Core Scientific, Inc./txCORZ
Core Scientific, Inc./tx Leases Disclosure
7. LEASES
Lessee Accounting
In February 2024, the Company entered into a lease agreement for a data center in Austin, Texas with a current operating capacity of 20 MW (the “Austin Lease”). The Austin Lease term is eight years. As of December 31, 2024, total future lease payments were expected to be approximately $91.2 million.
In September 2024, the Company entered into a lease agreement by and between the Company and Aubix, LLC (the "Aubix Lease") for approximately 5.7 acres of land, including a 40,000 square foot building that the Company intends to use for its HPC hosting operations. The Aubix Lease commenced in November 2024 when the Company began occupancy of the leased space. The term of the Aubix Lease is 10 years from the commencement date. The Company has the right to extend the term of the Aubix Lease up to an additional 15 years in 5 year increments. At lease inception, total future minimum lease payments related to the Aubix Lease were approximately $43.5 million.
In November 2024, the Company entered into a lease amendment with The City of Denton (the "Denton Lease Amendment") for additional land and access to power. The Denton Lease Amendment created an additional right-of-use asset and was recorded as a new operating lease. The term of the Denton Lease Amendment is 25 years. At lease inception, total future minimum lease payments related to the Denton Lease Amendment were $17.6 million.
The components of operating and finance leases are presented on the Company’s Consolidated Balance Sheets as follows (in thousands):
| Financial statement line item | December 31, 2024 | December 31, 2023 | ||||||||||||||||||
| Assets: | ||||||||||||||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | $ | 114,472 | $ | 7,844 | |||||||||||||||
Finance lease right-of-use assets | $ | 5,873 | $ | 16,268 | ||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Operating lease liabilities, current portion | Operating lease liabilities, current portion | $ | 9,974 | $ | 77 | |||||||||||||||
| Operating lease liabilities, net of current portion | Operating lease liabilities, net of current portion | $ | 97,843 | $ | 1,512 | |||||||||||||||
| Finance lease liabilities, current portion | Finance lease liabilities, current portion | $ | 1,669 | $ | 19,771 | |||||||||||||||
| Finance lease liabilities, net of current portion | Finance lease liabilities, net of current portion | $ | 3 | $ | 35,745 | |||||||||||||||
Supplemental disclosure of noncash investing and financing activities in the Company’s Consolidated Statements of Cash Flows includes a decrease in lease liability due to lease satisfactions on the Effective Date of $50.7 million presented in Extinguishment of accounts payable, accrued expenses, finance lease liability, and notes payable upon emergence for the year ended December 31, 2024.
The components of lease expense were as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||
| Financial statement line item | 2024 | 2023 | 2022 | |||||||||||||||||||||||
| Operating lease expense | Cost of HPC hosting services | $ | 10,274 | $ | — | $ | — | |||||||||||||||||||
| Operating lease expense | Cost of digital asset self-mining | 413 | — | — | ||||||||||||||||||||||
| Operating lease expense | Cost of digital asset hosted mining services | 87 | — | — | ||||||||||||||||||||||
| Operating lease expense | General and administrative expenses | 2,129 | 1,024 | 1,937 | ||||||||||||||||||||||
| Short-term lease expense | General and administrative expenses | 383 | — | 24 | ||||||||||||||||||||||
Variable lease expense | Cost of HPC hosting services | 1,455 | — | — | ||||||||||||||||||||||
| Finance lease expense: | ||||||||||||||||||||||||||
| Amortization of right-of-use assets | Cost of digital asset self-mining | 1,106 | 11,424 | 31,372 | ||||||||||||||||||||||
| Interest on lease liabilities | Interest expense, net | 1,200 | 1,787 | 7,080 | ||||||||||||||||||||||
| Total finance lease expense | 2,306 | 13,211 | 38,452 | |||||||||||||||||||||||
| Total lease expense | $ | 17,047 | $ | 14,235 | $ | 40,413 | ||||||||||||||||||||
Information relating to the lease term and discount rate is as follows:
| December 31, 2024 | December 31, 2023 | ||||||||||
| Weighted Average Remaining Lease Term (Years) | |||||||||||
| Operating leases | 8.5 | 16.7 | |||||||||
| Finance leases | 0.7 | 2.2 | |||||||||
| Weighted Average Discount Rate | |||||||||||
| Operating leases | 8.5 | % | 11.7 | % | |||||||
| Finance leases | 12.5 | % | 12.9 | % | |||||||
Information relating to lease payments is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Lease Payments | |||||||||||||||||
| Operating cash flows from operating leases | $ | 16,328 | $ | 956 | $ | 726 | |||||||||||
| Operating cash flows from finance leases | $ | 1,856 | $ | 964 | $ | 8,873 | |||||||||||
Financing cash flows from finance leases | $ | 6,038 | $ | 3,495 | $ | 27,868 | |||||||||||
1 Approximately $4.6 million of finance lease liabilities were reinstated pursuant to the Plan of Reorganization. Of the $7.9 million of finance lease payments made during the year ended December 31, 2024, $4.4 million related to cure payments from emergence on the Effective Date.
The Company’s minimum payments under noncancelable operating and finance leases having initial terms and bargain renewal periods in excess of one year are as follows at December 31, 2024, and thereafter (in thousands):
| Operating leases | Finance leases | ||||||||||
| 2025 | $ | 18,589 | $ | 1,750 | |||||||
| 2026 | 19,000 | 3 | |||||||||
| 2027 | 19,423 | — | |||||||||
| 2028 | 19,859 | — | |||||||||
| 2029 | 20,358 | — | |||||||||
| Thereafter | 54,309 | — | |||||||||
| Total lease payments | 151,538 | 1,753 | |||||||||
| Less: imputed interest | 43,721 | 81 | |||||||||
| Total | $ | 107,817 | $ | 1,672 | |||||||
Lessor Accounting
We generate revenue by leasing property to a customer under licensing agreements. The manner in which we recognize these transactions in our financial statements is described in Note 2 — Summary of Significant Accounting Policies, Revenue Recognition — HPC Hosting Segment. There was no lease revenue during the years ended December 31, 2023 and 2022.
The components of lease revenue were as follows (in thousands):
| Year Ended December 31, 2024 | |||||
Lease Revenue | |||||
Operating lease revenue | $ | 17,498 | |||
Variable lease revenue | 6,880 | ||||
Total lease revenue | $ | 24,378 | |||
The following table represents the maturity analysis of operating lease payments expected to be received at December 31, 2024, and thereafter (in thousands):
| Operating leases | |||||
| 2025 | $ | 23,254 | |||
| 2026 | 23,952 | ||||
| 2027 | 24,670 | ||||
| 2028 | 25,410 | ||||
| 2029 | 26,173 | ||||
| Thereafter | 33,747 | ||||
| Total | $ | 157,206 | |||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.