Core Scientific will finalise its departure from bitcoin mining by the end of the year and will enter 2027 as a dedicated high-density colocation provider, management stated during Thursday’s third-quarter earnings call, marking a transition that has already reduced the company’s mining fleet by nearly 50 percent. Chief Financial Officer Jim Nygaard told investors the company expects to “complete the wind-down during the fourth quarter.” Chief Executive Officer Adam Sullivan put the same end date more bluntly: “We expect to complete our exit from Bitcoin mining by year end.” The comments landed alongside a results release filed with the SEC that shows how far the shift has already gone. Colocation revenue experienced a significant sequential increase of nearly 60%, reaching $215.4 million for the quarter ending September 30, as indicated in the earnings report. Revenue from digital asset self-mining decreased to $12.3 million, reflecting a decline of approximately 79% from $57.4 million in the previous year. Hosted mining for third parties contributed a mere $5.2 million. Colocation now constitutes approximately 92% of the total revenue, which stands at $232.9 million.
Self-mining reported a gross loss of $7.5 million for the quarter. Colocation gross profit reached $128.4 million, reflecting a margin of 60%. Adjusted EBITDA increased more than threefold sequentially to $133.6 million, with the margin expanding to 57% from 25%. Nygaard stated that Core Scientific had approximately 50% fewer miners operational at the conclusion of September compared to the end of 2025. The company has been repurposing power and floor space under long-term customer agreements for AI and high-performance computing workloads, a process its investor materials describe as continuing “as circumstances allow.” That trajectory is not singular among publicly traded miners. Market participants have been divesting from bitcoin and leasing facilities to AI enterprises, while analytical reports have highlighted an expanding funding disparity between entities capable of financing data center constructions and those lacking such resources.
As of September 30, Core Scientific is reporting 485 megawatts of colocation capacity, reflecting an increase of 90 megawatts during the quarter. This capacity translates to over $700 million in average annualised GAAP revenue from colocation. The remaining approximately 100 MW associated with its CoreWeave buildout is currently in the commissioning phase and is anticipated to begin generating revenue in the coming months, according to Sullivan. In addition to the 590 MW contracted by CoreWeave, Core Scientific has secured 530 MW through an AMD-backed agreement spanning five campuses. The initial delivery is slated for the first half of 2027, with full delivery anticipated by the end of 2028. Together, the two relationships encompass approximately 1.1 GW of capacity. Upon full delivery and billing, management anticipates that the portfolio will yield an average annual run-rate revenue of $1.8 billion and a net operating income of $1.6 billion. Bitcoin is nearing its disappearance from the financial records. Digital assets were recorded at $2.7 million on Sept. 30, a decline from $49.7 million three months prior and $222 million at the end of 2025.
Earlier this year, Core Scientific continued to accumulate coins while simultaneously selling during the pivot; that chapter is now effectively concluded. The mining exit has already incurred a cash cost. A $41.9 million loss on contract termination recorded in the second quarter signifies the choice to conclude a Block/Proto mining chip supply agreement. Liquidity concluded the third quarter at approximately $1.7 billion, which encompasses around $800 million in cash, following substantial capital expenditures on AMD facilities and the Polaris acquisition. Sullivan characterised the wind-down as a move to streamline the business in pursuit of “more attractive long-term growth opportunities.” Nygaard noted that commencing in 2027 with a “very clean P&L” – one devoid of mining in the figures – ought to provide investors with a more transparent view of a genuine colocation run-rate. The current challenge lies in determining if Core Scientific will deactivate the remaining machines as planned in the fourth quarter, and whether the AMD financing package will arrive promptly to sustain the growth of that clean P&L.
