Core Scientific, Inc. CORZ Form 10-Q filing Q1 FY2026

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets 6

Condensed Consolidated Statements of Operations 7

Condensed Consolidated Statements of Stockholders’ Equity 8

Condensed Consolidated Statements of Cash Flows 9

Notes to Condensed Consolidated Financial Statements 10

1 — Organization and Description of Business 10

2 — Summary of Significant Accounting Policies 10

3 — Property, Plant, and Equipment 15

4 — Balance Sheet Components 16

5 — Leases 17

6 — Debt 19

7 — Warrant Liabilities 21

8 — Fair Value Measurements 21

9 — Commitments and Contingencies 23

10 — Income Taxes 25

11 — Stock-Based Compensation 25

12 — Net Loss Per Share 27

13 — Segment Reporting 28

14 — Supplemental Cash Flow and Noncash Information 30

15 — Subsequent Events 31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32

Item 3. Quantitative and Qualitative Disclosures About Market Risk 44

Item 4. Controls and Procedures 44

PART II — OTHER INFORMATION

Item 1. Legal Proceedings 46

Item 1A. Risk Factors 46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47

Item 3. Defaults Upon Senior Securities 47

Item 4. Mine Safety Disclosures 47

Item 5. Other Information 47

Item 6. Exhibits 48

Signatures 49

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Item 1. Financial Statements

6

Certain prior year amounts have been reclassified for consistency with the current year presentation.

See accompanying notes to unaudited condensed consolidated financial statements.

7

See accompanying notes to unaudited condensed consolidated financial statements.

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Core Scientific, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

(in thousands)

For the Three Months Ended March 31, 2026

For the Three Months Ended March 31, 2025

See accompanying notes to unaudited condensed consolidated financial statements.

1 Proceeds from digital assets received as noncash revenue consideration liquidated upon management's discretion.

9

Certain prior year amounts have been reclassified for consistency with the current year presentation.

See accompanying notes to unaudited condensed consolidated financial statements.

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Core Scientific, Inc. (“Core Scientific” or the “Company”) is a leader in designing, building and operating large scale, purpose-

built data centers for high-density colocation (“HDC”) services. Core Scientific operates facilities for high-density colocation services

serving artificial intelligence-related (“AI”) workloads and is a premier provider of digital infrastructure, software solutions and

services to its third-party customers. The majority of the Company's revenue is derived from high-density colocation services, with the

remainder derived from earning digital assets for the Company's own account and from digital asset mining hosting services. The

Company is in the process of repurposing its remaining mining facilities to support its high-density colocation services business as

circumstances allow. Core Scientific’s facilities are located in Alabama (1), Georgia (2), Kentucky (1), North Carolina (1), North

Dakota (1), Oklahoma (1), and Texas (4).

The Company had historically focused on designing, building and operating digital infrastructure to engage in digital asset

mining for its own account and providing hosting solutions for third-party digital asset miners. In 2024, the Company announced its

first high-density colocation contract with CoreWeave, Inc. (“CoreWeave), a provider of high-performance computing ("HPC")

services.

Core Scientific operates in three segments: “Colocation,” consisting of providing high-density colocation services to customers

employing AI and HPC related workloads, “Digital Asset Self-Mining,” consisting of performing digital asset mining for its own

account, and “Digital Asset Hosted Mining,” consisting of providing hosting services to third parties for digital asset mining.

The Company’s high-density colocation services provide space, power, cooling, facilities operations, security and other services

to third-party colocation customers to support workloads for machine learning and AI. Colocation segment revenue is concentrated

with a single customer; see Note 13 — Segment Reporting.

The Company’s digital asset hosted mining business provides a full suite of services to digital asset mining customers. The

Company provides deployment, monitoring, troubleshooting, optimization and maintenance of customers’ digital asset mining

equipment and provide necessary electrical power, repair and other infrastructure services necessary for customers to operate, maintain

and efficiently mine digital assets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim condensed consolidated financial statements reflect the application of certain significant

accounting policies as described below and elsewhere in these notes to the unaudited interim condensed consolidated financial

statements.

Basis of Presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”). All intercompany balances and transactions have been

eliminated in consolidation.

The results for the unaudited interim condensed consolidated statements of operations are not necessarily indicative of results to

be expected for the year ending December 31, 2026 or for any future interim period. The unaudited interim condensed consolidated

financial statements do not include all the information and notes required by GAAP for complete financial statements. The

accompanying unaudited interim financial statements should be read in conjunction with the consolidated financial statements and

related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and

liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Some

of the more significant estimates include assumptions used in property, plant and equipment, the initial measurement of lease

liabilities, stock-based compensation, the fair value of derivative liabilities, and income taxes. These estimates are based on

information available as of the date of the financial statements; therefore, actual results could differ from management’s estimates.

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include all cash balances and highly liquid investments, including money market funds, with original

maturities of three months or less from the date of acquisition. As of March 31, 2026 and December 31, 2025, substantially all cash

and cash equivalents exceeded Federal Deposit Insurance Corporation insured limits. Restricted cash as of March 31, 2026, consisted

of funds held in escrow in connection with utility and other contractual arrangements.

Digital Assets

The Company’s digital assets have active markets with observable prices and their fair value measurements are considered

Level 1. The following table presents a roll-forward of total digital assets for the three months ended March 31, 2026 and 2025 (in

thousands):

1 As of March 31, 2026, and December 31, 2025, there was $0.3 million and $0.4 million, respectively, of digital asset receivable included in Customer funding

receivable and other current assets on the Company’s condensed consolidated balance sheets.

The following table presents the Company’s bitcoin holdings (in thousands, except for quantity):

Property, Plant and Equipment, Net

Property, plant, and equipment includes the cost of land, buildings, and improvements for datacenter and support facilities and

the Company’s corporate office space. Property and equipment further consists of computer, mining, network, electrical and other

equipment, including property and equipment under finance leases. Property, plant and equipment, net is stated at cost less

accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the

estimated useful lives of the assets. Leasehold improvements are capitalized at cost and amortized over the shorter of their estimated

useful lives or the lease term. Future obligations related to finance leases are presented as Finance lease liabilities, current portion and

Finance lease liabilities, net of current portion in the Company’s condensed consolidated balance sheets. Depreciation expense,

including amortization of assets held under finance leases, is primarily included in Cost of revenue in the Company’s condensed

consolidated statements of operations.

Property, plant and equipment capitalized costs include the directly identifiable costs incurred to acquire, construct, install, or

otherwise prepare the asset for its intended use and to put it into service. Directly identifiable costs include construction payroll and

benefits and other direct capital project costs.

When management decides to abandon long-lived assets before the end of their previously estimated useful life, the Company

considers whether an impairment of the related asset group has been triggered. If that asset group is no longer recoverable, an

impairment is recognized for any excess of the asset group’s carrying value above its fair value. Thereafter, the estimated useful life,

salvage value, and prospective depreciation of the affected assets are revised to reflect their shortened remaining useful life. The

historical cost of assets, and related accumulated depreciation, are written off at the time that assets are removed from service.

Long-Lived Asset Impairments

The Company tests long-lived asset groups for recoverability whenever events or changes in circumstances have occurred that

may affect recoverability or the estimated useful lives of long-lived assets. Long-lived assets include property, plant and equipment

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

and intangible assets subject to amortization. A long-lived asset may be impaired when the estimated future undiscounted cash flows

are less than the carrying amount of the asset. If that comparison indicates that the asset’s carrying value may not be recoverable, the

impairment is measured based on the difference between the carrying amount and the estimated fair value of the asset. Long-lived

assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell.

Deferred Revenue

Deferred revenue from colocation services relate to prepaid base license fees for colocation lease arrangements which are

accounted for under Accounting Standards Codification (“ASC”) 842, Leases (“ASC Topic 842”). Prepaid base license fees relate to

capital expenditures on colocation facility site development funded by the customer. Deferred revenue from hosted mining services

relates to customer contracts for digital asset hosted mining services which are accounted for under ASC 606, Revenue Recognition

(“ASC Topic 606”). Advanced payments are typically recognized in the following month for hosted mining services and are generally

recognized within 30 months of license order commencement for colocation services.

The following table presents a rollforward of deferred revenue for the periods presented (in thousands):

Revenue Recognition - Colocation Revenue

The Company’s Colocation segment generates revenue by licensing data center space to customers under licensing agreements.

These arrangements contain lease components for the right to use data center space and nonlease components for power delivery,

physical security, and maintenance services. The Company has elected the practical expedient available under ASC Topic 842, to

combine the nonlease revenue components that have the same pattern of transfer as the related operating lease components into a

single combined component. The single combined component is accounted for under ASC Topic 842 as an operating lease if the lease

components are the predominant components and is accounted for under ASC Topic 606 if the nonlease components are the

predominant components. The lease components are the predominant components in the Company’s current licensing arrangements

and the single combined component in these arrangements is accounted for under the operating lease guidance of ASC Topic 842.

The Company has concluded that it is probable that substantially all of the payments will be collected over the term of the

arrangements and recognizes the total combined component license payments under the agreements on a straight-line basis over the

non-cancellable term. The difference between straight-line license revenue and amounts billed or received is recorded as deferred

revenue in the condensed consolidated balance sheets. Certain arrangements include options to extend the term. These extension

options are not reasonably certain to be exercised and are excluded from the lease term and calculation of lease payments at lease

commencement.

Certain licensing arrangements provide for variable payments for power delivery services and maintenance services on

customer assets and reimbursements for lessor costs such as taxes. Payments for physical security and other routine maintenance

services are included in the fixed lease payments. Power delivery services represent a stand ready obligation to make power available

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

to the customer over the coterminous lease term and have the same pattern of transfer as the related operating lease components.

Customers may request and the Company may provide maintenance services on customer assets during the coterminous lease term.

Customers are charged monthly for fees incurred on these maintenance services delivered and actual power costs incurred at current

utility or fuel cost rates. These payments from customers for power delivery and maintenance services are recognized as variable lease

payments in accordance with the practical expedient elected. Variable lease payments are presented on a gross basis and are included

in Colocation revenue in the condensed consolidated statements of operations.

Revenue From Contracts With Customers - Digital Asset Self-Mining Revenue

The Company recognizes revenue in accordance with ASC Topic 606.

One of the Company’s ongoing major or central operations is to provide hash calculations to third-party pool operators as a

participant in mining pools. The Company considers the third-party mining pool operators to be its customers under ASC Topic 606.

Contract inception and the Company’s enforceable right to consideration begin when the Company commences providing hash

calculation services to the mining pool operators. Each party to the contract has the unilateral right to terminate the contract at any

time without any compensation to the other party for such termination. As such, the duration of a contract is less than a day and may

be continuously renewed multiple times throughout the day. The implied renewal option is not a material right because there are no

upfront or incremental fees in the initial contract and the terms, conditions, and compensation amount for the renewal options are at

the then market rates.

The Company is entitled to non-cash compensation based on the Full-Pay-Per-Share (“FPPS”) model of the mining pool in

which it participates. FPPS pools pay block rewards and transaction fees, net of mining pool fees, and participants are entitled to non-

cash consideration even if a block is not successfully validated by the mining pool operator. The Company is entitled to compensation

once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a daily 24-hour

period beginning 00:00:00 UTC and ending 23:59:59 UTC. The non-cash consideration for providing hash calculations to the pool

operator under the FPPS payout method is comprised of block rewards and transaction fees net of pool operator fees, determined as

follows:

• The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated on the Bitcoin

Network for the daily 24-hour period beginning 00:00:00 UTC and ending 23:59:59 UTC in accordance with the following

formula: the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin Network’s

implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin Network block rewards

expected to be generated for the same daily period.

• The non-cash consideration in the form of transaction fees paid by transaction requestors is based on the share of total actual

fees paid over the daily 24-hour period beginning 00:00:00 UTC and ending 23:59:59 UTC in accordance with the following

formula: total actual transaction fees generated on the Bitcoin Network during the 24-hour period as a percent of total block

rewards the Bitcoin Network actually generated during the same 24-hour period, multiplied by the block rewards the

Company earned for the same 24-hour period noted above.

• The block reward and transaction fees earned by the Company are reduced by mining pool fees charged by the operator for

operating the pool based on a rate schedule per the mining pool contract. The mining pool fee is only incurred to the extent

the Company performs hash calculations and generate revenue in accordance with the pool operator’s payout formula during

the same daily 24-hour period.

The above non-cash consideration is variable, since the amount of block reward earned depends on the amount of hash

calculations the Company performs; the amount of transaction fees the Company is entitled to depends on the actual Bitcoin Network

transaction fees over the same 24-hour period; and the operator fees for the same 24-hour period are variable since they are determined

based on the total block rewards and transaction fees in accordance with the pool operator’s agreement. The Company estimates

variable consideration at contract inception and includes amounts for which it is probable that a significant reversal in the amount of

revenue recognized will not occur when the uncertainty is subsequently resolved. The Company recognizes the non-cash consideration

on the same day that control is transferred of the underlying bitcoin, which is the same day as contract inception.

The Company measures the non-cash consideration using the spot rate for Bitcoin as quoted on Coinbase Global, Inc., the

Company’s principal market. The Company recognizes non-cash consideration on the same day that control of the contracted service

is transferred to the pool operator, which is the same day as the contract inception.

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Direct expenses associated with providing hash calculation services to a third-party operated mining pool are recorded as cost

of revenues. Depreciation and amortization expenses on fixed and right-of-use assets, including digital asset mining equipment, used

to provide the services are also recorded as a component of cost of revenues.

Revenue From Contracts With Customers - Digital Asset Hosted Mining Services

The Company generates revenue from contracts with customers from digital asset hosted mining services. The Company

recognizes revenue when the promised service is performed. Revenue excludes any amounts collected on behalf of third parties,

including sales and indirect taxes.

Hosting Services

The Company regularly enters contracts that include hosting services, for which revenue is recognized as services are

performed on a variable basis. The Company performs hosting services that enable customers to run blockchain and other HPC

operations. The Company’s performance obligation related to these services is satisfied over time. The Company recognizes revenue

for services that are performed on a consumption basis, such as the amount of electricity used in a period, based on the customer’s use

of such resources. The Company recognizes variable consumption usage hosting revenue each month as the uncertainty related to the

consideration is resolved, hosting services are provided to the Company’s customers, and its customers utilize the hosting services (the

customer simultaneously receives and consumes the benefits of the Company’s performance). The Company generally bills its

customers in advance based on estimated consumption under the contract. The Company recognizes revenue based on actual

consumption in the period and invoices adjustments in subsequent periods or retains credits toward future consumption. The term

between invoicing and when payment is due typically does not exceed 30 days.

Stock-Based Compensation

The Company grants performance and market conditioned restricted stock units (“PSUs”) to certain executives as part of its

long-term equity compensation program. Each PSU has service conditions and either market or performance conditions that are

subject to respective graded vesting schedules. Each tranche in the respective graded vesting schedule is a separate award for

accounting purposes and the Company applies the accelerated attribution method to recognize compensation expense. Compensation

expense is recognized over the longer of the explicit service period or the performance measurement period of each tranche.

PSU tranches with market conditions, such as the relative total shareholder return (“RTSR”) metric, are measured on the grant

date using a Monte Carlo simulation model. PSU tranches with performance conditions are measured using the grant date fair value of

the Company’s common stock and are expensed only when the performance condition is deemed probable of achievement. The

Company reassesses the probability of achieving performance conditions at each reporting date and adjusts for actual forfeitures as

they occur.

Recently Adopted Accounting Standards

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments

(“ASU 2024-04”), which clarifies the accounting for certain settlements of convertible debt instruments as induced conversions versus

extinguishments. The guidance is effective for fiscal years beginning after December 15, 2025. The Company adopted ASU 2024-04

as of January 1, 2026, and will apply the guidance prospectively. The adoption of ASU 2024-04 did not have a material impact on the

Company’s consolidated financial statements and related disclosures.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense

Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires

disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. In

January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03 for all public business entities. The

amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within

annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied

prospectively; retrospective application is also permitted. The Company is currently evaluating the impact these ASUs will have on its

consolidated financial statements and related disclosures.

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

3. PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment, net as of March 31, 2026 and December 31, 2025 consist of the following (in thousands):

1 Estimated useful life of improvements. Land is not depreciated.

Depreciation expense for the three months ended March 31, 2026 and 2025 was $16.4 million and $19.5 million, respectively.

During the three months ended March 31, 2026 and 2025, $140.5 million and $1.6 million, respectively, of construction in

progress was placed into service.

As of March 31, 2026 and December 31, 2025, property, plant and equipment, net being leased to customers consisted of the

following (in thousands):

Depreciation expense for assets leased to customers for the three months ended March 31, 2026, was $2.6 million. There were

no assets leased to customer for the three months ended March 31, 2025.

During the three months ended March 31, 2026, the Company identified indicators of impairment of its mining equipment and

mining infrastructure asset groups, including sustained declines in bitcoin prices, declines in bitcoin hashprice, and significant

decreases in secondary market values for digital asset mining equipment. As a result, the Company performed a recoverability

assessment of its mining-related asset groups in accordance with ASC Topic 360-10. The undiscounted future cash flows for each

asset group was less than its carrying amount, indicating the assets were not recoverable.

The Company measured the fair value of its mining equipment using a market approach based on observable secondary market

pricing data for similar assets. The Company measured the fair value of its mining infrastructure assets using an income approach

based on a discounted cash flow analysis reflecting the estimated future cash flows a market participant would expect from operating

the assets as mining hosting facilities.

During the three months ended March 31, 2026, the Company recognized impairment charges of $266.5 million, consisting of

$151.6 million related to mining equipment and $114.9 million related to mining infrastructure, which are included in Impairment of

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

property, plant and equipment in the condensed consolidated statements of operations. No impairment charges were recognized during

the three months ended March 31, 2025.

4. BALANCE SHEET COMPONENTS

Customer funding receivable and other current assets as of March 31, 2026 and December 31, 2025 consisted of the following

(in thousands):

Customer funding receivable represents amounts due from the Company’s customer for construction-related payables and

accrued expenses incurred on their behalf. The Company collects these amounts from the customer prior to payment to vendors.

Obligations related to customer items are paid soon after reimbursement. As of March 31, 2026, $187.7 million of the related

obligations were included in accrued expenses and $128.0 million were included in accounts payable, compared with $290.6 million

in accrued expenses and $46.6 million in accounts payable as of December 31, 2025.

Accrued expenses as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

Other noncurrent liabilities as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

5. LEASES

Lessee Accounting

The components of operating and finance leases are presented on the Company’s condensed consolidated balance sheets as

follows (in thousands):

The components of lease expense were as follows (in thousands):

Information relating to the lease term and discount rate is as follows:

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Information relating to lease payments is as follows (in thousands):

The Company’s minimum payments under noncancelable operating and finance leases having terms in excess of one year are as

follows at March 31, 2026, and thereafter (in thousands):

Lessor Accounting

We generate revenue by leasing property to a customer under licensing agreements. The manner in which the Company

recognizes these transactions in its financial statements is described in Note 2 — Summary of Significant Accounting Policies,

Revenue Recognition — Colocation Segment.

The components of lease revenue were as follows (in thousands):

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table represents the maturity analysis of operating lease payments expected to be received at March 31, 2026,

and thereafter (in thousands):

1 Operating lease payments expected to be received exclude $5.8 billion in total future noncancellable operating lease payments expected to be received for operating

leases that have not yet commenced as of March 31, 2026, which have initial lease terms of 12 years from commencement.

6. DEBT

Debt as of March 31, 2026 and December 31, 2025 consisted of the following (in thousands):

1 Interest rate is variable and resets monthly based on SOFR plus an applicable margin of 2.50% per annum. As of March 31, 2026, the stated rate was 6.2% and the

effective interest rate was 6.9%, which includes the amortization of debt issuance costs.

Interest expense on the Company’s debt was as follows (in thousands):

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Maturities on debt, gross of unamortized discounts, as of March 31, 2026, are as follows (in thousands):

Convertible Notes

On August 19, 2024, the Company issued $460.0 million in aggregate principal amount of 3.00% Convertible Senior Notes due

2029 (the “2029 Convertible Notes”). The 2029 Convertible Notes mature on September 1, 2029, unless earlier converted, redeemed

or repurchased. The 2029 Convertible Notes are convertible at the option of the holders only upon the occurrence of certain events,

including if the Company's common stock price exceeds 130% of the conversion price (approximately $14.30 per share, based on the

initial conversion price of approximately $11.00 per share) for at least 20 trading days (whether or not consecutive) during the 30

consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter. The stock

price conversion condition for the 2029 Convertible Notes was first satisfied during the fourth quarter of 2025. As a result, the 2029

Convertible Notes were convertible at the option of the holders during the three months ended March 31, 2026. No holders elected to

convert during the period. This condition was also satisfied during the first quarter of 2026, and accordingly, the 2029 Convertible

Notes remain convertible during the second quarter of 2026.

On December 5, 2024, the Company issued $625.0 million aggregate principal amount of 0.00% Convertible Senior Notes due

2031 (the "2031 Convertible Notes"). The 2031 Convertible Notes mature on June 15, 2031, unless earlier converted, redeemed, or

repurchased. The 2031 Convertible Notes are convertible at the option of the holders only upon the occurrence of certain events,

including if the Company’s common stock price exceeds 130% of the conversion price (approximately $29.24 per share, based on the

initial conversion price of approximately $22.49 per share) for at least 20 trading days (whether or not consecutive) during the 30

consecutive trading day period ending on, and including, the last trading day of the immediately preceding calendar quarter. The stock

price conversion condition for the 2031 Convertible Notes was not satisfied during any measurement period through March 31, 2026.

Term Loan Facility

On March 4, 2026, the Company entered into a loan facility Credit Agreement (the “Credit Agreement”) with the lenders party

thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent (“MSSF”). The Credit

Agreement provides for a senior secured loan facility (the “Term Loan Facility”) in an aggregate principal amount of $500.0 million,

with an accordion feature that allowed up to an additional $500.0 million. The Company borrowed the full $500.0 million initially

available on March 5, 2026. On March 18, 2026, the Company entered into Amendment No. 1 to the Credit Agreement (the

“Incremental Amendment”) with MSSF and JPMorgan Chase Bank, N.A. as Amendment No. 1 Term Lender, which amended the

Credit Agreement to increase the term loan commitments by $500.0 million, to $1.0 billion, pursuant to the accordion feature of the

Credit Agreement. The Company borrowed the full $500.0 million incremental commitment on March 18, 2026.

Loans under the Term Loan Facility bear interest at Term Secured Overnight Financing Rate (“SOFR”) (subject to a 0% floor)

plus an applicable margin of 2.50% per annum. The Term Loan Facility matures 364 days after the closing date. The Company’s

obligations are guaranteed by certain direct or indirect, wholly owned material domestic subsidiaries and secured by a first-priority

lien on substantially all assets of the Company and the guarantors. As of March 31, 2026, $1.0 billion was outstanding under the Term

Loan Facility. In connection with the Credit Agreement and the Incremental Amendment, the Company incurred approximately

$6.4 million of debt issuance costs, which are being amortized over the term of the Term Loan Facility.

Secured Notes Offering

On April 22, 2026, the Company's indirect wholly-owned subsidiary, Core Scientific Finance I LLC (“Core Scientific

Finance”), priced a private offering of $3.30 billion aggregate principal amount of 7.75% senior secured notes due 2031 at an issue

price of 99.25% of the principal amount. Core Scientific Finance used the net proceeds from the offering to fund a debt service reserve

account, and the remaining proceeds to make a distribution to the Company, a portion of which the Company used to repay in full the

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

outstanding borrowings under the Term Loan Facility, including accrued interest thereon and fees and expenses in connection

therewith. The offering closed on May 6, 2026. Upon such repayment, the Company terminated the Term Loan Facility.

7. WARRANT LIABILITIES

On January 23, 2024, the Company entered into a warrant agreement (the “Warrant Agreement”) providing for the issuance of

98,313,313 warrants, each exercisable for one share of common stock at an exercise price of $6.81 per share (the “Tranche 1

Warrants”), and 81,927,898 warrants, each exercisable for one share of common stock at an exercise price of $0.01 per share (the

“Tranche 2 Warrants” and, together with the Tranche 1 Warrants, the “Warrants”). The Tranche 1 Warrants expire on January 23,

2027, and the Tranche 2 Warrants expire on January 23, 2029.

During the three months ended March 31, 2026, nominal Tranche 1 Warrants were exercised, which resulted in cash receipts of

$0.1 million. As of March 31, 2026, there were 96.7 million unexercised Tranche 1 Warrants.

During the three months ended March 31, 2026, 0.4 million Tranche 2 Warrants were exercised, which resulted in immaterial

cash receipts. As of March 31, 2026, there were 7.8 million unexercised Tranche 2 Warrants.

8. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

During the three months ended March 31, 2026 and 2025, a decrease of $1.0 million and an increase of $12.8 million, in fair

value of CVRs, respectively, was included in Change in fair value of warrants and contingent value rights in the Company’s

condensed consolidated statements of operations.

During the three months ended March 31, 2026 and 2025, an increase of $31.8 million and a decrease of $634.3 million, in fair

value of Warrants, respectively, was included in Change in fair value of warrants and contingent value rights in the Company’s

condensed consolidated statements of operations.

The following presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a

recurring basis as of March 31, 2026 (in thousands):

1 The fair value of contingent value rights is included within Other current liabilities and Other noncurrent liabilities on the Company’s condensed consolidated balance

sheets, based on the expected timing of settlement.

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a

recurring basis as of December 31, 2025 (in thousands):

1 The fair value of contingent value rights is included within Other current liabilities and Other noncurrent liabilities on the Company’s condensed consolidated balance

sheets, based on the expected timing of settlement.

Financial Instruments Not Carried at Fair Value

The Convertible Notes are recorded at amortized cost in the condensed consolidated balance sheets. The fair value is disclosed

for informational purposes only in accordance with ASC Topic 825-10, Financial Instruments, and is determined using trading

activity in over-the-counter markets. The following tables present the carrying amounts and estimated fair values of the Convertible

Notes as of March 31, 2026 and December 31, 2025 (in thousands):

March 31, 2026

December 31, 2025

Nonrecurring Fair Value Measurements

The Company measures certain non-financial assets at fair value on a nonrecurring basis when events or circumstances indicate

that the carrying amount may not be recoverable. During the three months ended March 31, 2026, the Company measured the fair

value of its mining-related long-lived asset groups in connection with the impairment charges described in Note 3 — Property, Plant,

and Equipment.

23

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents the fair value of assets measured on a nonrecurring basis during the three months ended March 31,

2026 (in thousands):

The fair value of mining equipment was determined using a market approach based on observable pricing from published

secondary market indices for digital asset mining hardware, classified as Level 2 within the fair value hierarchy.

The fair value of mining infrastructure was determined using an income approach based on a discounted cash flow analysis of a

hypothetical colocation hosting arrangement, classified as Level 3 within the fair value hierarchy. The following table presents the

significant unobservable inputs used in the Level 3 measurement:

The Company’s financial instruments, which are not subject to recurring fair value measurements, include cash and cash

equivalents (other than money market funds), restricted cash, accounts receivable, accounts payable, leases, debt and certain accrued

expenses and other liabilities. Except for the 2029 Convertible Notes and 2031 Convertible Notes, the carrying amounts of these

financial instruments materially approximate their fair values.

9. COMMITMENTS AND CONTINGENCIES

Commitments

As of March 31, 2026, the Company had approximately $1.47 billion of expected future cash expenditures under its outstanding

purchase and construction commitments, primarily related to infrastructure development costs, power utility deposits, equipment

procurement, and labor. These commitments relate to the remaining build out at existing customer conversion sites, and new

greenfield development undertaken for prospective customers. Of this amount, $434.0 million will be passed through to the

Company’s customer as invoiced. Substantially all of these expenditures are expected to occur within the next 12 months.

The Company routinely engages with construction vendors for the construction of its facilities. These engagements are

governed by contracts containing standard terms and conditions, including certain milestones that obligate the Company to pay as

work is completed. In the event of termination of any of these contracts by the Company, the Company would be liable for all work

that has been completed or is in process, plus any applicable fees. The Company generally has the right to cancel open purchase orders

prior to delivery or terminate the contracts without cause.

Legal Proceedings

The Company is subject to legal proceedings arising in the ordinary course of business. The Company accrues losses for a legal

proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the

uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters.

Accordingly, actual costs incurred may differ materially from amounts accrued and could materially adversely affect the Company’s

business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, the Company is unable to

estimate reasonably possible losses in excess of any amounts accrued.

Purported Shareholder Class Action (“Pang”)

On November 14, 2022, Plaintiff Mei Pang filed a purported class-action complaint against Core Scientific, Inc., its former

chief executive officer, Michael Levitt, and others in the United States District Court, Western District (Austin) of Texas asserting that

the Company violated the Securities Act and Exchange Act by allegedly failing to disclose to investors that among other things the

24

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Company was vulnerable to litigation given its decision to pass power costs to its customers, that certain clients had breached their

contracts, and that this impacted the Company’s profitability and ability to continue as a going concern. The complaint seeks monetary

damages. Core filed a notice of suggestion of bankruptcy stating that its petition for bankruptcy—filed on December 21, 2022—

operates as a stay to the continuation of this matter. Plaintiff subsequently withdrew its claims against Core. A lead plaintiff was

appointed in April 2023 and proofs of claim were filed in the Company’s Chapter 11 Cases. After the Company filed its motion to

dismiss and a subsequent motion for consideration with respect to remaining claims not dismissed, all remaining claims in the

complaint against the individual defendants were subsequently dismissed without prejudice in April 2024.

On December 7, 2023, the United States Bankruptcy Court for the Southern District of Texas in Houston, sustained the

Company’s objection to the filed class proof of claim without prejudice to re-file a proof of claim on an individual basis by December

20, 2023; and denied plaintiff’s Motion for Class Treatment under Fed. R. Bankr. P. 7023. No individual proof of claim was filed by

any of the class representatives of the purported class action by December 20, 2023, and a separately filed objection to confirmation of

Debtors’ Fourth Amended Chapter 11 Plan and Disclosure Statement was overruled by the Bankruptcy Court on January 16, 2024. On

January 29, 2024, plaintiff filed a notice of appeal of the order confirming the Company’s Plan of Reorganization.

On June 7, 2024, Plaintiff refiled its complaint asserting that the individual defendants violated the Securities Exchange Act by

allegedly failing to disclose to investors that among other things the Company failed to disclose known trends or uncertainties that

would have an impact on the Company’s financial performance. The Company’s motion to dismiss the refiled complaint is pending

with the United States District Court in Austin, Texas.

On March 7, 2025, the United States District Court for the Western District (Austin) of Texas referred Plaintiff's complaint to

the United States Bankruptcy Court for the Southern District of Texas in Houston for determination of the issues raised by the

Company's motion to dismiss, dismissed without prejudice Company's motion to dismiss as moot and administratively closed the case.

On March 19, 2025, the United States Bankruptcy Court Southern District of Texas Houston Division dismissed Plaintiff's appeal of

the order confirming the Company's Plan of Reorganization as it related to the Plaintiffs as moot in light of the administrative closure

of the securities case brought by the Plaintiffs in the United States District Court Western District of Texas. On April 2, 2025, the

Plaintiff's filed a Motion for Reconsideration of the orders entered in each of the United States District Court for the Southern District

of Texas Houston Division and the United States District Court for the Western District of Texas (Austin) each of which was denied

and as to which Plaintiff has appealed.

Shareholder Class Action (“Ihle”)

On July 24, 2023, Plaintiff Brad Ihle filed a class action complaint against certain officers and directors of Power & Digital

Infrastructure Acquisition Corp. (the former name of the current corporate entity operating our business, or “XPDI”) and XMS

Sponsor LLC et al, in the Court of Chancery State of Delaware. The complaint alleges breach of fiduciary duties arising out of the

merger of XPDI and the entity that conducted our business operations prior to the merger and the marketing and solicitation of

shareholders pursuant to that merger agreement dated July 20, 2021. Certain of the defendants have notified the Company of their

intention to seek defense and indemnification in this matter pursuant to Delaware law and the Company’s bylaws. The matter was

settled during the quarter ended December 31, 2025, with the Company’s payment in satisfaction of its existing indemnification

obligation. This payment is reflected in the Loss on legal settlements in the Company’s condensed consolidated statements of

operations.

Patent Infringement Claim

Malikie Innovations Ltd and Key Patents Innovations Ltd. (“Malikie”), filed suit in the United States District Court Eastern

District of Texas Marshall Division against Core Scientific, Inc. (the “Company”) alleging infringement in the Company’s bitcoin

mining business of U.S. Patent Nos. 8,788,827; 10,284,370; 8,666,062; 7,372,960; and 8,532,286. On July 20, 2025 the Company

filed a motion to dismiss the claims on the basis that the patents are invalid under 35 U.S.C §101 and on July 25, 2025 the Company

filed a motion to transfer the case to the United States District Court for the Western District of Texas (Austin). On November 14,

2025 Malikie filed a motion to amend the complaint to add allegations of infringement of U.S. Patent No. 8,712,039 by the

Company’s bitcoin mining business and its HPC business. Malikie also asserted infringement of the previously asserted 8,532,286

patent against the Company’s HPC business. All motions are pending. The court set a trial date of January 25, 2027.

Leases—See Note 5 — Leases for additional information.

25

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

10. INCOME TAXES

Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred

tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined

based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that

will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the

amount considered likely to be realized.

The income tax expense and effective income tax rate for the three months ended March 31, 2026 and 2025 were as follows:

For the three months ended March 31, 2026, the Company recorded $0.6 million of income tax expense which consisted of

discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is (0.2)%,

compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance (17.5)%, state taxes 0.7%,

non-deductible loss on warrant and contingent liabilities (3.2)% and other items (1.2)%. The Company has a full valuation allowance

on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset.

For the three months ended March 31, 2025, the Company recorded $0.2 million of income tax expense which consisted of

discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0%,

compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance 2.8%, state taxes (0.1)%,

non-deductible loss on warrant and contingent liabilities (24.6)% and other items 0.9%. The Company has a full valuation allowance

on its net deferred tax asset as evidence indicates that it is not more likely than not expected to realize such asset.

11. STOCK-BASED COMPENSATION

Incentive Plan

The Company adopted an equity-based management incentive plan on April 26, 2024 (the “Incentive Plan”), which was

amended and restated on May 12, 2025 to increase the number of shares authorized for issuance from 40,000,000 to 48,000,000.

Under the Incentive Plan, certain executives have been granted market condition restricted stock units (“MSUs”) which are subject to

the achievement of market-based share price goals and the executives’ continued service until the relevant vesting date. The number of

shares which vest as of the end of each measurement period on each vesting date are conditioned on the highest 20-day volume

weighted average price of the Company's share price achieved during the tranche’s measurement vesting period since grant. The MSU

vesting schedule is proportionate over a three-year service period where such proportions are identified as tranches with separate

service conditions and measurement periods for the market conditions. If certain market-based share price goals are not met during

certain tranche measurement periods, the ability to satisfy such goals apply in subsequent measurement periods and permit vesting if

such market conditions are then met (and the service conditions are then satisfied). The following table presents additional information

relating to each MSU award:

26

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Performance Share Units

In April 2025, the Company granted PSUs to certain executive officers under the Incentive Plan. The PSUs are eligible to vest

in three equal installments on April 15, 2026, March 15, 2027, and March 15, 2028, subject to satisfaction of the service condition and

the achievement of three separate market or performance conditions during the respective performance measurement period (for a total

of nine tranches). The performance measurement period is generally the calendar year preceding each vesting date. The number of

shares earned at each vesting date range from 0% to 300% of target based on measures of satisfaction of the market or performance

condition for each tranche. Market conditions include RTSR metric, which is a measure of the performance of the Company’s own

stock relative to the Russell 2000. Performance conditions include aggregate energized MW growth and colocation customer

acquisition targets.

Stock-Based Compensation

Restricted Stock Units — RSUs granted in 2026 and 2025 generally vest over a 3-year service period.

Market Condition Restricted Stock Units — See “Incentive Plan” above for the vesting conditions of the MSUs.

A summary of RSU, MSU and PSU activity for the three months ended March 31, 2026, is as follows (amounts in thousands,

except per share amounts):

As of March 31, 2026, unrecognized compensation cost and the related weighted-average period over which the cost is

expected to be recognized for each award type were as follows (in thousands):

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Stock-based compensation expense for the three months ended March 31, 2026 and 2025, is included in the Company’s

1 Represents the amounts of stock-based compensation capitalized to property, plant, and equipment.

12. NET (LOSS) INCOME PER SHARE

Basic earnings per share (“EPS”) is measured as the income or loss available to common stockholders divided by the weighted

average common shares outstanding for the period. Upon exercise of the Tranche 2 Warrants, shares are issuable for little or no

consideration, sometimes referred to as “penny warrants”. Under ASC 260-10-45-13, those issuable shares are considered outstanding

in the computation of basic EPS whether or not related warrants have been exercised. At March 31, 2026, approximately 7.8 million

shares of common stock remain issuable upon the exercise of the Tranche 2 Warrants and are included in the number of outstanding

shares used for the computation of basic EPS for the three months then ended. Additionally, the basic EPS numerator includes an

adjustment to eliminate the changes in fair value that have been recognized in net (loss) income.

Diluted EPS includes and presents the dilutive effect on EPS from the potential issuance of shares from unvested restricted

stock units, conversion of convertible securities, or the exercise of options and/or warrants. The potentially dilutive effect of

convertible securities is calculated using the if-converted method. The potentially dilutive effect of options or warrants are computed

using the treasury stock method. When potentially dilutive securities have an anti-dilutive effect (i.e., increase income per share or

decrease loss per share), they are excluded from the diluted EPS calculation.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted (loss)

income per share (in thousands, except per share amounts):

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Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Potentially dilutive securities include securities excluded from the calculation of diluted EPS because to do so would be anti-

dilutive. Shares which may be issued from potentially dilutive securities are as follows (in thousands):

13. SEGMENT REPORTING

The Company’s operating segments are aggregated into reportable segments only if they exhibit similar economic

characteristics and have similar business activities.

The Company has three operating segments: “Colocation”, consisting of providing high-density colocation services to

customers employing AI and HPC related workloads; “Digital Asset Self-Mining”, consisting of performing digital asset mining for

its own account; and “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining.

The Colocation operation generates revenue through licensing agreements and orders with licensees that include fixed and variable

payments on a recurring basis. The Digital Asset Self-Mining segment generates revenue from operating owned digital infrastructure

and computer equipment as part of a pool of users that process transactions conducted on one or more blockchain networks. In

exchange for these services, the Company receives digital assets. The Digital Asset Hosted Mining business generates revenue through

the sale of consumption-based contracts for its digital asset hosted mining services which are recurring in nature.

The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”). The CODM uses gross profit to

evaluate performance and allocate resources. Gross profit is used to evaluate actual results against expectations, which are based on

comparable prior results, current budget, and current forecast. Gross profit is also used in deciding how profits and cash flows will be

reinvested or otherwise deployed. The CODM does not evaluate performance or allocate resources based on segment asset or liability

information; accordingly, the Company has not presented a measure of assets by segment. The segments’ accounting policies are the

same as those described in the summary of significant accounting policies. The Company excludes certain operating expenses and

other expenses from the allocations to operating segments.

29

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):

30

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

A reconciliation of the reportable segment gross profit to (loss) income before income taxes included in the Company’s

Concentrations of Revenue and Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash

equivalents and accounts receivable. Credit risk with respect to accounts receivable is concentrated with a small number of customers.

The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit

quality, in order to limit the exposure to credit risk. As of March 31, 2026 and December 31, 2025, all of the Company’s fixed assets

were located in the United States. For the three months ended March 31, 2026 and 2025, all of the Company’s revenue was generated

in the United States. For the three months ended March 31, 2026 and 2025, 26% and 84%, respectively, of the Company’s total

revenue was generated from one customer in the Digital Asset Self-Mining segment. For the three months ended March 31, 2026 and

2025, 67% and 11%, respectively, of the Company's total revenue was generated from one customer in the Colocation segment. As of

March 31, 2026 and December 31, 2025, substantially all of the Company’s digital assets were held by one third-party digital asset

service.

14. SUPPLEMENTAL CASH FLOW AND NONCASH INFORMATION

The following table presents supplemental cash flow and non-cash information for the periods presented (in thousands):

31

Core Scientific, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

15. SUBSEQUENT EVENTS

Hunt County Acquisition

On May 5, 2026, the Company completed its acquisition of 100% of the membership interests of Telios Quinlan One, LLC, a

Delaware limited liability company that owns approximately 260 acres of land in Hunt County, Texas, together with a related electric

service agreement with Farmers Electric Cooperative, Inc. for an approximately 430 MW project, which the Company intends to

develop as a future data center site. The aggregate purchase price was approximately $232.5 million in cash, of which a $2.0 million

deposit was paid in January 2026 and is included in Other current assets on the condensed consolidated balance sheet as of March 31,

2026. In January 2026, in connection with the related electric service agreement, the Company posted $33.0 million of cash collateral

to Farmers Electric Cooperative, Inc., which is included in Other noncurrent assets on the condensed consolidated balance sheet as of

March 31, 2026.

Polaris DS LLC Merger Agreement

On May 5, 2026, the Company entered into an Agreement and Plan of Merger to acquire Polaris DS LLC, which owns an

approximately 40-acre site adjacent to the Company's existing Muskogee, Oklahoma data center operations and electric service

agreements providing for up to 440 MW of gross utility power capacity. The aggregate purchase price is approximately $421 million

in cash, subject to customary adjustments and certain contingent payments. Concurrently with execution, the Company deposited an

additional $60 million into the existing escrow account, bringing the total deposit (recorded in restricted cash) to $120 million, which

will be applied to the purchase price at closing. The transaction is subject to customary closing conditions and is expected to close in

the third quarter of 2026.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” “Core Scientific,”

or “Core” refer to Core Scientific, Inc. and its subsidiaries.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is

intended to promote understanding of the results of operations and financial condition of the Company. This MD&A is provided as a

supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the

accompanying notes to unaudited condensed financial statements (Part I, Item 1 of this Form 10-Q) as well as the financial and other

information included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and

Exchange Commission on March 2, 2026. This section generally discusses the results of operations for the three months ended

March 31, 2026, compared to March 31, 2025.

As discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion and

analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never

materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking

statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those

discussed in the section titled “Risk Factors” under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December

31, 2025, filed with the Securities and Exchange Commission on March 2, 2026.

Overview

Core Scientific, Inc. (“we,” “us,” “our,” the “Company,” “Core Scientific,” or “Core”) designs, builds and operates large-scale

purpose-built data centers that support high-density colocation services and digital asset mining for both our own account and to a

lesser extent, third-party customers. Our data centers are optimized for power-intensive, mission-critical computing workloads, with a

focus on artificial intelligence (“AI”) and other high-performance computing (“HPC”) applications.

In 2024, we announced our first high-density colocation contract with CoreWeave, Inc. (“CoreWeave), a provider of HPC

services, which was subsequently expanded to 590 megawatts (“MW”) of leased customer power capacity over the exercise of several

contractual options. We believe leveraging our existing infrastructure for high-density colocation services will provide more stable and

predictable revenue streams and represents substantially less risk over time than our traditional hosted bitcoin mining or self-mining

operations.

We are constructing, refurbishing, reallocating or converting our 11 facilities in Alabama (1), Georgia (2), Kentucky (1), North

Carolina (1), North Dakota (1), Oklahoma (1), and Texas (4) to support artificial intelligence related workloads, in support of our

existing colocation customer, but also to support our commitment to meeting the growing demand for high-density colocation

solutions and diversifying our customer base. This will be done as circumstances allow and, in a manner, designed to retain access to

electrical power under our control, maximize the value of our digital asset mining equipment to third parties, and fulfill existing

obligations to suppliers and customers. In addition to converting our existing portfolio, we are actively pursuing the acquisition of

new sites, including land and power capacity, to expand our data center footprint beyond our current facilities.

We will continue to mine digital assets and manage our self-mining fleet with a focus on power expense coverage and cash

generation while we convert our data centers for alternative high-density colocation service business opportunities. We expect to

increase revenue derived from high-density colocation (“HDC”) services as capacity gets delivered to our current end customer as well

as when we sign and begin generating revenue from new colocation customers.

As of March 31, 2026, we operated a diversified portfolio of ten data centers across seven U.S. states, representing

approximately 1.9 gigawatts (“GW”) of gross utility power capacity, or approximately 1.3 GW of total leasable customer power

capacity. We continue to be in active discussions with both our existing and future potential utility providers regarding additional

power allocations.

For the three months ended March 31, 2026, total revenue increased to $115.2 million from $79.5 million for the prior period,

primarily due to higher colocation revenue from incremental billable customer power capacity, partially offset by lower digital asset

self-mining revenue driven by reduced bitcoin production and lower average bitcoin prices. Operating loss was $310.4 million for the

three months ended March 31, 2026, compared to $47.0 million in the prior period, primarily driven by $266.5 million of non-cash

impairment charges on mining-related property, plant and equipment. Net loss was $347.2 million during the three months ended

March 31, 2026, compared to net income of $576.3 million in the prior period, and included significant non-cash items, including

33

changes of $30.8 million in the fair value of warrants and contingent value rights. Adjusted EBITDA increased to $4.4 million from

$(6.1) million in the prior period. Adjusted EBITDA is a non-GAAP financial measure. See “Key Business Operating Metrics and

Non-GAAP Financial Measures” below for our definition of, and additional information related to Adjusted EBITDA.

Recent Developments

Term Loan Facility

On March 4, 2026, we entered into a loan facility Credit Agreement (the “Credit Agreement”), by and among us, as borrower,

the lenders party thereto from time to time (the “Lenders”) and Morgan Stanley Senior Funding, Inc. (“MSSF”), as administrative

agent and collateral agent. The Credit Agreement provides for a senior secured loan facility (the “Term Loan Facility”) in an aggregate

principal amount of $500.0 million. The Credit Agreement also provides for an accordion feature that allowed us to request an

increase in commitments under the Credit Agreement by up to an additional $500.0 million. Subject to certain customary conditions,

we may borrow funds available under the Term Loan Facility, in up to ten separate advances, during the period commencing on May

4, 2026 and ending on the date that is one business day prior to the Maturity Date (as defined below). We borrowed the full $500.0

million initially available under the Credit Agreement on March 5, 2026.

On March 18, 2026, we entered into an Amendment No. 1 to the Credit Agreement (the “Incremental Amendment”) with

MSSF and JPMorgan Chase Bank, N.A. (“JPM”), as Amendment No. 1 Term Lender, which amends the Credit Agreement to increase

the term loan commitments thereunder by $500.0 million, to $1.0 billion total, pursuant to the accordion feature. We borrowed the full

$500.0 million incremental commitment on March 18, 2026.

The Term Loan Facility will mature, and all obligations thereunder will become due and payable, on March 3, 2027 (the

“Maturity Date”). Loans under the Term Loan Facility bear interest at a rate equal to term SOFR (subject to a 0% floor), plus an

applicable margin of 2.50% per annum.

Our obligations under the Credit Agreement are guaranteed by certain of our direct or indirect, wholly owned material domestic

subsidiaries and are secured by a first-priority lien on substantially all our and the guarantors assets.

In connection with the offering of $3.3 billion aggregate principal amount of 7.75% senior secured notes due 2031 by our

indirect wholly-owned subsidiary, Core Scientific Finance I LLC, as described below, we used a portion of the proceeds from such

offering that was distributed to us to repay in full the outstanding borrowings under the Term Loan Facility, including accrued interest

thereon and fees and expenses in connection therewith, and upon such repayment, we terminated the Term Loan Facility.

Senior Secured Notes Offering

On April 22, 2026, our indirect wholly-owned subsidiary, Core Scientific Finance I LLC ("Core Scientific Finance"), priced a

private offering of $3.30 billion aggregate principal amount of 7.75% senior secured notes due 2031 at an issue price of 99.25% of the

principal amount. Core Scientific Finance used the net proceeds from the offering to fund a debt service reserve account, and the

remaining proceeds to make a distribution to us, a portion of which we used to repay in full the outstanding borrowings under the

Term Loan Facility, including accrued interest thereon and fees and expenses in connection therewith. The Offering closed on May 6,

The Notes are guaranteed by each of Core Scientific Austin LLC, Core Scientific Denton LLC, Core Scientific Dalton LLC,

Core Scientific Marble LLC and Core Scientific Muskogee LLC, which collectively represent Core Scientific Finance's only

subsidiaries (the "Subsidiary Guarantors").

In connection with the Offering, we have commenced a series of restructuring transactions intended to transfer or grant all

assets and rights reasonably necessary for the development and operation of specified data center facilities to Core Scientific Finance

and the Subsidiary Guarantors.

The Notes and related guarantees are secured by first-priority liens on (i) substantially all assets of Core Scientific Finance and

the Subsidiary Guarantors, other than certain excluded property, (ii) all equity interests of Core Scientific Finance held by the direct

parent of Core Scientific Finance, Core Scientific Finance Holding LLC ("Holdco"), and (iii) certain of our assets and rights to be

transferred or granted, as applicable, to Core Scientific Finance and the Subsidiary Guarantors pursuant to the restructuring described

above that have not yet been transferred or granted as of the date hereof.

34

In addition, in connection with the issuance of the Secured Notes, we provide a customary, uncapped completion guarantee for

the benefit of the holders of the Notes with respect to the completion of the data center development projects. The completion

guarantee will require that we provide Core Scientific Finance with funds necessary to ensure the completion of such projects in the

event that the proceeds of the offering of Secured Notes and other available funds are insufficient to do so.

CoreWeave Special Purpose Vehicle

The Company received notice from its counterparty, CoreWeave, Inc., of its intention to enter into assignment and assumption

agreements for our Dalton 1 and Denton North Colocation License Agreements and Orders, as amended, ("License Agreements") with

a special purpose vehicle that is an indirect subsidiary of CoreWeave, Inc. ("CW SPV"). We understand that CW SPV received certain

commitments from a customer sufficient for the debt issued by CW SPV to obtain an investment grade rating. While CoreWeave

remains a primary obligor under the terms of the License Agreements, as a result of the assignment and assumption agreements, CW

SPV is now the Licensee under the License Agreements.

Key Factors Affecting Our Financial Performance

Our results of operations, liquidity and cash flows are affected by a number of factors, including (i) our ability to execute our

strategic transition toward high‑density colocation services, (ii) bitcoin market conditions and network fundamentals that drive

self‑mining economics, (iii) broader macroeconomic and regulatory developments, (iv) power prices and curtailment activity, and (v)

the competitive landscape for our industry. The factors below highlight key drivers that have affected, and may continue to affect, our

financial performance.

Our financial performance depends in part on our ability to operate our self‑mining fleet profitably and, as we transition our

business, to execute and expand our colocation operations and attract and retain colocation customers. Increases in power costs,

inability to mine digital assets efficiently and to sell digital assets at favorable prices will reduce our operating margins and could have

a material near-term adverse effect on our business, financial condition and results of operations. In addition, sustained declines in

bitcoin prices or adverse changes in network conditions could reduce cash generated from self‑mining during periods where

self‑mining remains a significant contributor to our results.

Strategic Transition to High-Density Colocation Services

As we grow our Colocation operations over the next several years by converting the remaining bitcoin mining sites and adding

new infrastructure and customers, we expect Colocation to represent a larger share of our results and gradually reduce our exposure to

bitcoin spot price volatility. The Colocation segment is characterized by the implementation of long-term contracts with customers

spanning 10+ years with terms and conditions resulting in stable, predictable revenue and cash flows over each period.

The pace of this transition, and the timing of related revenue and cash flows, depends on (i) customer deployment schedules

under existing and future contracts and (ii) the timing and cost of converting and commissioning incremental billable customer power

capacity. Conversion capital expenditures and timelines are sensitive to equipment lead times and availability, labor constraints,

permitting and interconnection sequencing, and supply chain and logistical challenges. Changes in these inputs can affect when

incremental capacity becomes billable and therefore may affect the timing of colocation revenue, cost of services and related cash

flows.

Bitcoin Market Conditions

Our Digital Asset Self-Mining segment is heavily dependent on the spot price of bitcoin. The prices of digital assets,

specifically bitcoin, have experienced substantial volatility, meaning that high or low prices may have little or no relationship to

identifiable market forces, may be subject to rapidly changing investor sentiment, and may be influenced by factors such as

technology, regulatory developments and enforcement actions. Bitcoin (as well as other digital assets) may have value based on

various factors, including their acceptance as a means of exchange by consumers and others, scarcity, and market demand. Changes in

the market price of bitcoin can materially affect (i) revenue recognized from self‑mining, (ii) the fair value of digital assets we hold

and related gains or losses recognized in our results of operations, and (iii) liquidity to the extent we sell bitcoin as part of our treasury

strategy. Bitcoin miners also receive a transaction fee in the form of a portion of bitcoin for validating transactions on the Bitcoin

network. The transaction fee can vary in value over time, with higher fees prioritizing certain transactions over those with lower fees.

An increase in Bitcoin network transaction fees increases mining proceeds.

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Higher power costs, lower realized bitcoin prices, or reduced mining efficiency would reduce self-mining margins and cash

generation during periods when self-mining remains a significant contributor to our results. As we transition, the timing of colocation

conversions and customer deployments, and our ability to execute and scale colocation operations and retain colocation customers,

will increasingly influence our revenue mix and profitability.

Bitcoin Network Fundamentals

Our business is not only impacted by the volatility in digital asset prices and transaction fees, but also by increases in the

competition for digital asset production. For bitcoin, this increased competition is described as the network hash rate resulting from the

growth in the overall quantity and quality of miners working to solve blocks on the bitcoin blockchain, and the difficulty index

associated with the secure hashing algorithm employed in solving the blocks. Increases in network hash rate generally increase

network difficulty over time, which can reduce the amount of bitcoin earned for a given level of deployed hash rate and power

consumption.

Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires bitcoin miners to

upgrade their mining equipment to remain profitable and compete effectively with other miners. Difficulty and network conditions are

outside of our control and can materially affect our self‑mining revenue and margins.

Tariffs

Beginning on February 1, 2025, the United States government announced a series of additional tariffs on goods imported to the

United States, raising concerns about material price inflation and delivery delays with respect to equipment and materials needed for

our high-density colocation data center conversions and also with respect to parts, machinery and hardware used in our digital asset

mining business. During the three months ended March 31, 2026, tariffs contributed to higher costs for certain equipment and

materials procured directly by the Company for non-customer-funded projects. Our agreement with our HDC customer is funded

almost entirely by the customer, and our financial contribution is capped at a fixed dollar amount, limiting our exposure to tariff-

related cost increases on customer-funded capital expenditures.

We could experience additional impacts from tariffs on our results of operations in future periods. We continue to analyze the

additional impact of these tariffs on our business and actions we can take to minimize any current and future impact. Sustained or

further increases in tariffs on key equipment and materials could affect conversion economics, timelines and/or operating costs, which

could affect the timing and profitability of our colocation expansion.

Electricity Costs

Electricity cost is the major operating cost for our mining fleet, as well as for the hosted mining services provided to customers.

The cost and availability of electricity are affected primarily by changes in seasonal demand, with peak demand during the summer

months driving higher costs and increased curtailments to support grid operators. Severe winter weather can increase the cost of

electricity and the frequency of curtailments when it results in damage to power transmission infrastructure that reduces the grid’s

ability to deliver power. Geopolitical and macroeconomic factors, such as overseas military or economic conflict between states, can

adversely affect electricity costs by raising the cost of power generation inputs such as natural gas. Other events out of our control can

also impact electricity costs and availability. In our self‑mining and hosted mining operations, increases in power prices and/or

increased curtailments can materially reduce margins and cash generation. In our colocation operations, power costs are passed

through to customers and changes in power prices may increase revenue and cost of colocation services without a corresponding

change in gross profit.

Our Competition and Customers

In addition to factors underlying our mining business growth and profitability, the success of our Colocation business greatly

depends on our ability to retain and develop opportunities with our existing customers, secure additional infrastructure and attract new

customers.

Competition in digital asset mining is driven in part by access to low‑cost power, scale, fleet efficiency and capital availability,

and can contribute to increases in network hash rate and difficulty. We face significant competition in every aspect of our business,

including, but not limited to, the acquisition of new miners, the ability to raise capital, obtaining low-cost electricity, obtaining access

to sites with reliable sources of high power, and evaluating new technology developments in the industry.

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Based on available data, we believe that an increase in the scale and sophistication of competition in the digital asset mining

industry has continued to increase network hash rate, with new entrants and existing competitors increasing the number of miners

mining for bitcoin.

Despite this trend, our ability to compete in self‑mining will depend on managing fleet efficiency, power costs and capital

allocation as we shift resources toward colocation.

In our Colocation operations, we compete with other providers of high-power data center capacity, such as major data center

real estate investment trusts, developers of data centers, hyperscalers and bitcoin miners with capacity suitable for high-density

colocation services. This competition focuses primarily on the identification and acquisition of new, high-power sites, but also

includes competition for the capital required to build or modify existing sites to support high-density colocation.

Competition in colocation may affect pricing, contract terms, and the pace at which we can secure additional power and sites

and therefore may affect revenue growth and required capital expenditures.

Regulation

We operate in a dynamic regulatory environment. For a discussion of federal, state, and international regulatory developments

affecting our digital asset mining and colocation activities, see “Government Regulation” in Part I, Item 1 “Business” section in our

Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 2,

2026. We continue to evaluate whether any such developments present known trends or uncertainties that may materially impact our

operations, energy costs, or customer demand. Regulatory developments affecting digital assets, data centers, energy markets and

environmental matters could affect compliance costs, power availability and pricing, and customer demand, which could impact our

results of operations and liquidity.

Key Business Operating Metrics and Non-GAAP Financial Measures

In addition to our financial results, we use the following business operating metrics and non-GAAP financial measures to

evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. These operating

metrics and non‑GAAP financial measures should be considered in addition to, and not as a substitute for, our consolidated financial

statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Management also uses the following data center capacity and power metrics (measured in megawatts) to evaluate the scale of

our utility power footprint and customer IT load capacity, monitor customer commitments and remaining available capacity, assess

commissioning progress and deployment pacing, and inform capital allocation and site planning decisions. Unless otherwise indicated,

these metrics are presented as of period end and represent management estimates based on operational and engineering data and may

not be comparable to similarly titled measures used by other operators.

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Metric (MW) Definition How management uses it

Gross Utility Power Capacity Total electric utility power capacity agreements associated with our data center sites under our control as of period end, including capacity that is commissioned for future use. Used for portfolio planning and utility power allocation discussions.

Total Leasable Customer Power Capacity Our estimate of the total non-redundant customer IT load that our data center sites could support in the aggregate as of period end, regardless of whether such capacity has been contracted with customers or remains available for sale. This metric is representative of the amount of power available for customer use in servicing their workloads. Used to assess total customer‑usable IT load available for leasing, evaluate leased versus unleased capacity, and plan conversion/ development sequencing and sales capacity.

Leased Customer Power Capacity Power capacity that is committed to customers under executed customer contracts, regardless of whether service has commenced as of period end. Used to monitor signed customer commitments and contracted backlog and to plan future deployment/commissioning requirements.

Unleased Customer Power Capacity The portion of Total Leasable Customer Power not committed under customer contracts as of period end. This metric is calculated as Total Leasable Customer Power minus Leased Customer Power Capacity. Used to monitor remaining uncommitted customer IT load and to prioritize incremental contracting and conversion/commissioning plans.

Billable Customer Power Capacity Portion of Leased Customer Power Capacity for which service has commenced and we are actively billing as of period end. Used to monitor in-service customer power that is billing and to track deployment/ commissioning pace and near-term revenue ramp.

The following table presents the values for these metrics as of March 31, 2026 and December 31, 2025 (in megawatts).

Adjusted EBITDA

We report our financial results in accordance with GAAP. To supplement our consolidated financial statements, we provide

investors with Adjusted EBITDA, which is a non‑GAAP financial measure. Adjusted EBITDA is defined as our net (loss) income,

adjusted to eliminate the effect of (i) interest income, interest expense, and other income (expense), net; (ii) provision for income

taxes; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) loss on disposal and impairment of property,

plant and equipment; (vi) site demolition costs incurred in connection with the conversion of existing facilities to colocation data

center operations; (vii) change in fair value of warrant and contingent value rights; (viii) loss on legal settlements; (ix) post-emergence

bankruptcy advisory costs incurred related to reorganization, and (x) certain additional non-cash items that do not reflect the

performance of our ongoing business operations. The most directly comparable GAAP measure to Adjusted EBITDA is net (loss)

income. For additional information, including a reconciliation of net (loss) income to Adjusted EBITDA, please refer to the table

below.

We believe Adjusted EBITDA is an important measure because it allows management, investors, and our Board of Directors to

evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by

making the adjustments described above. In addition, it provides useful information to investors and others in understanding and

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evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business, as it

removes the effect of net interest expense, taxes, certain non-cash items, variable charges and timing differences. Moreover, we have

included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measurement used by our management

internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic and

financial planning.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature or because the

amount and timing of these items are not related to the current results of our core business operations which renders evaluation of our

current performance, comparisons of performance between periods and comparisons of our current performance with our competitors

less meaningful. However, you should be aware that when evaluating Adjusted EBITDA, we may incur future expenses similar to

those excluded when calculating this measure. Our presentation of this measure should not be construed as an inference that its future

results will be unaffected by unusual items. Further, this non-GAAP financial measure should not be considered in isolation from, or

as a substitute for, financial information prepared in accordance with GAAP. We compensate for these limitations by relying primarily

on GAAP results and using Adjusted EBITDA on a supplemental basis. Our computation of Adjusted EBITDA may not be

comparable to other similarly titled measures computed by other companies because not all companies calculate this measure in the

same fashion. You should review the reconciliation of net (loss) income to Adjusted EBITDA below and not rely on any single

financial measure to evaluate our business.

The following table presents a reconciliation of net (loss) income to Adjusted EBITDA for the three months ended March 31,

2026 and 2025 (in thousands):

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Results of Operations for the Three Months Ended March 31, 2026 and 2025

The following table sets forth our selected condensed consolidated statements of operations for each of the periods indicated (in

thousands).

The following table summarizes gross profit and gross margin by reportable segment for each of the periods indicated (in

thousands).

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Gross profit represents segment revenue less segment cost of revenue. Accordingly, the year over year changes in gross profit

and gross margin by segment are primarily driven by the changes in revenue and cost of revenue discussed in the “Revenue” and

“Cost of revenue” sections below.

Revenue

Colocation revenue

Colocation revenue consists of fees charged to customers for licensed data center space, power and related services. Under our

contracts, customers generally pay fixed monthly fees based on billable customer power capacity and variable usage‑based charges

and other billable services. Power fees are passed through to customers without markup and are recognized as revenue on a gross

basis, with a corresponding charge to cost of colocation services. As a result, changes in power prices can cause fluctuations in

colocation revenue that are not indicative of changes in our underlying colocation margins.

The year over year increase in colocation revenue was primarily attributable to incremental billable customer power capacity at

our Denton, Texas and Marble, North Carolina data centers during the three months ended March 31, 2026.

Digital asset self-mining revenue

Digital asset self‑mining revenue consists primarily of bitcoin earned from operating our owned mining fleet. We participate in

mining pools under which we receive consideration based on the hash rate we contribute to the pool.

The year over year decrease in self-mining revenue was driven primarily by lower bitcoin production and lower average

realized bitcoin prices during the three months ended March 31, 2026.

Cost of revenue

Cost of revenue includes the costs to operate our colocation, digital asset self‑mining, and digital asset hosted mining

businesses, including power fees, depreciation, personnel and facility-related costs.

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Colocation cost of revenue

The year over year increase in cost of colocation services was driven primarily by incremental billable capacity at our Denton,

Texas and Marble, North Carolina data centers during the three months ended March 31, 2026.

Digital asset self-mining cost of revenue

The year over year decrease in cost of digital asset self-mining was driven primarily by reduced self-mining activity during the

three months ended March 31, 2026, including lower power consumption resulting from the reallocation of power capacity to

colocation operations and lower depreciation expense as a larger portion of the mining fleet became fully depreciated.

Impairment of property, plant and equipment

During the three months ended March 31, 2026, we recognized non-cash impairment charges of $266.5 million on our mining-

related property, plant and equipment. The charges resulted from sustained deterioration in bitcoin mining economics during the

quarter, including declines in bitcoin prices, hashprice reaching historic lows, and significant decreases in secondary market values for

mining equipment. Of the total charge, $151.6 million related to mining equipment whose carrying value exceeded current secondary

market values, and $114.9 million related to mining infrastructure at facilities used in our self-mining operations, whose carrying

values exceeded fair values determined using a discounted cash flow methodology. No impairment charges were recognized during

the three months ended March 31, 2025.

Change in fair value of warrants and contingent value rights

The year over year decrease in change in fair value of warrants and contingent value rights shifted from a $621.5 million gain in

the prior year period to a $30.8 million loss in the current period, driven by changes in our stock price during the respective periods.

Liquidity and Capital Resources

Sources and Uses of Cash

We finance our operating and capital requirements primarily through a combination of (i) cash and cash equivalents, (ii) cash

generated from operations, (iii) sales of digital assets (bitcoin), subject to market conditions and our treasury strategy, and (iv)

financing activities, including debt financing arrangements. We also receive customer prepayments under our colocation

arrangements, which are associated with, and are expected to offset a significant portion of, the capital expenditures required to build

out and convert facilities for those arrangements.

In March 2026, we entered into the Term Loan Facility, pursuant to which we borrowed the full $500.0 million initially

available under the Credit Agreement. Subsequently, in March 2026, we entered into the Incremental Amendment, pursuant to which

we borrowed the full $500.0 million incremental commitment.

In April 2026, our indirect wholly-owned subsidiary, Core Scientific Finance priced the private offering of $3.30 billion

aggregate principal amount of 7.75% Secured Notes at an issue price of 99.250% of the principal amount. In connection with the

offering of Secured Notes, Core Scientific Finance used a portion of the net proceeds to fund a debt service reserve account, and the

remaining proceeds to make a distribution to us. We used a portion of the net proceeds we received from Core Scientific Finance to

repay in full the outstanding balance under the Term Loan Facility, including accrued interest thereon and fees and expenses in

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connection therewith. The offering of Secured Notes closed on May 6, 2026, and upon such repayment, we terminated the Term Loan

Facility. See “Senior Secured Notes Offering” under Recent Developments above for additional details.

During the three months ended March 31, 2026, we sold 2,385 bitcoin for aggregate proceeds of $208.3 million to fund planned

capital expenditures and other cash requirements. We will be opportunistic in liquidating the remainder of our bitcoin balance.

Our planned capital expenditures and other cash requirements may require additional external financing. We may from time to

time seek additional financing to fund our operations and capital expenditures. If we are unable to obtain financing on acceptable

terms, we may be required to reduce, delay or modify planned expenditures or pursue other alternatives.

We have assessed our current and expected operating and capital expenditure requirements and our current and expected

sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of March 31, 2026, that

our available liquidity, including cash and cash equivalents and expected operating cash flows and customer funding related to our

colocation arrangements, will be sufficient to satisfy our cash requirements for at least the next twelve months.

The following table summarizes our cash and cash equivalents and the fair value of our digital assets (in thousands):

The following table presents our cash flows (in thousands):

Net cash provided by (used in) operating activities increased to $249.9 million from $(45.0) million in the prior year period,

primarily due to customer prepayments received under our colocation arrangements and proceeds from sales of digital assets.

Net cash used in investing activities increased to $386.7 million from $89.0 million in the prior year period, primarily reflecting

capital expenditures related to our colocation expansion, primarily related to long-lead equipment and other data center development

costs.

Net cash provided by (used in) financing activities was $971.4 million compared to $(4.2) million in the prior year period,

primarily due to net proceeds from the Company's Term Loan Facility.

Material Cash Requirements

Our material cash requirements from known contractual and other obligations are discussed below on both a short-term and

long-term basis.

Short-Term Cash Requirements

Capital Expenditures and Other Commitments

During the three months ended March 31, 2026 and 2025, we spent $389.2 million and $84.0 million respectively, on capital

expenditures, primarily related to the conversion and expansion of our data center portfolio for colocation operations. As of March 31,

2026, we were contractually committed to approximately $1.47 billion, of which $434.0 million will be passed through to the

Company’s customer as invoiced. Substantially all of these expenditures are expected to occur within the next 12 months.

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Operating Leases

For our operating lease payment obligations due within the next 12 months, see Note 5 — Leases to our consolidated financial

statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.

Long-Term Cash Requirements

Senior Secured Notes

In May 2026, our indirect wholly-owned subsidiary, Core Scientific Finance, issued $3.3 billion aggregate principal amount of

7.75% Senior Secured Notes due 2031. For the maturity date, principal amount and terms of these notes, see "Senior Secured Notes

Offering" under Recent Developments above and Note 6 — Debt to our consolidated financial statements in Item 1 of Part I of this

Quarterly Report on Form 10-Q.

Convertible Notes

We have outstanding 3.00% Convertible Senior Notes due 2029 and 0.00% Convertible Senior Notes due 2031. For the

maturity dates, principal amounts, and terms of these instruments, see Note 6 — Debt to our consolidated financial statements in Item

1 of Part I of this Quarterly Report on Form 10-Q.

Capital Expenditures

We expect to incur significant capital expenditures beyond the next 12 months as we continue to convert our remaining data

center portfolio to colocation infrastructure and pursue new site acquisitions to expand our footprint. The pace and magnitude of these

expenditures will depend on customer deployment schedules, the timing of site conversions, and the availability and cost of financing.

Operating Leases

For our operating lease payment obligations due beyond the next 12 months, see Note 5 — Leases to our consolidated financial

statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.

Critical Accounting Estimates

The critical accounting estimates, assumptions, judgments and the related policies that we believe have the most significant

impact on our consolidated financial statements are described below.

Property, Plant, and Equipment

Our mining-related property, plant, and equipment involves significant estimates, including the determination of useful lives

and the evaluation of recoverability and fair value. These estimates require judgment about future bitcoin mining economics, including

technology improvements, bitcoin prices, hashprice, power prices, secondary market values for mining equipment, and the

assumptions underlying fair value measurements such as discount rates and projected cash flows. During the three months ended

March 31, 2026, we recognized significant impairment charges on our mining-related assets (see Note 3 — Property, Plant, and

Equipment and Note 8 — Fair Value Measurements to our consolidated financial statements in Item 1 of Part I of this Quarterly

Report on Form 10-Q). The fair value of mining infrastructure is particularly sensitive to the discount rate applied to projected cash

flows; refer to Note 8 for the significant unobservable inputs used in the Level 3 measurement.

Stock-Based Compensation

We have outstanding equity awards that include performance conditions, the achievement of which must be assessed by

management at each reporting date. Compensation expense for these awards is recognized based on the estimated number of awards

expected to vest, applying a cumulative catch-up adjustment when those estimates change. The assessment of probable achievement

requires significant judgment, including assumptions about our infrastructure deployment progress, customer pipeline activity, and a

degree of Compensation Committee discretion. Given the range of potential payout outcomes, changes in management's probability

assessments could result in material adjustments to stock-based compensation expense recognized in future periods.

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Management believes its current estimates are reasonable based on available information. Actual results may differ, and any

such differences could materially impact our financial condition and results of operations.

Recent Accounting Pronouncements

For a discussion of new accounting standards relevant to our business, refer to Note 2 — Summary of Significant Accounting

Policies to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact

our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of

fluctuations in the price of bitcoin and commodities.

Risk Regarding the Price of Bitcoin

As of March 31, 2026, we held 547 bitcoin, with a carrying value of $37.3 million, all of which were produced from our bitcoin

mining operations.

We cannot predict the future market price of bitcoin and, as such, we cannot predict future changes in the carrying value of our

bitcoin assets based on future market prices. The future value of bitcoin will affect the amount of revenue recognized from our

operations, and any changes in the future value of bitcoin while we hold it in our account would also be reported in our net income (or

loss), either of which could have a material adverse effect on the market price for our securities.

Bitcoin prices for the three months ended March 31, 2026 ranged from a low of $60,123 to a high of $97,877, with an average

price of $76,649.

Interest Rate Risk

As of March 31, 2026, we had $1.0 billion outstanding under our Term Loan Facility, which bears interest at Term Secured

Overnight Financing Rate (“SOFR”) plus 2.50% per annum. A hypothetical 100 basis point increase in Term SOFR would increase

our annual interest expense by approximately $10.0 million. We do not currently use interest rate hedging instruments to manage this

exposure. See Note 6 — Debt to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for

additional details.

Commodity Price Risk

Certain operating costs incurred by us are subject to price fluctuations caused by the volatility of underlying commodity prices,

the most significant of which is electricity. We closely monitor the cost of electricity at all of our locations. Our colocation customer

agreements include power pass-through provisions that allow us to recover the cost of customer power usage. We did not have

commodity derivative instruments outstanding as of March 31, 2026.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have conducted an

evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e)

and 15d-15(e) under the Exchange Act) as of March 31, 2026.

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of March 31,

2026, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial

reporting described below.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, we identified a material

weakness in our internal control over financial reporting. As of March 31, 2026, this material weakness has not been remediated.

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Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable

assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well

designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurances that its objectives

will be met. Similarly, an evaluation of controls cannot provide absolute assurances that misstatements due to error or fraud will not

occur or that all control issues and instances of fraud, if any, have not been detected.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there

is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected

on a timely basis. The material weakness previously identified and which remains unremediated as of March 31, 2026 is as follows:

We did not effectively operate controls to account for intended demolition of building and infrastructure assets, including

evaluation of impairment, related to the conversion of facilities from digital asset mining operations to HPC colocation infrastructure

due to insufficient complement of trained personnel.

This material weakness resulted in material misstatements to property, plant and equipment on the consolidated balance sheet

and impairment of property, plant and equipment on the consolidated statement of operations, which were corrected prior to the

issuance of the consolidated financial statements as of and for the year ended December 31, 2025, however, resulted in the restatement

of previously issued annual and interim financial statements. The control deficiency described above created a reasonable possibility

that a material misstatement of the consolidated financial statements will not be prevented or detected on a timely basis, we concluded

the deficiency represents a material weakness in our internal control over financial reporting and our internal control over financial

reporting was determined to be not effective as of December 31, 2025 and continues to be not effective as of March 31, 2026.

Remediation Plan for the Material Weakness

With the oversight of senior management and the Audit Committee, we have developed a remediation plan to address the

material weakness. The plan includes the elements described below, which we are in various stages of implementing.

• Implementing additional training for accounting personnel on the evaluation of novel transactions related to property,

plant and equipment. During the three months ended March 31, 2026, we conducted training for accounting personnel

on the identification of novel and non-routine transactions.

• Implementing additional levels of management review and oversight, including consultation with external technical

accounting resources as necessary, over significant accounting conclusions related to property, plant and equipment,

including those involving the application of accounting guidance to novel or non-routine transactions. During the three

months ended March 31, 2026, we implemented a quarterly management review process for property, plant and

equipment and established an accounting policy review committee.

We believe our remediation plan will be sufficient to remediate the material weakness. However, the material weakness will not

be considered remediated until management completes the design and implementation of the actions described above and the controls

operate for a sufficient period of time, and management has concluded, through testing, that these controls are effective. As we test our

internal controls over financial reporting, we may determine that additional measures or modifications to the remediation plan are

necessary or appropriate.

Changes in Internal Control over Financial Reporting

Except for the ongoing remediation efforts described above, during the most recently completed fiscal quarter, there was no

change in Core Scientific, Inc.’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the

Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial

reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in lawsuits, claims and other legal matters that arise in the ordinary course of business. The outcome of these

matters cannot be predicted with certainty; however, we believe that the ultimate resolution of these matters will not have a material

adverse effect on our consolidated financial position, results of operations or cash flows. To the extent that the ultimate resolution of

any matter differs from our current estimates reflected in the recorded reserves, we could incur additional charges that could be

significant. Information regarding our material pending legal proceedings is included in Note 9 — Commitments and Contingencies,

to our consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

For a discussion of our risk factors, see Part I, Item 1A. — “Risk Factors” of the Company’s Annual Report on Form 10-K for

the year ended December 31, 2025, which was filed with the SEC on March 2, 2026.

There were no material changes during the period covered in this Quarterly Report to the risk factors previously disclosed in the

Annual Report, except for the risk factors noted below.

Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect

our business, financial condition and results of operations and impair our ability to satisfy our obligations under the notes.

As of March 31, 2026, we had approximately $2.09 billion aggregate principal amount of indebtedness for borrowed money. In

addition, in May 2026, Core Scientific Finance, our indirect wholly owned subsidiary, issued $3.30 billion aggregate principal amount

of Secured Notes. We may also incur additional indebtedness to meet future financing needs. Our indebtedness could have significant

negative consequences for our security holders and our business, results of operations and financial condition by, among other things:

• increasing our vulnerability to adverse economic and industry conditions;
• limiting our ability to obtain additional financing;
• requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will

reduce the amount of cash available for other purposes;

• limiting our flexibility to plan for, or react to, changes in our business;
• diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the

notes; and

• placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to

capital.

Our business or the business of Core Scientific Finance, as applicable, may not generate sufficient funds, and may otherwise be

unable to maintain sufficient cash reserves, to pay amounts due under our or its indebtedness, including our 3.00% Convertible Senior

Notes due 2029 (the “2029 Convertible Notes”), 0.00% convertible senior notes due 2031 (the “2031 Convertible Notes” and, together

with the 2029 Convertible Notes, the “Convertible Notes”) and Secured Notes, and our cash needs may increase in the future. In

addition, any future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to

operate our business, raise capital or make payments under our other indebtedness. If we or Core Scientific Finance, as applicable, fail

to comply with these covenants or to make payments under our or its indebtedness when due, then we or Core Scientific Finance

would be in default under that indebtedness, which could, in turn, result in that and other indebtedness becoming immediately payable

in full.

Provisions in our indentures could delay or prevent an otherwise beneficial takeover of us.

Certain provisions in the indentures governing our Convertible Notes or the Secured Notes, or agreements governing any future

indebtedness, could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a

fundamental change under the indentures governing our Convertible Notes, then, except as described in the applicable indenture,

noteholders of such Convertible Notes will have the right to require us to repurchase their notes for cash. The indenture governing the

Secured Notes contains a similar requirement for Core Scientific Finance to offer to repurchase for cash such Secured Notes upon the

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occurrence of a change of control as set forth in such indenture. In addition, if a takeover constitutes a make-whole fundamental

change under the applicable indenture governing our Convertible Notes, then we may be required to temporarily increase the

conversion rate for any conversion of such Convertible Notes. In any such case, and in other cases, our obligations under the

indentures governing our Convertible Notes or Secured Notes, or agreements governing any future indebtedness, could increase the

cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a

transaction that noteholders or holders of our common stock may view as favorable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended March 31, 2026, nominal shares of common stock were issued upon the exercise of Tranche 1

Warrants in reliance on the exemption provided by Section 1145 of the Bankruptcy Code. The Company received cash proceeds of

$0.1 million from the exercise.

During the quarter ended March 31, 2026, 0.4 million shares of common stock were issued upon the exercise of Tranche 2

Warrants in reliance on the exemption provided by Section 1145 of the Bankruptcy Code. The Company received minimal cash

proceeds from the exercise.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Trading Arrangements

During the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1

trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

| | Exhibit Description |

10.1 Agreement and Plan of Merger, dated as of May 5, 2026, by and among Core Scientific, Inc., Polar Merger Sub, LLC, Top Access Enterprises Limited, Polaris DS LLC, and solely for the purposes of Article XI (and Article I and Article VII to the extent relating thereto), Altair LLC. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 6, 2026). 10.2* Membership Interest Purchase Agreement, dated December 26, 2025, by and among Core Scientific, Inc. and McCall Family Limited Partnership. 10.3 Cooperation Agreement, dated as of February 18, 2026, by and between Core Scientific, Inc. and Two Seas Capital LP (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on February 19, 2026). 10.4 Delayed-Draw Bridge Credit Agreement, dated as of March 4, 2026, among Core Scientific, Inc., as borrower, the lenders party thereto from time to time, and Morgan Stanley Senior Fundings, Inc., as administrative agent and as collateral agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on March 6, 2026). 10.5 Amendment No. 1 to Credit Agreement, dated as of March 18, 2026, among Core Scientific, Inc., as borrower, JPMorgan Chase Bank, N.A., as amendment no. 1 term lender, and Morgan Stanley Senior Funding, Inc., as administrative agent and as collateral agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on March 23, 2026). 31.1* Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase. (104) Cover Page Interactive Data File (the cover page XBRL tags)

* Filed or furnished herewith.

†† Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation S-K Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

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