Core Scientific’s colocation revenue hit $215.4 million in Q3, as it continues to strengthen its AI ambitions ahead of its planned Bitcoin mining exit.
Core Scientific plans to end its Bitcoin mining operations by December 2026 and enter 2027 as a dedicated high-density colocation provider focused on artificial intelligence (AI) and high-performance computing (HPC), CFO Jim Nygaard said during the company’s third-quarter earnings call on Thursday.
The transition has already reduced the company’s mining fleet by nearly half as it reallocates power and data-center capacity to infrastructure customers.
Quarterly Colocation Revenue
Colocation revenue climbed 58% quarter-on-quarter to $215.4 million in Q3, compared with $136.7 million in Q2 and $15 million in the same period last year. Total revenue rose 42% sequentially to $232.9 million, while adjusted EBITDA increased to $133.6 million from $41.1 million in the previous quarter. The adjusted EBITDA margin also expanded from 25% to 57%, which indicated improved operating performance as additional capacity came online.
Core Scientific recorded net income of $1.18 billion, and reversed losses of $1.16 billion in Q2 and $144 million a year earlier. However, the result included a substantial non-cash gain from changes in the fair value of warrants, so the figure does not reflect underlying business performance alone.
Nygaard also spoke about the scale of the operational shift. By the end of September, the company had nearly 50% fewer miners online than at the end of 2025. Meanwhile, it was billing for 485 megawatts of colocation capacity, an increase of 90 MW during the quarter. This capacity represents more than $700 million in average annualized GAAP colocation revenue.
Approximately 100 MW remaining under its CoreWeave buildout is undergoing commissioning. Revenue recognition is expected to begin over the coming months, Chief Executive Officer Adam Sullivan said.
But Core Scientific isn’t the only one. Several publicly traded BTC miners have been pivoting infrastructure toward AI workloads. For instance, Riot is developing large-scale AI data centers, while MARA is diversifying into AI infrastructure in addition to its ongoing Bitcoin mining operations.
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Profitability Pressures
Competition among Bitcoin miners remains intense, and another major reward reduction will make mining less lucrative within 17 months.
The pressure on traditional mining operations is also evident in American BTC’s latest results. The Eric Trump-backed company reported $126 million in quarterly net income, but the figure was largely supported by a $197.3 million non-cash gain on its Bitcoin holdings. Its mining business showed weaker performance, as revenue declined 5.5% quarter-on-quarter to $63.4 million, while the cost of mining one BTC increased approximately 15% to $42,100.
Excluding the gain on its Bitcoin holdings, American Bitcoin would have reported an approximately $5.5 million loss. It also reported a $64.3 million loss on derivatives. CEO Mike Ho said the company continued mining Bitcoin below spot-market prices despite seasonal increases in electricity costs.
