Core Scientific Completes Pivot Away From Bitcoin Mining, Colocation Revenue Reaches $215.4M
Core Scientific said on its Thursday third-quarter earnings call that it expects to complete its exit from bitcoin mining by year-end and enter 2027 as a pure colocation provider. Colocation revenue reached $215.4 million in the quarter, roughly 92% of total revenue, according to SEC filings.
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Mining Wind-Down Timeline
Core Scientific expects to finish exiting bitcoin mining in the fourth quarter of 2026, management said on its third-quarter earnings call on Thursday. CEO Adam Sullivan said the company expects to "complete our exit from Bitcoin mining by year end," and CFO Jim Nygaard said the wind-down would be completed during the fourth quarter. The sources differ slightly on framing: Bitcoin Magazine reports the end date as year-end, while CryptoPotato gives December 2026 explicitly. Both describe the company as entering 2027 as a dedicated high-density colocation provider.
The mining fleet has already been cut substantially. Nygaard told investors the company had nearly 50% fewer miners online at the end of September than at year-end 2025, as it repurposed power and floor space under long-term customer agreements.
Revenue Mix Shift
Colocation revenue rose nearly 60% sequentially to $215.4 million in the quarter ended September 30, according to the SEC-filed results exhibit. CryptoPotato's comparison, which reports 58% quarter-on-quarter growth from $136.7 million in Q2, gives a slightly different percentage than Bitcoin Magazine's "nearly 60%" figure; the underlying dollar amounts are consistent across both reports. Self-mining revenue fell to $12.3 million, down about 79% from $57.4 million a year earlier. Total revenue was $232.9 million, up 42% sequentially, placing colocation at roughly 92% of the total.
Self-mining posted a $7.5 million gross loss in the quarter. Colocation gross profit was $128.4 million, a 60% margin. Adjusted EBITDA rose to $133.6 million from $41.1 million in the prior quarter, lifting the margin to 57% from 25%.
Capacity and Contracted Backlog
Core Scientific is billing for 485 megawatts of colocation capacity as of September 30, up 90 MW in the quarter and representing more than $700 million in average annualized GAAP colocation revenue. Sullivan said roughly 100 MW under the CoreWeave buildout is in commissioning and should begin recognizing revenue over the next few months.
Beyond CoreWeave's contracted 590 MW, the company has 530 MW under an AMD-backed agreement across five campuses, with initial delivery targeted for the first half of 2027 and full delivery by year-end 2028. Management expects the combined roughly 1.1 GW portfolio to generate $1.8 billion in average annual run-rate revenue and $1.6 billion in net operating income once fully delivered and billing.
Balance Sheet and Reported Earnings
Digital asset holdings on the balance sheet stood at $2.7 million on September 30, down from $49.7 million three months earlier and $222 million at year-end 2025. The mining exit has carried a cash cost: a $41.9 million loss on contract termination booked in Q2 reflects the decision to end a Block/Proto mining chip supply agreement. Liquidity ended the quarter at about $1.7 billion, including roughly $800 million in cash, following heavy capital spending on AMD sites and the Polaris acquisition.
Reported earnings diverge sharply between the sources. CryptoPotato reports net income of $1.18 billion, but notes it was driven by a substantial non-cash gain from changes in the fair value of warrants and does not reflect underlying operations. Bitcoin Magazine does not cite a net income figure, focusing instead on adjusted EBITDA. Readers should treat the headline net income number as non-operational.
Industry Context and Open Questions
Core Scientific is not alone. CryptoPotato notes Riot is building large-scale AI data centers and MARA is diversifying into AI infrastructure while continuing to mine. Bitcoin Magazine notes peers have been selling bitcoin and leasing campuses to AI tenants. Separately, CryptoPotato reports American Bitcoin's mining revenue fell 5.5% quarter-on-quarter to $63.4 million, with cost per mined BTC rising about 15% to $42,100, illustrating the margin pressure on pure miners.
Management framed the wind-down as simplifying the business toward "more attractive long-term growth opportunities," and Nygaard said a 2027 P&L without mining should give investors a clearer view of the colocation run-rate. The near-term tests are whether the remaining machines are shut down on schedule in the fourth quarter and whether the AMD financing is in place to support delivery timelines.
Why It Matters
For Traders
CORZ shares may react to whether the Q4 shutdown and CoreWeave revenue recognition start on schedule, though the sources do not provide share price data.
For Investors
The shift makes Core Scientific's results increasingly a colocation story, with about 92% of Q3 revenue from hosting and a contracted pipeline of roughly 1.1 GW.
For Builders
Operators running hash-based workloads should note that Core Scientific's exit signals continued capital reallocation from mining sites to AI and HPC hosting.
This article is for information only and is not financial advice. Read the full disclaimer.
