us to repay in full the outstanding borrowings under the Term Loan Facility, including accrued interest thereon and fees and expenses in connection therewith, and upon such repayment, we terminated the Term Loan Facility. Senior Secured Notes Offering On April 22, 2026, our 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 us, a portion of which we used to repay in full the 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. The Notes are guaranteed by each of Core Scientific Austin LLC, Core Scientific Denton LLC, Core Scientific Dalton LLC, Core Scientific Marble LLC and Core Scientific Muskogee LLC, which collectively represent Core Scientific Finance's only subsidiaries (the "Subsidiary Guarantors"). In connection with the Offering, we have commenced a series of restructuring transactions intended to transfer or grant all assets and rights reasonably necessary for the development and operation of specified data center facilities to Core Scientific Finance and the Subsidiary Guarantors. The Notes and related guarantees are secured by first-priority liens on (i) substantially all assets of Core Scientific Finance and the Subsidiary Guarantors, other than certain excluded property, (ii) all equity interests of Core Scientific Finance held by the direct parent of Core Scientific Finance, Core Scientific Finance Holding LLC ("Holdco"), and (iii) certain of our assets and rights to be transferred or granted, as applicable, to Core Scientific Finance and the Subsidiary Guarantors pursuant to the restructuring described above that have not yet been transferred or granted as of the date hereof. 34 In addition, in connection with the issuance of the Secured Notes, we provide a customary, uncapped completion guarantee for the benefit of the holders of the Notes with respect to the completion of the data center development projects. The completion guarantee will require that we provide Core Scientific Finance with funds necessary to ensure the completion of such projects in the event that the proceeds of the offering of Secured Notes and other available funds are insufficient to do so. CoreWeave Special Purpose Vehicle The Company received notice from its counterparty, CoreWeave, Inc., of its intention to enter into assignment and assumption agreements for our Dalton 1 and Denton North Colocation License Agreements and Orders, as amended, ("License Agreements") with a special purpose vehicle that is an indirect subsidiary of CoreWeave, Inc. ("CW SPV"). We understand that CW SPV received certain commitments from a customer sufficient for the debt issued by CW SPV to obtain an investment grade rating. While CoreWeave remains a primary obligor under the terms of the License Agreements, as a result of the assignment and assumption agreements, CW SPV is now the Licensee under the License Agreements. Key Factors Affecting Our Financial Performance Our results of operations, liquidity and cash flows are affected by a number of factors, including (i) our ability to execute our strategic transition toward high‑density colocation services, (ii) bitcoin market conditions and network fundamentals that drive self‑mining economics, (iii) broader macroeconomic and regulatory developments, (iv) power prices and curtailment activity, and (v) the competitive landscape for our industry. The factors below highlight key drivers that have affected, and may continue to affect, our financial performance. Our financial performance depends in part on our ability to operate our self‑mining fleet profitably and, as we transition our business, to execute and expand our colocation operations and attract and retain colocation customers. Increases in power costs, inability to mine digital assets efficiently and to sell digital assets at favorable prices will reduce our operating margins and could have a material near-term adverse effect on our business, financial condition and results of operations. In addition, sustained declines in bitcoin prices or adverse changes in network conditions could reduce cash generated from self‑mining during periods where self‑mining remains a significant contributor to our results. Strategic Transition to High-Density Colocation Services As we grow our Colocation operations over the next several years by converting the remaining bitcoin mining sites and adding new infrastructure and customers, we expect Colocation to represent a larger share of our results and gradually reduce our exposure to bitcoin spot price volatility. The Colocation segment is characterized by the implementation of long-term contracts with customers spanning 10+ years with terms and conditions resulting in stable, predictable revenue and cash flows over each period. The pace of this transition, and the timing of related revenue and cash flows, depends on (i) customer deployment schedules under existing and future contracts and (ii) the timing and cost of converting and commissioning incremental billable customer power capacity. Conversion capital expenditures and timelines are sensitive to equipment lead times and availability, labor constraints, permitting and interconnection sequencing, and supply chain and logistical challenges. Changes in these inputs can affect when incremental capacity becomes billable and therefore may affect the timing of colocation revenue, cost of services and related cash flows. Bitcoin Market Conditions Our Digital Asset Self-Mining segment is heavily dependent on the spot price of bitcoin. The prices of digital assets, specifically bitcoin, have experienced substantial volatility, meaning that high or low prices may have little or no relationship to identifiable market forces, may be subject to rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory developments and enforcement actions. Bitcoin (as well as other digital assets) may have value based on various factors, including their acceptance as a means of exchange by consumers and others, scarcity, and market demand. Changes in the market price of bitcoin can materially affect (i) revenue recognized from self‑mining, (ii) the fair value of digital assets we hold and related gains or losses recognized in our results of operations, and (iii) liquidity to the extent we sell bitcoin as part of our treasury strategy. Bitcoin miners also receive a transaction fee in the form of a portion of bitcoin for validating transactions on the Bitcoin network. The transaction fee can vary in value over time, with higher fees prioritizing certain transactions over those with lower fees. An increase in Bitcoin network transaction fees increases mining proceeds. 35 Higher power costs, lower realized bitcoin prices, or reduced mining efficiency would reduce self-mining margins and cash generation during periods when self-mining remains a significant contributor to our results. As we transition, the timing of colocation conversions and customer deployments, and our ability to execute and scale colocation operations and retain colocation customers, will increasingly influence our revenue mix and profitability. Bitcoin Network Fundamentals Our business is not only impacted by the volatility in digital asset prices and transaction fees, but also by increases in the competition for digital asset production. For bitcoin, this increased competition is described as the network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the bitcoin blockchain, and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Increases in network hash rate generally increase network difficulty over time, which can reduce the amount of bitcoin earned for a given level of deployed hash rate and power consumption. Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires bitcoin miners to upgrade their mining equipment to remain profitable and compete effectively with other miners. Difficulty and network conditions are outside of our control and can materially affect our self‑mining revenue and margins. Tariffs Beginning on February 1, 2025, the United States government announced a series of additional tariffs on goods imported to the United States, raising concerns about material price inflation and delivery delays with respect to equipment and materials needed for our high-density colocation data center conversions and also with respect to parts, machinery and hardware used in our digital asset mining business. During the three months ended March 31, 2026, t ariffs contributed to higher costs for certain equipment and materials procured directly by the Company for non-customer-funded projects. Our agreement with our HDC customer is funded almost entirely by the customer, and our financial contribution is capped at a fixed dollar amount, limiting our exposure to tariff- related cost increases on customer-funded capital expenditures. We could experience additional impacts from tariffs on our results of operations in future periods. We continue to analyze the additional impact of these tariffs on our business and actions we can take to minimize any current and future impact. Sustained or further increases in tariffs on key equipment and materials could affect conversion economics, timelines and/or operating costs, which could affect the timing and profitability of our colocation expansion. Electricity Costs Electricity cost is the major operating cost for our mining fleet, as well as for the hosted mining services provided to customers. The cost and availability of electricity are affected primarily by changes in seasonal demand, with peak demand during the summer months driving higher costs and increased curtailments to support grid operators. Severe winter weather can increase the cost of electricity and the frequency of curtailments when it results in damage to power transmission infrastructure that reduces the grid’s ability to deliver power. Geopolitical and macroeconomic factors, such as overseas military or economic conflict between states, can adversely affect electricity costs by raising the cost of power generation inputs such as natural gas. Other events out of our control can also impact electricity costs and availability. In our self‑mining and hosted mining operations, increases in power prices and/or increased curtailments can materially reduce margins and cash generation. In our colocation operations, power costs are passed through to customers and changes in power prices may increase revenue and cost of colocation services without a corresponding change in gross profit. Our Competition and Customers In addition to factors underlying our mining business growth and profitability, the success of our Colocation business greatly depends on our ability to retain and develop opportunities with our existing customers, secure additional infrastructure and attract new customers. Competition in digital asset mining is driven in part by access to low‑cost power, scale, fleet efficiency and capital availability, and can contribute to increases in network hash rate and difficulty. We face significant competition in every aspect of our business, including, but not limited to, the acquisition of new miners, the ability to raise capital, obtaining low-cost electricity, obtaining access to sites with reliable sources of high power, and evaluating new technology developments in the industry. 36 Based on available data, we believe that an increase in the scale and sophistication of competition in the digital asset mining industry has continued to increase network hash rate, with new entrants and existing competitors increasing the number of miners mining for bitcoin. Despite this trend, our ability to compete in self‑mining will depend on managing fleet efficiency, power costs and capital allocation as we shift resources toward colocation. In our Colocation operations, we compete with other providers of high-power data center capacity, such as major data center real estate investment trusts, developers of data centers, hyperscalers and bitcoin miners with capacity suitable for high-density colocation services. This competition focuses primarily on the identification and acquisition of new, high-power sites, but also includes competition for the capital required to build or modify existing sites to support high-density colocation. Competition in colocation may affect pricing, contract terms, and the pace at which we can secure additional power and sites and therefore may affect revenue growth and required capital expenditures. Regulation We operate in a dynamic regulatory environment. For a discussion of federal, state, and international regulatory developments affecting our digital asset mining and colocation activities, see “Government Regulation” in Part I, Item 1 “Business” section in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 2, 2026. We continue to evaluate whether any such developments present known trends or uncertainties that may materially impact our operations, energy costs, or customer demand. Regulatory developments affecting digital assets, data centers, energy markets and environmental matters could affect compliance costs, power availability and pricing, and customer demand, which could impact our results of operations and liquidity. Key Business Operating Metrics and Non-GAAP Financial Measures In addition to our financial results, we use the following business operating metrics and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. These operating metrics and non‑GAAP financial measures should be considered in addition to, and not as a substitute for, our consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Management also uses the following data center capacity and power metrics (measured in megawatts) to evaluate the scale of our utility power footprint and customer IT load capacity, monitor customer commitments and remaining available capacity, assess commissioning progress and deployment pacing, and inform capital allocation and site planning decisions. Unless otherwise indicated, these metrics are presented as of period end and represent management estimates based on operational and engineering data and may not be comparable to similarly titled measures used by other operators. 37 Metric (MW) Definition How management uses it Gross Utility Power Capacity Total electric utility power capacity agreements associated with our data center sites under our control as of period end, including capacity that is commissioned for future use. Used for portfolio planning and utility power allocation discussions. Total Leasable Customer Power Capacity Our estimate of the total non-redundant customer IT load that our data center sites could support in the aggregate as of period end, regardless of whether such capacity has been contracted with customers or remains available for sale. This metric is representative of the amount of power available for customer use in servicing their workloads. Used to assess total customer‑usable IT load available for leasing, evaluate leased versus unleased capacity, and plan conversion/ development sequencing and sales capacity. Leased Customer Power Capacity Power capacity that is committed to customers under executed customer contracts, regardless of whether service has commenced as of period end. Used to monitor signed customer commitments and contracted backlog and to plan future deployment/commissioning requirements. Unleased Customer Power Capacity The portion of Total Leasable Customer Power not committed under customer contracts as of period end. This metric is calculated as Total Leasable Customer Power minus Leased Customer Power Capacity. Used to monitor remaining uncommitted customer IT load and to prioritize incremental contracting and conversion/commissioning plans. Billable Customer Power Capacity Portion of Leased Customer Power Capacity for which service has commenced and we are actively billing as of period end. Used to monitor in-service customer power that is billing and to track deployment/ commissioning pace and near-term revenue ramp. The following table presents the values for these metrics as of March 31, 2026 and December 31, 2025 (in megawatts). March 31, 2026 December 31, 2025 Gross Utility Power Capacity 1,860 1,426 Total Leasable Customer Power Capacity 1,275 920 Leased Customer Power Capacity 590 590 Unleased Customer Power Capacity 685 330 Billable Customer Power Capacity 225 120 Adjusted EBITDA We report our financial results in accordance with GAAP. To supplement our consolidated financial statements, we provide investors with Adjusted EBITDA, which is a non‑GAAP financial measure. Adjusted EBITDA is defined as our net (loss) income, adjusted to eliminate the effect of (i) interest income, interest expense, and other income (expense), net; (ii) provision for income taxes; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) loss on disposal and impairment of property, plant and equipment; (vi) site demolition costs incurred in connection with the conversion of existing facilities to colocation data center operations; (vii) change in fair value of warrant and contingent value rights; (viii) loss on legal settlements; (ix) post-emergence bankruptcy advisory costs incurred related to reorganization, and (x) certain additional non-cash items that do not reflect the performance of our ongoing business operations. The most directly comparable GAAP measure to Adjusted EBITDA is net (loss) income. For additional information, including a reconciliation of net (loss) income to Adjusted EBITDA, please refer to the table below. We believe Adjusted EBITDA is an important measure because it allows management, investors, and our Board of Directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making the adjustments described above. In addition, it provides useful information to investors and others in understanding and 38 evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business, as it removes the effect of net interest expense, taxes, certain non-cash items, variable charges and timing differences. Moreover, we have included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic and financial planning. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature or because the amount and timing of these items are not related to the current results of our core business operations which renders evaluation of our current performance, comparisons of performance between periods and comparisons of our current performance with our competitors less meaningful. However, you should be aware that when evaluating Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating this measure. Our presentation of this measure should not be construed as an inference that its future results will be unaffected by unusual items. Further, this non-GAAP financial measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We compensate for these limitations by relying primarily on GAAP results and using Adjusted EBITDA on a supplemental basis. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because not all companies calculate this measure in the same fashion. You should review the reconciliation of n et (loss) income to Adjusted EBITDA below and not rely on any single financial measure to evaluate our business. The following table presents a reconciliation of n et (loss) income to Adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands): Three Months Ended March 31, 2026 2025 Adjusted EBITDA Net (loss) income $ (347,188) $ 576,251 Adjustments: Interest expense (income), net 4,857 (2,187) Income tax expense 600 205 Depreciation and amortization 16,553 19,731 Stock-based compensation expense 17,761 16,185 Loss on disposal of property, plant and equipment 13,638 6 Impairment of property, plant and equipment 266,488 — Site conversion demolition costs — 4,442 Change in fair value of warrants and contingent value rights 30,799 (621,464) Loss on legal settlements 500 — Post-emergence bankruptcy advisory costs 317 603 Other 27 157 Adjusted EBITDA $ 4,352 $ (6,071) 39 Results of Operations for the Three Months Ended March 31, 2026 and 2025 The following table sets forth our selected condensed consolidated statements of operations for each of the periods indicated (in thousands). Three Months Ended March 31, 2026 2025 $ Change Revenue: Colocation revenue $ 77,539 $ 8,573 $ 68,966 Digital asset self-mining revenue 30,105 67,179 (37,074) Digital asset hosted mining revenue from customers 7,600 3,773 3,827 Total revenue 115,244 79,525 35,719 Cost of revenue: Cost of colocation services 33,618 8,106 25,512 Cost of digital asset self-mining 47,189 61,170 (13,981) Cost of digital asset hosted mining services 4,331 2,036 2,295 Total cost of revenue 85,138 71,312 13,826 Gross profit 30,106 8,213 21,893 Decrease in fair value of digital assets 6,558 10,688 (4,130) Loss on disposal of property, plant and equipment 13,638 6 13,632 Impairment of property, plant and equipment 266,488 — 266,488 Colocation organizational and site startup costs 8,665 11,667 (3,002) Advisor fees 333 603 (270) Selling, general and administrative 44,846 32,287 12,559 Operating loss (310,422) (47,038) (263,384) Non-operating expense (income), net: Interest expense (income), net 4,857 (2,187) 7,044 Change in fair value of warrants and contingent value rights 30,799 (621,464) 652,263 Loss on legal settlements 500 — 500 Other non-operating expense, net 10 157 (147) Total non-operating expense (income), net 36,166 (623,494) 659,660 (Loss) income before income taxes (346,588) 576,456 (923,044) Income tax expense 600 205 395 Net (loss) income $ (347,188) $ 576,251 $ (923,439) The following table summarizes gross profit and gross margin by reportable segment for each of the periods indicated (in thousands). Three Months Ended March 31, 2026 2025 Change Colocation Segment Colocation gross profit $ 43,921 $ 467 $ 43,454 Colocation gross margin 57 % 5 % 51 % Digital Asset Self-Mining Segment Digital asset self-mining gross (loss) profit $ (17,084) $ 6,009 $ (23,093) Digital asset self-mining gross margin (57) % 9 % (66) % Digital Asset Hosted Mining Segment Digital asset hosted mining gross profit $ 3,269 $ 1,737 $ 1,532 Digital asset hosted mining gross margin 43 % 46 % (3) % 40 Gross profit represents segment revenue less segment cost of revenue. Accordingly, the year over year changes in gross profit and gross margin by segment are primarily driven by the changes in revenue and cost of revenue discussed in the “ Revenue” and “ Cost of revenue” sections below. Revenue Three Months Ended March 31, 2026 2025 $ Change Revenue: Colocation revenue $ 77,539 $ 8,573 $ 68,966 Digital asset self-mining revenue 30,105 67,179 (37,074) Digital asset hosted mining revenue from customers 7,600 3,773 3,827 Total revenue $ 115,244 $ 79,525 $ 35,719 Percentage of total revenue: Colocation revenue 67 % 11 % Digital asset self-mining revenue 26 % 84 % Digital asset hosted mining revenue from customers 7 % 5 % Total revenue 100 % 100 % Colocation revenue Colocation revenue consists of fees charged to customers for licensed data center space, power and related services. Under our contracts, customers generally pay fixed monthly fees based on billable customer power capacity and variable usage‑based charges and other billable services. Power fees are passed through to customers without markup and are recognized as revenue on a gross basis, with a corresponding charge to cost of colocation services. As a result, changes in power prices can cause fluctuations in colocation revenue that are not indicative of changes in our underlying colocation margins. The year over year increase in colocation revenue was primarily attributable to incremental billable customer power capacity at our Denton, Texas and Marble, North Carolina data centers during the three months ended March 31, 2026 . Digital asset self-mining revenue Digital asset self‑mining revenue consists primarily of bitcoin earned from operating our owned mining fleet. We participate in mining pools under which we receive consideration based on the hash rate we contribute to the pool. The year over year decrease in self-mining revenue was driven primarily by lower bitcoin production and lower average realized bitcoin prices during the three months ended March 31, 2026. Cost of revenue Three Months Ended March 31, 2026 2025 $ Change Cost of revenue: Cost of colocation services $ 33,618 $ 8,106 $ 25,512 Cost of digital asset self-mining 47,189 61,170 (13,981) Cost of digital asset hosted mining services 4,331 2,036 2,295 Total cost of revenue $ 85,138 $ 71,312 $ 13,826 Cost of revenue includes the costs to operate our colocation, digital asset self‑mining, and digital asset hosted mining businesses, including power fees, depreciation, personnel and facility-related costs. 41 Colocation cost of revenue The year over year increase in cost of colocation services was driven primarily by incremental billable capacity at our Denton, Texas and Marble, North Carolina data centers during the three months ended March 31, 2026 . Digital asset self-mining cost of revenue The year over year decrease in cost of digital asset self-mining was driven primarily by reduced self-mining activity during the three months ended March 31, 2026 , including lower power consumption resulting from the reallocation of power capacity to colocation operations and lower depreciation expense as a larger portion of the mining fleet became fully depreciated. Impairment of property, plant and equipment Three Months Ended March 31, 2026 2025 $ Change Impairment of property, plant and equipment 266,488 — $ 266,488 Percentage of total revenue 231 % — % During the three months ended March 31, 2026, we recognized non-cash impairment charges of $266.5 million on our mining- related property, plant and equipment. The charges resulted from sustained deterioration in bitcoin mining economics during the quarter, including declines in bitcoin prices, hashprice reaching historic lows, and significant decreases in secondary market values for mining equipment. Of the total charge, $151.6 million related to mining equipment whose carrying value exceeded current secondary market values, and $114.9 million related to mining infrastructure at facilities used in our self-mining operations, whose carrying values exceeded fair values determined using a discounted cash flow methodology. No impairment charges were recognized during the three months ended March 31, 2025 . Change in fair value of warrants and contingent value rights Three Months Ended March 31, 2026 2025 $ Change Change in fair value of warrants and contingent value rights 30,799 (621,464) 652,263 Percentage of total revenue 27 % (781) % The year over year decrease in change in fair value of warrants and contingent value rights shifted from a $621.5 million gain in the prior year period to a $30.8 million loss in the current period, driven by changes in our stock price during the respective periods . Liquidity and Capital Resources Sources and Uses of Cash We finance our operating and capital requirements primarily through a combination of (i) cash and cash equivalents, (ii) cash generated from operations, (iii) sales of digital assets (bitcoin), subject to market conditions and our treasury strategy, and (iv) financing activities, including debt financing arrangements. We also receive customer prepayments under our colocation arrangements, which are associated with, and are expected to offset a significant portion of, the capital expenditures required to build out a nd convert facilities for those arrangements. In March 2026, we entered into the Term Loan Facility, pursuant to which we borrowed the full $500.0 million initially available under the Credit Agreement. Subsequently, in March 2026, we entered into the Incremental Amendment, pursuant to which we borrowed the full $500.0 million incremental commitment. In April 2026, our indirect wholly-owned subsidiary, Core Scientific Finance priced the private offering of $3.30 billion aggregate principal amount of 7.75% Secured Notes at an issue price of 99.250% of the principal amount. In connection with the offering of Secured Notes, Core Scientific Finance used a portion of the net proceeds to fund a debt service reserve account, and the remaining proceeds to make a distribution to us. We used a portion of the net proceeds we received from Core Scientific Finance to repay in full the outstanding balance under the Term Loan Facility, including accrued interest thereon and fees and expenses in 42 connection therewith. The offering of Secured Notes closed on May 6, 2026, and upon such repayment, we terminated the Term Loan Facility. See “Senior Secured Notes Offering” under Recent Developments above for additional details. During the three months ended March 31, 2026 , we sold 2,385 bitcoin for aggregate proceeds of $208.3 million to fund planned capital expenditures and other cash requirements. We will be opportunistic in liquidating the remainder of our bitcoin balance. Our planned capital expenditures and other cash requirements may require additional external financing. We may from time to time seek additional financing to fund our operations and capital expenditures. If we are unable to obtain financing on acceptable terms, we may be required to reduce, delay or modify planned expenditures or pursue other alternatives. We have assessed our current and expected operating and capital expenditure requirements and our current and expected sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of March 31, 2026 , that our available liquidity, including cash and cash equivalents and expected operating cash flows and customer funding related to our colocation arrangements, will be sufficient to satisfy our cash requirements for at least the next twelve months. The following table summarizes our cash and cash equivalents and the fair value of our digital assets (in thousands): March 31, 2026 December 31, 2025 Cash and cash equivalents $ 1,005,148 $ 311,378 Digital assets $ 37,312 $ 222,000 The following table presents our cash flows (in thousands): Three Months Ended March 31, 2026 2025 Net cash provided by (used in) operating activities 249,877 (45,041) Net cash used in investing activities (386,652) (89,016) Net cash provided by (used in) financing activities 971,382 (4,198) Net cash provided by (used in) operating activities increased to $249.9 million from $(45.0) million in the prior year period, primarily due to customer prepayments received under our colocation arrangements and proceeds from sales of digital assets. Net cash used in investing activities increased to $386.7 million from $89.0 million in the prior year period, primarily reflecting capital expenditures related to our colocation expansion, primarily related to long-lead equipment and other data center development costs. Net cash provided by (used in) financing activities was $971.4 million compared to $(4.2) million in the prior year period, primarily due to net proceeds from the Company's Term Loan Facility. Material Cash Requirements Our material cash requirements from known contractual and other obligations are discussed below on both a short-term and long-term basis. Short-Term Cash Requirements Capital Expenditures and Other Commitments During the three months ended March 31, 2026 and 2025, we spent $389.2 million and $84.0 million respectively, on capital expenditures, primarily related to the conversion and expansion of our data center portfolio for colocation operations. As of March 31, 2026 , we were contractually committed to approximately $1.47 billion , of which $434.0 million w ill be passed through to the Company’s customer as invoiced . Substantially all of these expenditures are expected to occur within the next 12 months. 43 Operating Leases For our operating lease payment obligations due within the next 12 months, see Note 5 — Leases to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details. Long-Term Cash Requirements Senior Secured Notes In May 2026, our indirect wholly-owned subsidiary, Core Scientific Finance, issued $3.3 billion aggregate principal amount of 7.75% Senior Secured Notes due 2031. For the maturity date, principal amount and terms of these notes, see "Senior Secured Notes Offering" under Recent Developments above and Note 6 — Debt to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. Convertible Notes We have outstanding 3.00% Convertible Senior Notes due 2029 and 0.00% Convertible Senior Notes due 2031. For the maturity dates, principal amounts, and terms of these instruments, see Note 6 — Debt to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q . Capital Expenditures We expect to incur significant capital expenditures beyond the next 12 months as we continue to convert our remaining data center portfolio to colocation infrastructure and pursue new site acquisitions to expand our footprint. The pace and magnitude of these expenditures will depend on customer deployment schedules, the timing of site conversions, and the availability and cost of financing. Operating Leases For our operating lease payment obligations due beyond the next 12 months, see Note 5 — Leases to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details. Critical Accounting Estimates The critical accounting estimates, assumptions, judgments and the related policies that we believe have the most significant impact on our consolidated financial statements are described below. Property, Plant, and Equipment Our mining-related property, plant, and equipment involves significant estimates, including the determination of useful lives and the evaluation of recoverability and fair value. These estimates require judgment about future bitcoin mining economics, including technology improvements, bitcoin prices, hashprice, power prices, secondary market values for mining equipment, and the assumptions underlying fair value measurements such as discount rates and projected cash flows. During the three months ended March 31, 2026 , we recognized significant impairment charges on our mining-related assets (see Note 3 — Property, Plant, and Equipment and Note 8 — Fair Value Measurements t o our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q). The fair value of mining infrastructure is particularly sensitive to the discount rate applied to projected cash flows; refer to Note 8 for the significant unobservable inputs used in the Level 3 measurement. Stock-Based Compensation We have outstanding equity awards that include performance conditions, the achievement of which must be assessed by management at each reporting date. Compensation expense for these awards is recognized based on the estimated number of awards expected to vest, applying a cumulative catch-up adjustment when those estimates change. The assessment of probable achievement requires significant judgment, including assumptions about our infrastructure deployment progress, customer pipeline activity, and a degree of Compensation Committee discretion. Given the range of potential payout outcomes, changes in management's probability assessments could result in material adjustments to stock-based compensation expense recognized in future periods. 44 Management believes its current estimates are reasonable based on available information. Actual results may differ, and any such differences could materially impact our financial condition and results of operations. Recent Accounting Pronouncements For a discussion of new accounting standards relevant to our business, refer to Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q .