Core Scientific, a publicly traded digital infrastructure provider, plans to end its Bitcoin mining operations by the close of the year and will begin 2027 fully focused on high-density colocation services, company executives confirmed during the third-quarter earnings call.
Management confirms strategic exit from mining
Chief Financial Officer Jim Nygaard told investors the company will complete the transition in the fourth quarter. Chief Executive Officer Adam Sullivan stated that Core Scientific expects to finish its exit from Bitcoin mining before the end of the year. This strategic shift has already resulted in a significant reduction in the company’s self-operated mining fleet.
Colocation revenue for the quarter ended September 30 climbed nearly 60% from the previous quarter to $215.4 million, while digital asset self-mining revenue dropped to $12.3 million, declining approximately 79% year over year. Hosted mining for third parties contributed another $5.2 million, bringing Core Scientific’s total quarterly revenue to $232.9 million. Colocation services now account for around 92% of the company’s overall revenue.
Colocation operations reached a quarterly gross profit of $128.4 million, representing a 60% margin, while self-mining reported a $7.5 million gross loss for the same period. Adjusted EBITDA more than tripled sequentially to $133.6 million, with margins expanding to 57% from 25%.
Shift to AI-focused infrastructure
Nygaard noted that by the end of September, the company operated roughly 50% fewer mining machines compared to the end of 2025. Core Scientific has been repurposing its infrastructure and energy from crypto mining to colocation and high-performance computing, particularly for artificial intelligence (AI) clients, through extended customer agreements.
This strategic repositioning mirrors broader trends among major digital infrastructure companies, as competitors increasingly steer resources toward AI and computing leases. Recent research has identified a growing funding divide among mining companies, favoring those with capacity to build and finance data centers for new workloads.
As of September 30, Core Scientific billed for 485 megawatts of colocation capacity, a rise of 90 megawatts in one quarter. Additional capacity under a contract with CoreWeave, a cloud infrastructure provider specializing in AI, is in final commissioning and will bring total CoreWeave-contracted capacity to 590 megawatts over the coming months.
Beyond its CoreWeave partnership, Core Scientific has secured a separate 530-megawatt colocation agreement with support from AMD, a global semiconductor manufacturer, spanning five campuses. Initial delivery for this project is expected in the first half of 2027, with full rollout by the end of 2028. Combined, these agreements are projected to cover approximately 1.1 gigawatts of capacity.
Once fully operational, management anticipates these portfolios will deliver $1.8 billion in average annual run-rate revenue and $1.6 billion in net operating income.
Mini dictionary: Core Scientific is a US-based digital infrastructure company listed on the NASDAQ, historically known for its large-scale Bitcoin mining operations and now pivoting toward AI and high-performance computing.
| Segment | Q3 Revenue | Year-over-Year Change | Share of Total Revenue |
|---|---|---|---|
| Colocation | $215.4 million | +60% | 92% |
| Self-mining | $12.3 million | -79% | 5% |
| Hosted mining | $5.2 million | N/A | 2% |
Financial impact and future outlook
Digital assets held on Core Scientific’s balance sheet dwindled to $2.7 million as of September 30, a sharp decline from $49.7 million three months prior and $222 million at year-end 2025. The company had continued to accumulate coins earlier in the year before finalizing the strategic pivot away from mining.
Terminating a Block/Proto mining chip supply agreement resulted in a $41.9 million contract loss posted in the second quarter. Cash and equivalents, following significant investment in new sites and acquisitions, stood at roughly $800 million, out of approximately $1.7 billion in total liquidity by the end of the third quarter.
Sullivan characterized the reorganization as positioning the business for “more attractive long-term growth opportunities.” Nygaard noted that starting 2027 with a simplified and mining-free profit and loss statement would offer clearer insight into the company’s ongoing performance.
The next milestone for Core Scientific is to power down remaining mining equipment by the fourth quarter and ensure AMD-backed financing is secured to support continued growth in the colocation sector.
