TL;DR · 30-second read
The Short Version
Core Scientific started out mining bitcoin and now rents out huge computer buildings for artificial intelligence. It has lined up $600 million in banking arrangements from four major banks.
The surprise: most of it is not a loan. It is mainly a bank’s promise to cover what the company owes electric utilities, the way a co-signer backs a lease. That frees up about $300 million of the company’s own cash that had been locked away.
Getting electricity for artificial intelligence ties up serious money, not just land and machines.
Core Scientific (Nasdaq: CORZ) announced on August 27, 2026, that it had entered into $600 million of committed senior secured credit facilities. The package has two parts: a $100 million revolving credit facility, which is a credit line the company can draw, repay and draw again, and a $500 million letter of credit facility. Chief Financial Officer Jim Nygaard said the facilities are expected to release approximately $300 million of restricted cash.
Morgan Stanley Senior Funding led the deal as Lead Left Arranger. JPMorgan Chase Bank serves as Administrative and Collateral Agent. Goldman Sachs and TD Securities joined as Joint Lead Arrangers. The company said commitments are expected to be allocated equally among the four banks.
Executive Summary
Core Scientific’s new $600 million financing is mostly not borrowing capacity. Its largest piece, $500 million, is a facility for issuing letters of credit. The company says these letters may provide credit support for specific project obligations under utility agreements, as well as for general corporate purposes. The $100 million revolver is for general corporate purposes and working capital. The company expects the arrangement to free approximately $300 million of restricted cash, which CFO Jim Nygaard said would be “meaningfully improving our capital efficiency and financial flexibility.”
The structure matters more than the headline size. For an operator converting bitcoin-mining sites into AI hosting, securing power means more than connecting to the grid. Utility agreements can also require financial security. This deal swaps cash collateral for bank guarantees, at a disclosed annual cost and in exchange for a first-priority lien on substantially all of the company’s assets.
Several things are substantiated: the facility sizes, pricing, maturity of the revolver, collateral package and bank lineup. Several things are not. Core Scientific has not said how much in letters of credit it will issue, which utility obligations they will back, when the $300 million will actually be released, or how the freed cash will be deployed.
Why Most of the $600 Million Is a Bank Promise, Not a Loan
Of the $600 million Core Scientific arranged, $500 million, or five-sixths, is a letter of credit facility. A letter of credit is a bank’s written commitment to pay a named party, such as an electric utility, if the company fails to meet an obligation. Core Scientific’s announcement says these letters may be issued to provide credit support for specific project obligations under utility agreements. Only $100 million is a conventional revolving credit line that the company can draw and repay.
That split is the substance of the story. Large power users often have to give utilities financial security before capacity is built or reserved for them, because the utility carries the risk of stranded investment if the customer leaves. When that security is posted in cash, it sits on the balance sheet as restricted cash: it is counted as the company’s money, but the company cannot spend it. Core Scientific has not itemized what its restricted cash currently secures. It has, however, paired a facility designed to back utility obligations with an expected release of approximately $300 million of restricted cash. The plain reading is that a bank’s guarantee will stand where the company’s own cash used to.
For a company whose business depends on electricity, the deal shows how much financial weight power arrangements can carry alongside the physical buildout. Megawatts, or millions of watts of electrical capacity, have to be secured on paper as well as delivered over the wire. Holding that paper costs money.
What It Costs to Unlock $300 Million
The swap is not free. Letters of credit carry an annual fee of 1.75% on outstanding amounts plus a 0.125% fronting fee, which goes to the bank that issues the letter on behalf of the lending group. Combined, that is 1.875% a year, or about $1.875 million for every $100 million of letters outstanding.
Revolver borrowings have a three-year maturity. They bear interest at Adjusted Term SOFR plus 1.75%, or an alternate base rate plus 0.75%, at the company’s choice. SOFR, the Secured Overnight Financing Rate, is a benchmark for short-term dollar borrowing.
The economic test is whether the freed cash earns more, once deployed, than the fees cost to keep it free. Collateral competes for capital with electrical gear, cooling and construction. A fee under 2% can look inexpensive if the released cash goes into revenue-producing conversions, but the company has not said where it will go.
There is also a cost that does not show up as a fee. The facilities are guaranteed by certain wholly owned domestic subsidiaries and secured by a first-priority lien on substantially all assets of the company and the guarantors. These banks now stand first in line against nearly everything Core Scientific owns. That position can shape the terms of any project-level financing the company seeks later.
A Template for Mining-to-AI Conversions
Core Scientific says the majority of its revenue now comes from high-density colocation. That means renting data center space engineered for the heavy power and cooling demands of AI servers. The rest of its revenue comes from mining digital assets for its own account and from hosting other miners. The company is repurposing its remaining mining facilities “as circumstances allow” across 11 sites in seven states. Each conversion of that kind requires utility arrangements suited to denser, more demanding loads, and each arrangement can call for security.
The bank lineup is part of the signal. Morgan Stanley, JPMorgan, Goldman Sachs and TD Securities are expected to hold equal commitments. That gives a company that built its footprint in digital-asset mining committed letter of credit capacity from major banks, so it can satisfy utility security with bank paper rather than posting its own cash. Other operators converting mining sites to AI hosting face the same kind of utility obligations. Whether they can get comparable bank capacity, on comparable terms, will depend on their own credit and their own contracts.
Background
Core Scientific, listed on Nasdaq as CORZ, built its footprint operating large data centers for digital-asset mining. It now describes itself as a leader in designing, building and operating purpose-built data centers for high-density colocation serving AI workloads. Most of its revenue comes from that colocation business, with the remainder from mining for its own account and from hosting other miners. The company operates 11 facilities across Alabama, Georgia, Kentucky, North Carolina, North Dakota, Oklahoma and Texas, and it is converting its remaining mining sites to colocation as circumstances allow.
The AI buildout has drawn operators with existing large power connections, including bitcoin miners, into AI hosting, because grid power is among the slowest inputs to secure for a new data center. Converting a site involves more than new electrical gear and cooling. It also means negotiating utility arrangements that can require the operator to post financial security. How that security is funded, whether with cash or bank guarantees, has become a financing question in its own right. Source: Core Scientific (NASDAQ:CORZ) Stock: New Senior Secured Credit Facilities Aim to Free Up Restricted Cash — Kalkine’s coverage of Core Scientific’s new credit facilities and the expected release of restricted cash. Primary sources: Core Scientific Secures $600 Million of Senior Secured Credit Facilities — Core Scientific press release, August 27, 2026.Sources