Core Scientific to End Bitcoin Mining by Year-End as Colocation Revenue Climbs to $215M

Management announced on the third-quarter earnings call that Core Scientific will finish exiting bitcoin mining by the end of this year, entering 2027 solely as a high-density colocation firm. The shift has already reduced its mining fleet by about half.

Chief Financial Officer Jim Nygaard told investors that the company expects to "complete the wind-down during the fourth quarter." Chief Executive Adam Sullivan put the same timeline more directly: "We expect to complete our exit from Bitcoin mining by year end." The statements came alongside an SEC filing that illustrated how far the transition has progressed.

During the quarter ending September 30, colocation revenue rose sequentially by almost 60% to $215.4 million, according to the earnings report. Self-mining revenue from digital assets fell to $12.3 million, a decline of roughly 79% from $57.4 million a year earlier. Third-party hosted mining contributed only $5.2 million. Colocation now represents about 92% of the total $232.9 million in revenue.

The self-mining segment recorded a gross loss of $7.5 million for the quarter. Colocation generated $128.4 million in gross profit, representing a 60% margin. Adjusted EBITDA increased more than threefold sequentially to $133.6 million, while the margin widened from 25% to 57%.

Mining Fleet Shrinks as AI Leases Take Over Floor Space

Nygaard noted that as of the end of September, Core Scientific had roughly 50% fewer operational miners compared with the end of 2025. The company has been converting power and floor space for AI and high-performance computing under long-term agreements, which its investor materials say will continue "as circumstances allow."

This strategy is common among publicly traded mining companies. Competitors have also been selling bitcoin and leasing their facilities to AI clients, while analysts have noted a growing divide between miners that can fund data center construction and those that cannot.

Core Scientific is billing for 485 MW of colocation capacity as of September 30, an increase of 90 MW during the quarter, representing over $700 million in average annualized GAAP colocation revenue. Sullivan stated that the remaining approximately 100 MW under the CoreWeave buildout is undergoing commissioning and should begin contributing revenue over the next few months.

Apart from CoreWeave's 590 MW contract, Core Scientific has 530 MW under an AMD-supported agreement across five campuses. Initial delivery is scheduled for the first half of 2027, with full delivery by the end of 2028. Combined, these two agreements total about 1.1 GW. Once fully operational and billing, management projects that this portfolio alone will generate $1.8 billion in average annual run-rate revenue and $1.6 billion in net operating income.

What Core Scientific's Financials Reveal

Bitcoin holdings have nearly disappeared from the balance sheet. Digital assets totaled $2.7 million as of September 30, down from $49.7 million three months prior and $222 million at the end of 2025. Earlier this year, Core Scientific was still accumulating coins while also selling as part of the transition, but that phase is now essentially over.

The withdrawal from mining has already incurred a monetary expense. A $41.9 million charge for contract termination recorded in the second quarter resulted from ending a chip supply agreement with Block/Proto. At the close of the third quarter, liquidity stood at roughly $1.7 billion, including about $800 million in cash, following significant capital outlays on AMD facilities and the Polaris acquisition.

Sullivan described the wind-down as streamlining the business for "more attractive long-term growth opportunities." Nygaard added that entering 2027 with a "very clean P&L" — without mining results — would give investors a clearer view of the genuine colocation run-rate.

The key question remains whether Core Scientific will shut down its remaining machines as planned in the fourth quarter, and whether the AMD financing package arrives in time to sustain the growth of that clean P&L.