Core Scientific, Inc./txCORZ
Core Scientific, Inc./tx Segments Disclosure
15. 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 now has three operating segments: “Digital Asset Self-Mining”, consisting of performing digital asset mining for its own account; “Digital Asset Hosted Mining”, consisting of providing hosting services to third-parties for digital asset mining; and “HPC Hosting”, consisting of providing hosting services to third parties for GPU-based HPC operations. The Company’s HPC operations met the criteria to be considered a new segment during the second quarter of 2024. 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 HPC Hosting business generates revenue through licensing agreements and orders with licensees that include fixed and variable payments on a recurring basis.
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 Company adopted ASU 2023-07 on January 1, 2024. The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the CODM. Power fees, depreciation expense, employee compensation and facility operations expense were determined to be significant segment expenses. 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.
The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
Digital Asset Self-Mining Segment | (in thousands, except percentages) | ||||||||||||||||
Digital asset self-mining revenue | $ | 408,740 | $ | 390,333 | $ | 397,796 | |||||||||||
| Cost of digital asset self-mining: | |||||||||||||||||
| Power fees | 160,833 | 165,848 | 144,117 | ||||||||||||||
| Depreciation expense | 108,499 | 88,628 | 212,944 | ||||||||||||||
| Employee compensation | 26,129 | 16,853 | 23,574 | ||||||||||||||
| Facility operations expense | 13,274 | 14,055 | 9,554 | ||||||||||||||
| Other segment items | 5,600 | 6,312 | 4,893 | ||||||||||||||
| Total cost of digital asset self-mining | 314,335 | 291,696 | $ | 395,082 | |||||||||||||
Digital Asset Self-Mining gross profit | $ | 94,405 | $ | 98,637 | $ | 2,714 | |||||||||||
| Digital Asset Self-Mining gross margin | 23 | % | 25 | % | 1 | % | |||||||||||
Digital Asset Hosted Mining Segment | |||||||||||||||||
| Digital asset hosted mining revenue from customers | $ | 77,554 | $ | 112,067 | $ | 242,517 | |||||||||||
| Cost of digital asset hosted mining services: | |||||||||||||||||
| Power fees | 35,408 | 62,366 | 125,859 | ||||||||||||||
| Depreciation expense | 3,604 | 6,806 | 10,630 | ||||||||||||||
| Employee compensation | 4,933 | 6,337 | 20,587 | ||||||||||||||
| Facility operations expense | 2,765 | 5,285 | 8,344 | ||||||||||||||
| Other segment items | 6,848 | 6,451 | 71,411 | ||||||||||||||
| Total cost of digital asset hosted mining services | 53,558 | 87,245 | $ | 236,831 | |||||||||||||
Digital Asset Hosted Mining gross profit | $ | 23,996 | $ | 24,822 | $ | 5,686 | |||||||||||
| Digital Asset Hosted Mining gross margin | 31 | % | 22 | % | 2 | % | |||||||||||
| HPC Hosting Segment | |||||||||||||||||
HPC hosting revenue: | |||||||||||||||||
License fees | $ | 17,498 | $ | — | $ | — | |||||||||||
Maintenance and other | 73 | — | — | ||||||||||||||
Licensing revenue | 17,571 | — | — | ||||||||||||||
Power fees passed through to customer | 6,807 | — | — | ||||||||||||||
Total HPC hosting revenue | 24,378 | — | — | ||||||||||||||
| Cost of HPC hosting services: | |||||||||||||||||
| Depreciation expense | 3 | — | — | ||||||||||||||
Employee compensation | 2,514 | — | — | ||||||||||||||
| Facility operations expense | 11,907 | — | — | ||||||||||||||
| Other segment items | 478 | — | — | ||||||||||||||
Cost of licensing revenue | 14,902 | — | — | ||||||||||||||
Power fees passed through to customer | 6,807 | — | — | ||||||||||||||
| Total cost of HPC hosting services | 21,709 | — | — | ||||||||||||||
| HPC Hosting gross profit | $ | 2,669 | $ | — | $ | — | |||||||||||
HPC Hosting licensing gross margin | 15 | % | — | % | — | % | |||||||||||
HPC Hosting gross margin | 11 | % | — | % | — | % | |||||||||||
| Consolidated | |||||||||||||||||
| Consolidated total revenue | $ | 510,672 | $ | 502,400 | $ | 640,313 | |||||||||||
Consolidated cost of revenue | $ | 389,602 | $ | 378,941 | $ | 631,913 | |||||||||||
Consolidated gross profit | $ | 121,070 | $ | 123,459 | $ | 8,400 | |||||||||||
| Consolidated gross margin | 24 | % | 25 | % | 1 | % | |||||||||||
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 December 31, 2024 and December 31, 2023, all of the Company’s fixed assets were located in the United States. For the years ended December 31, 2024, 2023 and 2022, all of the Company’s revenue was generated in the United States. For the years ended December 31, 2024, 2023 and 2022, 80%, 78% and 62%, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin from one customer. As of December 31, 2024 and 2023, substantially all of our digital assets were held by one third-party digital asset service.
For the years ended December 31, 2024, 2023 and 2022, the concentration of customers comprising 10% or more of the Company’s Digital Asset Self-Mining, Digital Asset Hosted Mining, and HPC Hosting segment revenue were as follows:
| Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
| Percent of Digital Asset Self-Mining segment revenue: | Percent of Digital Asset Hosted Mining segment revenue: | Percent of HPC Hosting segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Customer | |||||||||||||||||||||||||||||||||||||||||||||||||||||
E (related party) | N/A | N/A | N/A | N/A | N/A | 38 | % | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||
F1 | N/A | N/A | N/A | 61 | % | 49 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
G | 100 | % | 100 | % | 100 | % | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||
H | N/A | N/A | N/A | 21 | % | 15 | % | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
J | N/A | N/A | N/A | N/A | N/A | N/A | 100 | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||
1 On the Effective Date, Customer F became a minority shareholder of the Company.
A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022, is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
Reportable segment gross profit | $ | 121,070 | $ | 123,459 | $ | 8,400 | |||||||||||
| Change in fair value of digital assets | (1,052) | — | — | ||||||||||||||
Gain from sale of digital assets | — | 3,893 | 44,298 | ||||||||||||||
| Impairment of digital assets | — | (4,406) | (231,315) | ||||||||||||||
Change in fair value of energy derivatives | (2,757) | (3,918) | — | ||||||||||||||
| Impairment of goodwill and other intangibles | — | — | (1,059,265) | ||||||||||||||
| Impairment of property, plant and equipment | — | — | (590,673) | ||||||||||||||
| Losses on exchange or disposal of property, plant and equipment | (4,210) | (1,956) | (28,025) | ||||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 11,830 | 7,184 | 26,962 | ||||||||||||||
Sales and marketing | 9,969 | 7,019 | 12,731 | ||||||||||||||
General and administrative | 110,448 | 93,908 | 213,280 | ||||||||||||||
Total operating expenses | 132,247 | 108,111 | 252,973 | ||||||||||||||
| Operating (loss) income | (19,196) | 8,961 | (2,109,553) | ||||||||||||||
| Non-operating expenses (income), net: | |||||||||||||||||
Loss (gain) on debt extinguishment | 487 | (20,065) | 287 | ||||||||||||||
Interest expense, net | 37,070 | 86,238 | 96,826 | ||||||||||||||
| Fair value adjustment on convertible notes | — | — | 186,853 | ||||||||||||||
| Fair value adjustment on derivative warrant liabilities | — | — | (37,937) | ||||||||||||||
| Reorganization items, net | (111,439) | 191,122 | (197,405) | ||||||||||||||
| Change in fair value of warrants and contingent value rights | 1,369,157 | — | — | ||||||||||||||
| Other non-operating (income) expense, net | (325) | (2,530) | 5,232 | ||||||||||||||
Total non-operating expenses, net | 1,294,950 | 254,765 | 53,856 | ||||||||||||||
Loss before income taxes | $ | (1,314,146) | $ | (245,804) | $ | (2,163,409) | |||||||||||
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.