Core Scientific still trying to diversify beyond CoreWeave

A common risk that Wall Street will often flag with companies that are still in growth mode is when too much of their business is concentrated with too few customers.

For Core Scientific (CORZ), a bitcoin miner turned data infrastructure provider, this risk is particularly pronounced since its entire data center infrastructure business currently consists of just one customer.

And that customer, CoreWeave (CRWV), brings its own risks as its debt-driven business model has come under increased scrutiny on Wall Street. D.A. Davidson analyst Gil Luria wrote n a client note in January that CoreWeave's equity is "still seen as worthless long-term" because "the entire value of the enterprise is owned by debt holders."

CoreWeave is carrying a debt load of about $14 billion, which Luria sees as creating a "value destruction inherent in CRWV's business."

As Core Scientific looks to diversify its customer base, one issue that has held it back was the attempted acquisition of its business by CoreWeave last year. The proposed $9 billion all-stock transaction would've allowed CoreWeave to bring at least some of its data center needs for large-scale AI development in-house, but Core Scientific's shareholders ultimately rejected the deal.

But according to Core Scientific CEO Adam Goldstein, the merger talks put their data center infrastructure business at a standstill.

"Our funnel is larger and broader than it was a few months ago, and we are in active discussions with hyperscalers, neoclouds, and large enterprises," Goldstein said in its Q4 earnings call with investors on Monday. "This is a timing issue, not a demand issue. While we were operating under the merger agreement, hyperscalers simply would not engage with us."

He added that the "conversations restarted following termination, and we have made significant headway."

Core Scientific misses target for new customer

During the company's earnings call in October, Goldstein had said Core Scientific was aiming to sign a new customer by its fourth-quarter earnings.

"We did not sign one by this call, and we are not satisfied with that," he said. "But the demand is there, and we have two sites under short exclusivity arrangements. We expect that this exercise will result in co-location leasing agreements in the near future."

Core Scientific has about 1.5 gigawatts of customer leasable capacity. It expanded capacity at existing sites, including its facility in Dalton, Georgia to 450 megawatts and its site in Pecos, Texas to 200 megawatts.

It also secured a new site in Hunt County, Texas that supports approximately 450 megawatts, but the facility will not be powered up until 2027.

The company reported earnings of 42 cents per share for the fourth quarter, soundly beating Wall Street's expectations for a loss of 16 cents per share. However, its Q4 revenue of $79.8 million fell well below consensus estimates of $115.9 million.

Jim Nygaard, chief financial officer for Core Scientific, noted on the call that the "vast majority" of its revenue still comes from its bitcoin mining business. He called 2025 "a transitional year" for the company as it looks to pivot its business away from bitcoin mining to scale its co-location data center business.

Sullivan said that the company sold 1,900 bitcoin in January for approximately $175 million. It has just under 1,000 BTC left and plans to sell almost all of its holdings this year, though it will depend on market timing and liquidity considerations.

The company's shares fell 7.2% on Tuesday, but are up just over 5% for the year.