Core Scientific, Inc. (NASDAQ: CORZ), a leader in
high-performance, net carbon neutral blockchain infrastructure and
software solutions, reported its consolidated financial results for
the fiscal year ended December 31, 2021.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220329005911/en/
Fiscal Year 2021 Financial Highlights (Compared to Fiscal
Year 2020)
- Total revenue increased by 803% to $544.5 million
- Gross profit increased by 2,443% to $238.9 million
- Net Income increased to $47.3 million
- Adjusted EBITDA1 increased by 3,849% to $238.9 million
- Self-mining operations increased BTC production 350% to 5,769
BTC2
- 5,296 BTC held at year end
- Total hashrate of 13.5 EH/s consisting of 6.6 EH/s self-mining
and 6.9 EH/s hosting
“Our team produced strong results in 2021, highlighted by
revenue of $544.5 million, net income of $47.3 million and adjusted
EBITDA of $238.9 million,” said Mike Levitt, Core Scientific Chief
Executive Officer. “Our total hashrate increased from less than 3.0
EH/s at year end 2020 to 13.5 EH/s at year end 2021. This
market-leading growth generated over 5,700 self-mined bitcoins in
2021. In the first two months of 2022 our total hashrate grew to
15.9 EH/s and we self-mined over 2,000 bitcoins. Across our
business we are executing our plans effectively and remain well
positioned to continue expanding our capacity and creating
shareholder value.”
FISCAL YEAR 2021 FULL YEAR FINANCIAL RESULTS
Total revenue increased by $484.2 million or 803%, to $544.5
million in 2021 from $60.3 million in 2020.
Total hosting revenue increased by $37.7 million, or 91%, to
$79.3 million in 2021 from $41.6 million in 2020. The increase was
driven by the execution of new customer hosting contracts for
miners deployed during the year ended December 31, 2021.
Total equipment sales increased by $235.6 million, or 1,871%, to
$248.2 million in 2021 from $12.6 million in 2020. The increase was
driven by higher demand for new generation mining equipment.
Digital asset mining income increased by $210.8 million, or
3,440%, to $216.9 million in 2021 from $6.1 million in 2020. The
year over year growth in mining income was driven by an increase in
our self-mining hash rate and higher bitcoin prices. Our
self-mining hash rate increased by 1,772%, to 6.6 EH/s in 2021 from
0.35 EH/s in 2020. The total number of bitcoins awarded in 2021
(excluding 1,746 of bitcoins mined by Blockcap prior to its
acquisition on July 30, 2021) was 4,0233 compared to 3283 in 2020.
The average price of bitcoin in 2021 was $47,437 compared to
$14,357 in 2020, an improvement of 230%.
Cost of revenue increased by $254.7 million or 500%, to $305.6
million in 2021 from $50.9 million in 2020. The increase was
primarily attributable to an increase in the cost of equipment sold
of $166.8 million, higher power consumption driven by increases in
both our self-mining and hosted fleet of $53.4 million, increased
depreciation expense of $21.3 million driven by the deployment of
self-mining units, facilities depreciation of $1.9 million, higher
personnel and facilities operating costs driven by the opening and
expansion of our data centers of $7.2 million and stock-based
compensation of $4.1 million. As a percentage of total revenue,
cost of revenue totaled 56% and 84% for the year ended December 31,
2021 and 2020, respectively.
Gross profit increased by $229.5 million, or 2,443%, to $238.9
million in 2021 from $9.4 million in 2020. The increase in gross
profit was driven primarily by a $163.6 million increase in gross
profit for the mining segment, which had a gross margin of 77% in
2021 compared to 51% in 2020. Also contributing to the increase in
gross profit was a $65.9 million increase in gross profit for the
Equipment Sales and Hosting Segment, which had a gross margin of
22% in 2021 compared to 12% in 2020, driven by higher margins on
equipment sales.
Operating income increased $137.8 million to $131.5 million in
2021 from an operating loss of $6.3 million in 2020. The increase
in operating income was predominantly due to the $229.5 million
increase in gross profit described above, primarily offset by $46.0
million of higher general and administrative expenses, which was
driven by $29.8 million of higher stock-based compensation expense,
and $37.2 million of higher impairments of digital currency assets,
which was driven by a change we made to our digital asset
investment policy in the second half of 2021 to begin holding a
more significant portion of our digital assets mined on our balance
sheet.
Net income increased $59.5 million to $47.3 million in 2021 from
a net loss of $12.2 million in 2020. The increase in net income was
due to the $137.8 million increase in operating income described
above, primarily offset by $41.3 million of non-operating expenses
related to our convertible notes, consisting of $25.3 million of
interest expense and $16.0 million of other fair value adjustments,
a $14.6 million increase in interest expense from other financing
arrangements, including a senior secured credit facility and
several equipment financing agreements for which the proceeds were
used to acquire self-mining equipment and to fund the build out of
our hosting and self-mining facilities, and a $6.7 million increase
in loss from debt extinguishments due to the payoff of senior
secured loans in April 2021.
Adjusted EBITDA increased $232.9 million to $238.9 million in
2021 from $6.1 million in 2020. The increase was due to higher
gross profit, excluding depreciation and amortization, partially
offset by higher operating expenses, excluding share-based
compensation and depreciation and amortization.
As of December 31, 2021, cash and cash equivalents were $117.9
million and restricted cash was $13.8 million.
As of December 31, 2021, the Company had a total Bitcoin balance
of 5,296. The carrying value of our mined digital assets was $234.3
million, which reflects impairment charges of $37.2 million
year-to-date.
OUTLOOK
In 2022, the Company expects to achieve total hashrate of
between 40 EH/s and 42 EH/s, with total power between 1,200 MW and
1,300 MW.
The foregoing estimates are forward-looking and reflect
management's view of current and future market conditions, subject
to certain risks and uncertainties and general economic and
business conditions in the United States and elsewhere in the
world. Investors are reminded that actual results may differ
materially from these estimates.
DAILY PRODUCTION REPORTING
Core Scientific anticipates providing daily bitcoin production
beginning early in April 2022 via www.corescientific.com.
CONFERENCE CALL AND WEBCAST
In conjunction with this release, Core Scientific, Inc. will
host a conference call today, Tuesday, March 29, 2022, at 4:30 pm
Eastern Time that will be webcast live. Mike Levitt, Chief
Executive Officer, Michael Trzupek, Chief Financial Officer and
Steven A. Gitlin, Senior Vice President Investor Relations, will
host the call.
Investors may dial into the call by using the following
telephone numbers, 1 (844) 200-6205 (U.S. toll-free), 1 (646)
904-5544 (U.S. local) or 1 (929) 526-1599 (international) and
providing the access code 892840 five to ten minutes prior to the
start time to allow for registration.
Investors with Internet access may listen to the live audio
webcast via the Investor Relations page of the Core Scientific,
Inc. website, http://investors.corescientific.com. Please allow 15
minutes prior to the call to download and install any necessary
audio software. A replay of the audio webcast will be available for
one year.
A supplementary investor presentation for the full fiscal year
2021 can be accessed at
https://investors.corescientific.com/investors/events-and-presentations/default.aspx.
AUDIO REPLAY
An audio replay of the event will be archived on the Investor
Relations section of the Company's website at
http://investors.corescientific.com and via telephone by dialing 1
(866) 813-9403 (U.S. toll free), 1 (929) 458-6194 (U.S. local) or
44 (204) 525-0658 (all other locations) and entering Access Code
892840.
ABOUT CORE SCIENTIFIC
Core Scientific is one of the largest publicly traded, net
carbon-neutral blockchain infrastructure providers and miners of
digital assets in North America. Core Scientific has operated
blockchain infrastructure in North America since 2017, using its
facilities and intellectual property portfolio that has grown to
more than 70 patents or applications for digital asset hosted
mining and self-mining. Core Scientific operates data centers in
Georgia, Kentucky, North Carolina, North Dakota and Texas, and
expects to commence operations in Oklahoma in the second half of
2022. Core Scientific’s proprietary Minder® fleet management
software combines the Company’s hosting expertise with data
analytics to deliver maximum uptime, alerting, monitoring and
management of all miners in the Company’s network. To learn more,
visit www.corescientific.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute
“forward-looking statements” for purposes of the federal securities
laws. Our forward-looking statements include, but are not limited
to, statements regarding our and our management team’s
expectations, hopes, beliefs, intentions or strategies regarding
the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “will,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements in this press release may include, for example,
statements about:
- execute its business strategy, including monetization of
services provided and expansions in and into existing and new lines
of business;
- realize the benefits expected from the acquisition of Blockcap,
including any related synergies;
- anticipate the uncertainties inherent in the development of new
business lines and business strategies;
- retain and hire necessary employees;
- anticipate the impact of the COVID-19 pandemic, including
variant strains of COVID-19, and its effect on business and
financial conditions;
- our ability to source clean and renewable energy;
- future estimates of computing capacity and operating
power;
- future demand for hosting capacity;
- future estimates of hashrate (including mix of self-mining and
hosting);
- operating gigawatts and power;
- future projects in construction or negotiation and future
expectations of operation location;
- orders for miners and critical infrastructure;
- future estimates of self-mining capacity;
- future infrastructure additions and their operational
capacity;
- operating power and site features of our operations center in
Denton, Texas;
- manage risks associated with operational changes in response to
the COVID-19 pandemic, including the emergence of variant strains
of COVID-19;
- increase brand awareness;
- attract, train and retain effective officers, key employees or
directors;
- upgrade and maintain information technology systems;
- acquire and protect intellectual property;
- meet future liquidity requirements and comply with restrictive
covenants related to long-term indebtedness;
- effectively respond to general economic and business
conditions, including the price of bitcoin;
- maintain the listing on, or to prevent the delisting of our
securities from, Nasdaq or another national securities
exchange;
- obtain additional capital, including use of the debt
market;
- the public float of our shares;
- enhance future operating and financial results;
- successfully execute expansion plans;
- anticipate rapid technological changes;
- comply with laws and regulations applicable to its business,
including tax laws and laws and regulations related to data privacy
and the protection of the environment;
- stay abreast of modified or new laws and regulations applicable
to its business or withstand the impact of any new laws and
regulations related to its industry;
- anticipate the impact of, and response to, new accounting
standards;
- anticipate the significance and timing of contractual
obligations;
- maintain key strategic relationships with partners and
distributors;
- respond to uncertainties associated with product and service
development and market acceptance;
- anticipate the impact of changes in U.S. federal income tax
laws, including the impact on deferred tax assets;
- successfully defend litigation; and
- successfully deploy the proceeds from the Business
Combination.
These forward-looking statements are based on information
available as of the date of this press release, and current
expectations, forecasts and assumptions, and involve a number of
judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws.
You should read this press release with the understanding that
our actual future results may be materially different from what we
expect. We qualify all of our forward-looking statements by these
cautionary statements.
In addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based upon information available to us as of the
date of this press release and while we believe such information
forms a reasonable basis for such statements, such information may
be limited or incomplete, and such statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These
statements are inherently uncertain, and investors are cautioned
not to unduly rely upon these statements.
Core Scientific, Inc.
Consolidated Balance
Sheets
(in thousands, except par
value)
(Unaudited)
December 31,
2021
2020
Assets
Current Assets:
Cash and cash equivalents
$ 117,871
$ 8,671
Restricted cash
13,807
50
Accounts receivable, net of allowance of
$— and $620, respectively
1,382
792
Accounts receivable from related
parties
300
315
Deposits for equipment
358,791
54,818
Digital currency assets
234,298
63
Prepaid expenses and other current
assets
30,111
6,210
Total Current Assets
756,560
70,919
Property, plant and equipment, net
597,304
85,244
Goodwill
1,055,760
58,241
Intangible assets, net
8,195
6,674
Other noncurrent assets
21,045
4,499
Total Assets
$ 2,438,864
$ 225,577
Liabilities, Redeemable
Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable
$ 11,617
$ 3,057
Accrued expenses and other
67,862
3,585
Deferred revenue
63,417
38,113
Deferred revenue from related parties
72,945
6,730
Capital lease obligations, current
portion
28,452
2,146
Notes payable, current portion
75,996
16,016
Total Current Liabilities
320,289
69,647
Capital lease obligations, net of current
portion
62,145
2,263
Notes payable, net of current portion
(includes $557,007 and $— at fair value)
652,213
19,864
Other noncurrent liabilities
18,531
103
Total Liabilities
1,053,178
91,877
Contingently redeemable preferred stock;
$0.00001 par value; 50,000 shares authorized; 6,766 shares issued
and outstanding at December 31, 2021 and 2020, respectively;
$45,164 total liquidation preference for both December 31, 2021 and
2020
44,476
44,476
Stockholders’ Equity:
Common stock; $0.00001 par value; 300,000
and 200,000 shares authorized at December 31, 2021 and 2020,
respectively; 169,719 and 98,607 shares issued and outstanding at
December 31, 2021 and 2020, respectively
2
1
Additional paid-in capital
1,379,606
163,967
Accumulated deficit
(27,432
)
(74,744
)
Accumulated other comprehensive loss
(10,966
)
—
Total Stockholders’ Equity
1,341,210
89,224
Total Liabilities, Redeemable
Preferred Stock and Stockholders’ Equity
$ 2,438,864
$ 225,577
Core Scientific, Inc.
Consolidated Statements of
Operations
(in thousands, except per
share amounts)
(Unaudited)
Year Ended December
31,
2021
2020
Revenue:
Hosting revenue from customers
$ 62,350
$ 34,615
Hosting revenue from related parties
16,973
6,983
Equipment sales to customers
138,376
11,193
Equipment sales to related parties
109,859
1,402
Digital asset mining income
216,925
6,127
Total revenue
544,483
60,320
Cost of revenue:
Cost of hosting services
77,678
36,934
Cost of equipment sales
177,785
11,017
Cost of digital asset mining
50,158
2,977
Total cost of revenue
305,621
50,928
Gross profit
238,862
9,392
(Loss) gain on legal settlements
(2,636
)
5,814
Gain from sales of digital currency
assets
4,814
69
Impairment of digital currency assets
(37,206
)
(4
)
Operating expenses:
Research and development
7,674
5,271
Sales and marketing
4,062
1,771
General and administrative
60,604
14,556
Total operating expenses
72,340
21,598
Operating income (loss)
131,494
(6,327
)
Non-operating expenses, net:
Loss on debt from extinguishment
8,016
1,333
Interest expense, net
44,354
4,436
Other non-operating expenses, net
16,049
110
Total non-operating expense, net
68,419
5,879
Income (loss) before income taxes
63,075
(12,206
)
Income tax expense
15,763
—
Net income (loss)
$ 47,312
$ (12,206
)
Deemed dividend from common to preferred
exchange
—
(10,478
)
Net income (loss) attributable to common
stockholders
$ 47,312
$ (22,684
)
Net income (loss) per share
Basic
$ 0.37
$ (0.23
)
Diluted
$ 0.32
$ (0.23
)
Weighted average shares outstanding:
Basic
129,527
98,492
Diluted
145,802
98,492
Core Scientific, Inc.
Consolidated Statements of
Cash Flows
(in thousands)
(Unaudited)
Year Ended December
31,
2021
2020
Cash flows from Operating
Activities:
Net income (loss)
$ 47,312
$ (12,206
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization
33,362
9,403
Stock-based compensation
38,937
3,037
Digital asset mining income
(216,925
)
(6,127
)
Deferred income taxes
9,528
—
Loss on legal settlements
2,636
—
Loss on debt extinguishment
8,016
1,333
Fair value adjustment on convertible
notes
31,217
—
Amortization of debt discount and debt
issuance costs
1,374
1,300
Losses on disposals of property, plant and
equipment
118
2
Gain from sales of digital currency
assets
—
—
Impairments of digital currency assets
37,206
4
Provision for doubtful accounts
—
616
Changes in working capital components:
Accounts receivable, net
(7,421
)
(1,303
)
Accounts receivable from related
parties
16
(243
)
Digital currency assets
24,011
6,090
Deposits for equipment for sales to
customers
(244,399
)
(54,736
)
Prepaid expenses and other current
assets
(34,076
)
(2,353
)
Accounts payable
(21,991
)
(1,770
)
Accrued expenses and other
56,200
1,625
Deferred revenue
184,340
30,009
Other noncurrent assets and liabilities,
net
(6,196
)
1,554
Net cash used in operating activities
(56,735
)
(23,765
)
Cash flows from Investing
Activities:
Purchases of property, plant and
equipment
(365,210
)
(13,668
)
Cash acquired (paid) in acquisitions
704
(1,568
)
Deposits for self-mining equipment
(59,275
)
—
Other
(59
)
92
Net cash used in investing activities
(423,840
)
(15,144
)
Cash flows from Financing
Activities:
Proceeds from issuances of common stock
options and warrants
513
2,642
Issuances of debt
670,750
45,178
Principal payments on debt
(57,049
)
(7,097
)
Payment for transaction cost
(10,682
)
—
Net cash provided by financing
activities
603,532
40,723
Increase in cash, cash equivalents, and
restricted cash
122,957
1,814
Cash, cash equivalents and restricted
cash—beginning of period
8,721
6,907
Cash, cash equivalents and restricted
cash—end of period
$ 131,678
$ 8,721
Core Scientific, Inc.
Segment Results
(in thousands)
(Unaudited)
Year Ended December
31,
2021
2020
Equipment Sales and Hosting
Segment
Revenue:
Hosting revenue
$ 79,323
$ 41,598
Equipment sales
248,235
12,595
Total revenue
327,558
54,193
Cost of revenue:
Cost of hosting services
77,678
36,934
Cost of equipment sales
177,785
11,017
Total Cost of revenue
$ 255,463
$ 47,951
Gross profit
$ 72,095
$ 6,242
Gross margin4
22
%
12
%
Mining Segment
Digital asset mining income
$ 216,925
$ 6,127
Total revenue
216,925
6,127
Cost of revenue
50,158
2,977
Gross profit
$ 166,767
$ 3,150
Gross margin4
77
%
51
%
Consolidated
Consolidated total revenue
$ 544,483
$ 60,320
Consolidated cost of revenue
$ 305,621
$ 50,928
Consolidated gross profit
$ 238,862
$ 9,392
Consolidated gross margin4
44
%
16
%
Core Scientific, Inc. and Subsidiaries
Non-GAAP Financial Measures (Unaudited)
Adjusted EBITDA is a non-GAAP financial measure defined as our
net income or (loss), 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; and (v)
certain additional non-cash and non-recurring items. For additional
information, including the reconciliation of net income (loss) 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 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 press release 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 is unpredictable, not driven by core
results of operations and renders comparisons with prior periods
and competitors less meaningful. However, you should be aware that
when evaluating Adjusted EBITDA, we may incur future expenses
similar to those excluded when calculating these measures. Our
presentation of this measure should not be construed as an
inference that its future results will be unaffected by unusual or
non-recurring 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 income (loss) to Adjusted
EBITDA below and not rely on any single financial measure to
evaluate our business. The following table presents a
reconciliation of net income (loss) to Adjusted EBITDA for the
years ended December 31, 2021 and 2020:
The following tables reconcile the Non-GAAP Financial Measures
to the most directly comparable U.S. GAAP financial performance
measure, which is net income (loss), for the periods presented (in
thousands):
Year Ended December
31,
2021
2020
Net income (loss)
$ 47,312
$ (12,206
)
Adjustments:
Interest expense, net
44,354
4,436
Income tax expense
15,763
—
Depreciation and amortization
33,362
9,403
Loss on debt from extinguishment
8,016
1,333
Stock-based compensation expense
38,937
3,037
Loss on legal settlements
2,636
—
Fair value adjustment on convertible
notes
16,047
—
Gain from sales of digital currency
assets
(4,814
)
(69
)
Impairment of digital currency assets
37,206
4
Losses on disposals of property, plant and
equipment
118
2
Other non-cash and non-recurring items
3
111
Adjusted EBITDA
$ 238,940
$ 6,051
1 Adjusted EBITDA is a non-GAAP financial measure. For a
reconciliation of Adjusted EBITDA to the most directly comparable
U.S. GAAP financial measures, please refer to the “Non-GAAP
Financial Measures” section of this press release. 2 Includes 1,746
of bitcoin mined by Blockcap during 2021 prior to being acquired on
July 30, 2021. 3 The total number of bitcoin awarded on a combined
self-mining basis for December 31, 2021 was 5,769 compared to 1,281
for the year ended December 31, 2020. 4 Gross margin is calculated
as gross profit as a percentage of total revenue.
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Investors: Steven Gitlin ir@corescientific.com
Media: press@corescientific.com
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