Core Scientific Posts $580M Net Income in Q1 2025 Despite Revenue Decline

Core Scientific (NASDAQ: CORZ) reported fiscal Q1 2025 financial results on Wednesday, revealing a net income of $580.7 million

Core Scientific (NYSE:CORZ) reported first-quarter 2025 net income of $580.7 million, smashing expectations. This was largely driven by a substantial non-cash gain tied to warrant liabilities.

However, the company's earnings report also revealed a sharp drop in revenue and continued operating losses.

The company reported total revenue of $79.5 million, down 44% year-over-year and nearly 92% quarter-over-quarter. This shortfall can be attributed to the Bitcoin halving and a strategic shift toward colocation services.

Key Developments and Strategic Highlights

The company is on track to deliver 250MW of billable capacity to CoreWeave by year-end, potentially driving $360 million in annualized colocation revenue in 2026.

It expects to deliver 8MW of capacity at its Denton facility by the end of May, with an additional 40MW coming online by the end of the current quarter.

Core Scientific ended the quarter with $778.6 million in cash, cash equivalents, and digital assets, supporting both organic and inorganic growth opportunities.

Shift to Colocation Hits Mining Revenue

Digital asset self-mining revenue fell sharply to $67.2 million, down from $150 million in the prior year's quarter, resulting in a 9% gross margin. The decline stems from a 75% drop in BTC mined, which was partially offset by a 74% increase in average BTC price and lower power costs.

Hosted mining revenue declined to $3.8 million, with gross profit of $1.7 million (46% margin), affected by the operational pivot away from hosting.

Colocation revenue totaled $8.6 million, with a modest 5% gross margin. Excluding direct power pass-through costs, non-GAAP gross margin stood at 8%.

Non-Cash Gains Drive Net Income Surge

The net income soared from $210.7 million in the year-ago quarter, mainly due to a $621.5 million mark-to-market gain related to warrant and contingent value right liabilities. This gain was driven by a decline in the company's share price.

Core Scientific also benefited from:

A $16.3 million drop in interest expense, helped by lower rates

A $7.9 million increase in money market returns

These gains were partially offset by:

A $99.8 million drop in total revenue

$111.4 million in reorganization-related costs (none recurring in Q1 2025)

Adjusted EBITDA Turns Negative

Adjusted EBITDA for the quarter was $(6.1) million, compared to $88.0 million a year ago. The decline reflects weaker revenue, higher operating expenses, and reduced profitability in mining operations.

CEO: ‘Inflection Point for Our Business’

CEO Adam Sullivan called the quarter a turning point, highlighting the company's accelerated execution on infrastructure projects and its growing role in next-gen data center infrastructure.

"We are not just expanding capacity; we are shaping the foundation for the next era of data center infrastructure," said Sullivan.