TLDR
- Core Scientific reported $580M net profit in Q1 2025, more than doubling its year-ago earnings
- Revenue fell to $79.5M, missing analyst estimates by 8.11%
- Profit largely driven by $621.5M non-cash mark-to-market warrant adjustments
- Company pivoting from Bitcoin mining toward high-performance computing (HPC) and AI
- Deal with CoreWeave expected to generate $360M in annual colocation revenue by 2026
Core Scientific, the Nasdaq-listed Bitcoin mining company, posted a substantial profit for Q1 2025 despite missing revenue targets. The firm reported net income of $580.7 million, more than double the $210.7 million from the same period last year.
The impressive profit figure came as total revenue fell to $79.5 million, down from $179.3 million in Q1 2024. This 8.11% miss against analyst estimates reflects the company’s ongoing transition away from pure Bitcoin mining.
The large profit was primarily due to a $621.5 million non-cash mark-to-market adjustment in the value of warrants and contingent value rights. This accounting adjustment was required because of the quarter-over-quarter decrease in Core Scientific’s share price.
CEO Adam Sullivan called the quarter “an inflection point” for Core Scientific. The company is positioning itself at “the center of one of the most important shifts in modern computing” as demand for high-performance data infrastructure accelerates.
Mining Revenue Decline
Core Scientific’s primary revenue still came from digital assets. The company generated $67.2 million in self-mining revenue and $3.8 million in hosted mining revenue, with just $8.6 million from colocation services.
The drop in Bitcoin mining revenue was due to two main factors. The Bitcoin halving on April 20, 2024, cut mining rewards from 6.25 BTC to 3.125 BTC. The company also shifted operations toward HPC hosting, mainly used for artificial intelligence.
These losses were partly offset by a 74% increase in the average Bitcoin price and a 33% decrease in power costs due to lower rates and usage.
The digital asset self-mining gross profit for Q1 2025 was $6.0 million (9% gross margin), compared to $68.4 million (46% gross margin) for the same period last year. This $62.4 million decrease was driven by the 75% drop in Bitcoin mined.
Strategic Shift to AI Infrastructure
Core Scientific is not alone in pivoting toward AI and high-performance computing. Other miners like Riot Platforms, Hive Digital, Hut 8, and Iris Energy have also converted part of their operations to HPC and AI.
In February, Core Scientific signed a deal with AI startup CoreWeave for a $1.2 billion data center expansion. The company is on track to deliver 250MW of billable capacity to CoreWeave by the end of this year.
The first 8MW of billable capacity at Denton will be delivered to CoreWeave by the end of May, with an additional 40MW by the end of the quarter.
With this shift, Core Scientific expects to enter 2026 with annualized colocation revenue of approximately $360 million. This represents a major transformation for the company.
The company ended Q1 with a strong cash position, including $778.6 million in cash, cash equivalents, and digital assets. This gives Core Scientific financial flexibility to pursue strategic growth opportunities.
Core Scientific’s shares (CORZ) closed May 7 trading down 1% at $8.90 but jumped over 3% to $9.24 after hours. The stock has faced pressure as the company transitions its business model.
Last year, Core Scientific emerged from bankruptcy and had its shares relisted on Nasdaq. Under the reorganization plan, shareholders received about 60% of new equity, with the company agreeing to repay debt in full and agree to certain warrant arrangements.
The quarterly financial results mark an important transition period as Core Scientific balances its legacy Bitcoin mining operations with its growing focus on providing infrastructure for AI and high-performance computing.
