Core Scientific Inc.

03/02/2026 | Press release | Distributed by Public on 03/02/2026 15:53

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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. This MD&A is provided as a supplement to,
and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements
(Part II, Item 8 of this Form 10-K). This section generally discusses the results of operations for 2025 compared to 2024. For
discussion related to the results of operations and changes in consolidated financial condition for 2024 compared to 2023 refer to
Part II, Item 7. - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our fiscal year 2024
Annual Report on Form 10-K, which was filed with the SEC on February 20, 2025.
Unless otherwise indicated, references to "2025" and "2024" in this MD&A refer to the years ended December 31, 2025
and 2024, respectively.
As described in Note 3 - Restatement of Previously Issued Financial Statementsin Part II, Item 8 to the consolidated
financial statements included in this Annual Report, during the preparation of the consolidated financial statements for the year ended
December 31, 2025, the Company identified errors in its previously issued consolidated financial statements related to the accounting
for property, plant and equipment demolished in connection with the conversion of certain facilities from digital asset mining
operations to high-density colocation infrastructure. The Company is concurrently filing an amended Annual Report on Form 10-K/A
for the year ended December 31, 2024 and amended Quarterly Reports on Forms 10-Q/A for the quarterly periods ended March 31,
2025, June 30, 2025, and September 30, 2025. The discussion that follows presents 2024 comparative data on an as-restated basis.
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 this Annual Report on Form 10-K.
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, the Company announced its first high-density colocation contract with CoreWeave, Inc. ("CoreWeave), a provider of
high-performance computing ("HPC") services, which subsequently had been expanded to 590megawatts ("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 ten facilities in Alabama (1), Georgia (2), Kentucky (1), North
Carolina (1), North Dakota (1), Oklahoma (1), and Texas (3) 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. We intend to convert every megawatt in our portfolio to high-density colocation infrastructure
over the next three years. 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.
Currently, the vast majority of our revenue is from mining bitcoin for our own account ("self-mining"). We will continue to
mine digital assets and manage our self-mining fleet with a focus on power expense coverageand cash generationwhile 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 December 31, 2025, we operated a diversified portfolio of ten data centers across seven U.S. states, representing
approximately 1.4gigawatts ("GW") of gross utility power capacity, or approximately 920megawatts("MW") 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.
During 2025, total revenue decreased to $319.0 millionfrom $510.7 million, primarily due to lower digital asset self-mining
revenue and digital asset hosted mining revenueas we shifted capital and infrastructure toward colocation, partially offset by higher
colocation revenue from incremental billable customer power capacity. Operating lossincreased to $245.6 millionin 2025 from
$142.1 millionin 2024. Net losswas $288.6 millionin 2025 and included significant non-cash items, including changes of $33.1
millionin the fair valueof warrants and contingent value rights. Adjusted EBITDA decreased to $29.7 millionin 2025 from $157.4
millionin 2024. 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.
Developments During 2025
On July 7, 2025,the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with CoreWeave, Inc.
("CoreWeave") pursuant to which CoreWeave would acquire the Company in an all-stock transaction, subject to stockholder approval
and other customary closing conditions. On October 30, 2025, the Company terminated the Merger Agreement in accordance with its
terms following Company stockholder rejection of the terms of the Merger Agreement ata special meeting of stockholders on that
date.
The Company incurred $21.6 millionofadvisory, legal, and other professional or consulting fees related to the proposed
transaction whichare reflected in our results of operations for the year ended December 31, 2025. Other than these costs, the
termination of the Merger Agreement did not result in any termination fees and did not have a material impact on the Company's
financial position or results of operations.
Our Business Model
Business Overview
As a large-scale owner and operator of high-power digital infrastructure, we generate revenue primarily through (i) Colocation
services (ii) Digital Asset Self-Mining, and (iii) Digital Asset Hosted Mining services. We are in the process of reallocating significant
portionsof our infrastructure and capital from bitcoin mining to HDC services for AI and HPC workloads.
We focus primarily on contracting our digital infrastructure for Colocation, miningbitcoin, and enhancing efficiencies in our
operations. In self-mining, we earn bitcoin by operating our owned mining fleet through mining pool arrangements, and in hosted
mining and colocation we earn fees for providing infrastructure, power and related services to third parties.
Our data centers house bitcoin mining computers and will increasingly house specialized compute accelerators, including
graphics processing units ("GPUs"). These facilities leverage our specialized design and construction capabilities by employing high-
density,innovative engineering, power designs and modular construction. For digital asset mining, our proprietary thermodynamic
structural design manages heat and airflow to deliver reliable operations to us and our customers. As part of our go-forward strategy,
we are in the process of converting our entire data center portfolio to support our high-density Colocationoperations for AI and HPC
workloads.
Business Strategy
Our strategy is to grow our revenue and profitability by converting and expanding our large-scale data center infrastructure
portfolio to deliver high-density colocation services for artificial intelligence and HPC workloads. We plan to develop and bring
online the infrastructure required to meet our existing contractual commitments to our high-density colocation customer, expand our
infrastructure portfolio by securing additional land and power at new and existing sites, and sign additional colocation customers to
diversify our revenue base.
Our customer strategy targets hyperscale cloud-based providers, neoclouds, and enterprises, including customers we believe
have significant data center infrastructure needs that have not yet been outsourced or will require additional data center space and
power to support their growth and their increasing reliance on technology infrastructure in their operations.
Segments
We have 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 our own
account, and "Digital Asset Hosted Mining," consisting of providing hosting services to third parties for digital asset mining. Prior to
April 1, 2024, we operated primarily in the Digital Asset Self-Mining and Digital Asset Hosted Mining segments.
Our Colocation segment provides space, power, cooling, facilities operations, security and other services to third-party
customers to support workloads for machine learning and artificial intelligence.
Our Digital Asset Self-Mining operation segment generates revenue from the deployment and operation of our own large fleet
of miners within our owned digital infrastructure as part of a pool of users that process transactions conducted on one or more
blockchain networks. In exchange for this activity, we receive digital assets in the form of bitcoin.
Our Digital Asset Hosted Mining operation segment generates revenue from recurring hosting services, which are generally
priced based on power usage and other service components. Our Digital Asset Hosted Mining operation segment provides a full suite
of services to our digital asset mining customers. We provide deployment, monitoring, troubleshooting, optimization and maintenance
of our customers' digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services
necessary for our customers to operate, maintain and efficiently mine digital assets. We do not currently expect to further expand our
Digital Asset Hosted Mining operations in future years.
Mining Equipment
On July 5, 2024, we entered into an arrangement with Block, Inc. ("Block"), a technology company developing ASICs,
pursuant to which we received ASICs during 2025 and expect to receive additional ASICs during 2026. As of December 31, 2025, we
estimate approximately $64.8 million of remaining cash payments associated with this arrangement, of which approximately $36.6
millionwas paid upon delivery in January 2026, with the remaining balance payable on a deferred basis primarily during 2026 and
extending into early 2027.
Aside from the miners received in 2025 and those expected from Block, we do not anticipate entering into new large-scale
bitcoin mining equipment procurement agreements as we continue to shift capital allocation toward HDC infrastructure. As a result,
we expect future capital expenditures related to mining equipment to decline. See "Liquidity and Capital Resources" for a discussion
of our material cash requirements and expected sources of funding, including capital expenditures and commitments.
The tables below summarize the total number of self- and hosted miners in operation as of December 31, 2025and
December 31, 2024 (miners in thousands):
Bitcoin Miners in Operation as of December 31, 2025
Mining Equipment
Hash rate (EH/s)
Number of Miners
Self-miners
15.7
135.5
Hosted miners
2.2
15.9
Total mining equipment
17.9
151.4
Bitcoin Miners in Operation as of December 31, 2024
Mining Equipment
Hash rate (EH/s)
Number of Miners
Self-miners
19.1
164.0
Hosted miners
1.0
7.1
Total mining equipment
20.1
171.1
See"Key Business Operating Metrics and Non-GAAP Financial Measures" below for definitions and discussion of the
operating metrics management uses to evaluate our performance.
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 convertingthe 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.
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. To date, tariffs have had no material impact on our costs or business operations, but we continue to analyze the
impact of these tariffs on our business and actions we can take to minimize any future impact. 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 the overall
potential impact of tariffs on our existing and future capital expenditures.Tariffs, however, could have additional impacts on our
results of operations in future years. To the extent tariffs increase the cost and/or lead time of key equipment and materials, they 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.
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 the Part I, Item 1 "Business" section in
this Annual Report on Form 10-K. 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.
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 December 31, 2025 (in megawatts).
December 31,
2025
Gross Utility Power Capacity
1,426
Total Leasable Customer Power Capacity
Leased Customer Power Capacity
Unleased Customer Power Capacity
Billable Customer Power Capacity
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, 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) Reorganization items, net; (vi) unrealized fair value
adjustment on energy derivatives; (vii) change in fair value of warrant and contingent value rights; (viii) Colocation segment startup
costs primarily related to the initial ramp up of new colocation sites, (ix) impairment of property, plant and equipment, (x) site
demolition costs incurred in connection with the conversion of existing facilities to colocation data center operations, (xi) post-
emergence bankruptcy advisory costs incurred related to reorganization, (xii) transaction costs incurred in connection with the Merger
Agreement, including advisory, legal, and other professional or consulting fees, (xiii) loss on legal settlements, and (xiv) 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. For additional information, including a reconciliation of net loss 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
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 Annual Report on Form 10-K 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 net loss to Adjusted EBITDA below and not rely on any single financial
measure to evaluate our business.
The following table presents a reconciliation of net loss to Adjusted EBITDA for the years ended December 31, 2025and 2024
(in thousands):
Year Ended December 31,
2025
2024
Adjusted EBITDA
Net loss
$(288,616)
$(1,437,874)
Adjustments:
Interest (income) expense, net
(3,277)
37,070
Income tax expense
Depreciation and amortization
68,841
113,205
Stock-based compensation expense
98,236
51,924
Unrealized fair value adjustment on energy derivatives
-
(2,262)
Loss on disposal of property, plant and equipment
9,680
4,210
Impairment of property, plant and equipment
11,359
122,869
Site conversion demolition costs
4,442
-
Loss on debt extinguishment
1,933
Colocation startup costs
-
4,611
Merger Agreement related costs
21,588
-
Post-emergence bankruptcy advisory costs
1,784
4,822
Reorganization items, net
-
(111,439)
Change in fair value of warrants and contingent value rights
33,059
1,369,157
Loss on legal settlements
10,690
2,070
Other non-operating expense (income), net
(2,395)
Other
-
Adjusted EBITDA
$(29,659)
$157,437
Resultsof Operations for the Year Ended December 31, 2025and 2024
The following table sets forth our selected consolidated statements of operations for each of the periods indicated (in
thousands).
Year Ended December 31,
2025
2024
$ Change
Revenue:
Colocation revenue
$65,424
$24,378
$41,046
Digital asset self-mining revenue
229,207
408,740
(179,533)
Digital asset hosted mining revenue from customers
24,388
77,554
(53,166)
Total revenue
319,019
510,672
(191,653)
Cost of revenue:
Cost of colocation services
45,679
21,709
23,970
Cost of digital asset self-mining
218,868
314,335
(95,467)
Cost of digital asset hosted mining services
16,574
53,558
(36,984)
Total cost of revenue
281,121
389,602
(108,481)
Gross profit
37,898
121,070
(83,172)
Decrease in fair value of digital assets
31,603
1,052
30,551
Decrease in fair value of energy derivatives
-
2,757
(2,757)
Loss on disposal of property, plant and equipment
9,680
4,210
5,470
Impairment of property, plant and equipment
11,359
122,869
(111,510)
Colocation organizational and site startup costs
48,249
13,734
34,515
Advisor fees
23,372
4,822
18,550
Selling, general and administrative
159,224
113,691
45,533
Operating loss
(245,589)
(142,065)
(103,524)
Non-operating expense (income), net:
Loss on debt extinguishment
1,933
1,446
Interest (income) expense, net
(3,277)
37,070
(40,347)
Change in fair value of warrants and contingent value rights
33,059
1,369,157
(1,336,098)
Reorganization items, net
-
(111,439)
111,439
Loss on legal settlements
10,690
2,070
8,620
Other non-operating expense (income), net
(2,395)
2,434
Total non-operating expense, net
42,444
1,294,950
(1,252,506)
Loss before income taxes
(288,033)
(1,437,015)
1,148,982
Income tax expense
(276)
Net loss
$(288,616)
$(1,437,874)
$1,149,258
The following table summarizes gross profit and gross margin by reportable segment for 2025 and 2024.
Year Ended December 31,
2025
2024
Change
Colocation Segment
Colocation gross profit
$19,745
$2,669
$17,076
Colocation gross margin
30%
11%
19%
Digital Asset Self-Mining Segment
Digital asset self-mining gross profit
$10,339
$94,405
$(84,066)
Digital asset self-mining gross margin
5%
23%
(18)%
Digital Asset Hosted Mining Segment
Digital asset hosted mining gross profit
$7,814
$23,996
$(16,182)
Digital asset hosted mining gross margin
32%
31%
1%
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
Year Ended December 31,
2025
2024
$ Change
Revenue:
Colocation revenue
$65,424
$24,378
$41,046
Digital asset self-mining revenue
229,207
408,740
(179,533)
Digital asset hosted mining revenue from customers
24,388
77,554
(53,166)
Total revenue
$319,019
$510,672
$(191,653)
Percentage of total revenue:
Colocation revenue
20%
5%
Digital asset self-mining revenue
72%
80%
Digital asset hosted mining revenue from customers
8%
15%
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 feesare 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 yearincrease in colocation revenue was primarily attributable to incremental billable customer power capacity at
our Denton, Texas and Marble, North Carolina data centers. In addition, lease operationsat our Austin, Texas data center, which
commenced in the second quarter of 2024, contributed to higher colocation revenue.
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 decreasein self-mining revenue was driven primarily by lower bitcoin production, partially offset by higher
average bitcoin prices.
Year Ended December 31,
2025
2024
% Change
Bitcoin mined
2,276
6,595
(65)%
Average price of bitcoin
$101,639
$65,894
54%
Self-mining hash rate
15.7
19.1
(18)%
The decrease in bitcoin mined was driven primarily by (i) a reduction in our deployed mining fleet due primarily to our
strategic shift to colocation, (ii) the Bitcoin network's halving, which reduced bitcoin earned per unit of hash rate beginning in April
2024, and (iii) more challenging network conditions, including higher network difficulty.
Digital asset hosted mining revenue
Digital asset hosted mining revenue represents fees earned for providing infrastructure, power and related services to third-party
miners. Under our hosting contracts, customers are generally billed monthly based on power capacity and/or power consumption over
the term of the arrangement, which typically ranges from one to three years.
The year over year decreasein hosted mining revenue from customers was primarily driven by our shift to our Colocation
operations.
Cost of revenue
Year Ended December 31,
2025
2024
$ Change
Cost of revenue:
Cost of colocation services
$45,679
$21,709
$23,970
Cost of digital asset self-mining
218,868
314,335
(95,467)
Cost of digital asset hosted mining services
16,574
53,558
(36,984)
Total cost of revenue
$281,121
$389,602
$(108,481)
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.
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 2025. In addition, costs related to lease operations at our Austin, Texas data
center, which commenced in the second quarter of 2024, contributed to higher colocation cost of revenue in 2025.
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
2025, including lower power consumption and depreciation.
Digital asset hosted mining cost of revenue
The year over year decrease in cost of digital asset hosted mining services was driven primarily by the wind-down of hosted
mining arrangements, which resulted in lower power consumption.
Decrease in fair value of digital assets
Year Ended December 31,
2025
2024
$ Change
Decrease in fair value of digital assets
$31,603
$1,052
$30,551
Percentage of total revenue
10%
-%
The year over year change in fair value of digital assets was primarily driven by higher bitcoin holdings in 2025 under our
bitcoin holding strategy and bitcoin price declines during portions of 2025.
Impairment of property, plant and equipment
Year Ended December 31,
2025
2024
$ Change
Impairment of property, plant and equipment
11,359
122,869
$(111,510)
Percentage of total revenue
4%
24%
The year over year decrease was primarily driven by a lower volume of assets committed to demolition in connection with the
conversion of data center facilities from digital asset mining to high-density colocation operations, compared to a significantly higher
volume of such charges recognized in 2024. We expect to incur future impairments of PP&E at the point at which the assets become
committed to demolition, which is generally expected to occur at the time of colocation customer contract execution.
Colocation organizational and site startup costs
Year Ended December 31,
2025
2024
$ Change
Colocation organizational and site startup costs
$48,249
$13,734
$34,515
Percentage of total revenue
15%
3%
Colocation organizational and site startup costs primarily consist of employee compensation, including stock-based
compensation. The year over year increase was primarily driven by site startup costs incurred to convert facilities from digital asset
mining to colocation operations, partially offset by the absence of organizational startup costs incurred in 2024 in connection with the
formation of the colocation segment.
Selling, general and administrative
Year Ended December 31,
2025
2024
$ Change
Selling, general and administrative
$159,224
$113,691
$45,533
Percentage of total revenue
50%
22%
Selling, general and administrative expenses ("SG&A") consist primarily of personnel-related costs and professional fees.
The increasein SG&A was driven primarily by:
•a $34.1 millionincrease in stock-basedcompensation expense;
•a $6.8 millionincrease in payroll expense; and
•a $6.4 millionincrease in professional fees.
Non-operating expenses (income), net
Year Ended December 31,
2025
2024
$ Change
Non-operating expenses (income), net:
Loss on debt extinguishment
$1,933
$487
$1,446
Interest (income) expense, net
(3,277)
37,070
(40,347)
Change in fair value of warrants and contingent value rights
33,059
1,369,157
(1,336,098)
Reorganization items, net
-
(111,439)
111,439
Loss on legal settlements
10,690
2,070
8,620
Other non-operating expense (income), net
(2,395)
2,434
Total non-operating expense, net
$42,444
$1,294,950
$(1,252,506)
Non-operating expenses (income), net primarily reflects (i) non-cash changes in the fair value of warrants and contingent value
rights and (ii) interest (income) expense, net, and reorganization-related items.
•Theyear over year decrease in change in fair value of warrants and contingent value rights was driven by changes in our
stock price, which increased by $0.51 per share during 2025, compared to an increase of $10.61fromJanuary 23, 2024, the
date of our emergence from bankruptcy, to December 31, 2024; and
•The absence ofReorganization items, net in 2025 was due to our emergence from bankruptcy on January 23, 2024.
•The year over year decreasein Interest (income) expense, net was driven primarily by a $23.2 milliondecrease in interest
expense dueto lower interest rates on outstanding debt, including the repayment of certain higher-interest notes during 2025,
and a $17.3 million increase in interest income earned on money market funds.
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 and convert facilities for those arrangements.
During 2026, we currently expect to monetize substantially all of our bitcoin holdings, subject to market conditions, to enhance
liquidity and fund our planned capital expenditures and other cash requirements. We currently anticipate that the majority of these
sales would occur during the first quarter of 2026. However, the timing and amount of any sales will depend on market conditions and
our liquidity needs and may change.
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 December 31, 2025,
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):
December 31,
2025
2024
Cash and cash equivalents
$311,378
$836,197
Digital assets
$222,000
$23,893
The following table presents our cash flows (in thousands):
Year Ended December 31,
2025
2024
Net cash provided by operating activities
278,250
42,896
Net cash used in investing activities
(740,750)
(95,192)
Net cash (used in) provided by financing activities
(63,102)
819,567
Net cash provided by operating activities increased to $278.3 millionin 2025 from $42.9 millionin 2024, primarily due to
higher cash inflows from operating working capital driven by deferred revenue associated with colocation services.
Net cash used in investing activities increased to $740.8 millionin 2025 from $95.2 millionin 2024, primarily reflecting capital
expenditures related to our colocation expansion.
Net cash used in financing activities was $63.1 millionin 2025 compared to net cash provided of $819.6 millionin 2024,
primarily due to the absence of prior-year financing proceeds.
Material Cash Requirements
Our material cash requirements from known contractual and other obligations consist primarily of (i) obligations for long-term
debt and related interest, (ii) operating lease obligations for property, and (iii) capital expenditure commitments related to the
conversion of a significant portion of our data centers to high-density colocation operations.
During 2025 and 2024, we spent $729.0 millionand $95.0 millionon capital expenditures, respectively. We expect to increase
capital expenditures in 2026 relative to 2025 to support our strategic shift to colocation services.
For additional information regarding our operating lease obligations, convertible notes, and purchase commitments, refer to
Note 7 - Leases, Note 8 - Convertible and Other Notes Payable, and Note 11 - Commitments and Contingencies, respectively,to
our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
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
The Company has made significant investments in Bitcoin mining equipment, which constitutes a substantial portion of its
property, plant, and equipment. Accounting for this equipment involves significant judgment and estimation uncertainty, particularly
regarding the determination of its estimated useful life for depreciation purposes and the assessment of potential impairment.
The Company depreciates its Bitcoin mining equipment using the straight-line method over an estimated useful life of three
years. This estimate reflects management's judgment based on the current state of technology and industry practices. However, the
actual useful life of this equipment is uncertaindue to the rapid pace of technological advancements in the Bitcoin mining industry.
The Company evaluates its Bitcoin mining equipment for impairment whenever events or changes in circumstances indicate
that the carrying amount of the equipment may not be recoverable. Recoverability is assessed by comparing the carrying amount of the
asset to the sum of the undiscounted futures cash flows expected from its use and disposal. If the carrying amount is not recoverable,
the impairment loss is measured as the difference between the carrying amount and the asset's fair value. Potential impairment triggers
include a significant decline in the market price of Bitcoin or the introduction of new technologies that reduce the efficiency or
profitability of the Company's existing equipment. These assessments rely on significant judgment and require assumptions about
future events and conditions, including Bitcoin prices, mining difficulty rates, electricity costs, and anticipated technological
advancements.
Management believes that its current estimates and assumptions are reasonable based on the information available. Actual
results may differ, and any such differences could materially impact the Company's financial condition and results of operations.
Stock-Based Compensation
The valuation of equity awards that contain market conditions, including the 2025 performance restricted stock units with a
relative total shareholder return condition, requires the use of a Monte Carlo pricing model. The model incorporates assumptions that
are both unobservable and significant to the overall fair value measurement, including expected volatility of the Company's common
stock and its correlation with the Russell 2000 Index, which reflect anticipated variability and relative performance of the Company's
stock price over the performance period. These assumptions involve judgment and are based on a combination of historical data and
market information. If different assumptions had been used, the resulting grant-date fair value of these awards, and the related stock-
based compensation expense recognized over the requisite service period, could have been materially different. Management believes
the estimates and assumptions used in the valuation of these awards are reasonable based on information available at the time of grant.
Recent Accounting Pronouncements
For a discussion of new accounting standards relevant to our business, refer to Note 2 - Summary of Significant Accounting
Policiesto our consolidated financial statements in Item 8 of Part II ofthis Annual Report on Form 10-K.
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