Core Scientific (CORZ) FY2025 10-K Risk Factors: 13 New, 31 Dropped

What the changes say

Core Scientific is shifting from bitcoin mining to high-density colocation, making construction, financing, power, capacity and customer execution central risks.
Digital-asset regulation, accounting, tax attributes and money-transmitter obligations receive expanded attention.
Privacy, security and generative-AI information leakage risks replace broader cybersecurity and customer-concentration disclosures.
Several generic risks, including CoreWeave concentration, staffing, geopolitics and third-party intellectual-property claims, were dropped.

What changed since the prior 10-K

New

NewRisks Related to our Businesses and Industries
In 2024, we initiated a significant strategic transition in our operations from bitcoin mining to colocation services, which will require the conversion of our existing infrastructure or development of new facilities to support our high-density colocation customers
Converting existing facilities or building new high-density data centers could be delayed or made more expensive by contractors, materials, financing, approvals, power and customer changes.
NewRisks Related to our Businesses and Industries
Further, increases in power costs could negatively impact our hosting customers’ demand for services, harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operations
Higher electricity costs could reduce bitcoin-mining profitability and make hosting services less attractive to customers.
NewRisks Related to our Businesses and Industries
Raising additional debt or equity financing may be difficult and may not be available when needed or, if available, may not be available on satisfactory terms. An inability to generate sufficient cash from operations or to obtain additional debt or equity financing have adversely affected our results of operations
Misjudging colocation capacity demand could create costly excess capacity or leave Core Scientific unable to serve existing and new customers.
NewRisks Related to our Businesses and Industries
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations
Insufficient contractual liability limits, public-source data gathering or generative-AI use could expose Core Scientific and customers to privacy claims, penalties and competitive harm.
NewRisks Related to our Businesses and Industries
Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security
U.S. federal, state and local privacy laws could require disclosures, data-rights processes and impact assessments, with statutory fines for noncompliance.
NewRisks Related to our Businesses and Industries
Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating uncertainty
Rapidly changing and conflicting privacy obligations could require costly changes to services, systems and third-party practices, while failures could disrupt operations.
NewRisks Related to our Businesses and Industries
In addition, the systems that connect our facilities to the internet and other external networks may become insufficient, including with respect to latency, reliability and diversity of connectivity
Facility connectivity may become inadequate for latency, reliability or network diversity, while new technologies could require costly infrastructure upgrades and reduce margins.
NewRisks Related to Regulatory Framework
Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost- prohibitive. If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations
Being classified as a FinCEN money services business or state money transmitter could require costly anti-money-laundering programs, licensing, reporting and recordkeeping.
NewRisks Related to Regulatory Framework
We intend to conduct our operations so that we are not required to register as an investment company under the 1940 Act
Changing SEC guidance on bitcoin and investment-company status could restrict digital-asset activities, force asset changes or limit transactions.
NewRisks Related to Regulatory Framework
U.S. federal and state laws and regulations of digital assets and digital asset intermediaries, such as digital asset exchanges and custodians, may increase our compliance costs and adversely impact the market for digital assets
New federal and state digital-asset rules, including the GENIUS Act and proposed market-structure legislation, could raise compliance costs and affect digital-asset markets.
NewRisks Related to Regulatory Framework
Changes in accounting standards and interpretations for crypto assets could materially affect our financial statements, results of operations, and the carrying value of our digital asset holdings, and could adversely impact our business and the market price of our securities
Further crypto-asset accounting changes could require fair-value reporting, revised disclosures or prior-period adjustments and increase earnings volatility.
NewRisks Related to Taxes
Based upon the evaluation of ownership changes occurring upon the Company’s emergence from bankruptcy on January 23, 2024, an ownership change likely occurred, which may limit our ability to utilize our federal NOL and capital loss carryforwards and certain other tax attributes
A likely ownership change during the January 23, 2024 bankruptcy emergence may limit federal NOL, capital-loss and other tax-attribute usage.
NewRisks Related to the Price of Bitcoin
We are no longer required to sell our digital assets, including bitcoin, as we receive them under our existing debt agreements

Dropped

Dropped
Summary of Selected Risk Factors Associated with an Investment in Our Securities
Summary of principal investment risks, including facility conversion and attracting HPC customers.
DroppedRisks Related to our Businesses and Industries
Currently our HPC business is highly dependent on a single customer
Dependence on CoreWeave, which generated 100% of HPC Hosting revenue.
DroppedRisks Related to our Businesses and Industries
Moreover, in order to grow our hosting business, we may need additional facilities to increase our capacity for more miners. The costs of constructing, developing, operating and maintaining hosting facilities and growing our hosting operations may not be profitable or possible
DroppedRisks Related to our Businesses and Industries
If we do not accurately predict our facility requirements, it could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to our Businesses and Industries
If we fail to accurately estimate the factors upon which we base our contract pricing, we may generate less profit than expected or incur losses on those contracts, which could have a material adverse effect on our business, financial condition and results of operations
Need for additional hosting facilities and financing to expand miner capacity profitably.
DroppedRisks Related to our Businesses and Industries
We may be exposed to cybersecurity threats and breaches, which could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to our Businesses and Industries
Our digital infrastructure could be breached despite our security procedures
DroppedRisks Related to our Businesses and Industries
We may not be able to adequately protect our intellectual property rights and other proprietary rights, which could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to our Businesses and Industries
We may infringe on third-party intellectual property rights or other proprietary rights, which could have a material adverse effect on our business, financial condition and results of operations
Risk of inaccurately forecasting data-center capacity requirements.
DroppedRisks Related to our Businesses and Industries
Our success is dependent on the ability of our management team and our ability to attract, develop, motivate and retain other well-qualified employees, which may be more difficult, costly or time-consuming than expected
Risk of mispricing hosting contracts based on power consumption and service costs.
DroppedRisks Related to our Businesses and Industries
Our business is heavily impacted by social, political, economic and other events and circumstances in the United States and in countries outside of the United States, most particularly Asian and other non-Western countries
DroppedRisks Related to our Businesses and Industries
Global conflict could negatively impact the Company’s business, results of operations and financial conditions
DroppedRisks Related to our Businesses and Industries
Changes in tariffs or import restrictions could have a material adverse effect on our business, financial condition and results of operations
General cybersecurity threats, breaches, malware, hacking and unauthorized system disruption.
DroppedRisks Related to our Businesses and Industries
In the past, we have identified material weaknesses in our internal control over financial reporting, and additional material weaknesses may occur in the future
Breaches exposing digital-asset accounts, private keys, data or digital assets.
DroppedRisks Related to our Businesses and Industries
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis
DroppedRisks Related to the Price of Bitcoin
To the extent that the profit margins of digital asset mining operations are not high, mining participants are more likely to sell their earned bitcoin, which could constrain bitcoin prices
DroppedRisks Related to the Price of Bitcoin
Mining operators may sell a substantial amount of digital assets into the market, which may exert downward pressure on the price of the applicable digital asset and, in turn, could have a material adverse effect on our business, financial condition and results of operations
Difficulty obtaining and protecting Core Scientific’s intellectual-property rights.
DroppedRisks Related to the Price of Bitcoin
The cash needs of our HPC hosting growth initiatives will limit the amount of digital assets we hold, thus preventing us from recognizing any gain from the appreciation in value of the digital assets we have sold and may sell in the future
Potential infringement claims involving third-party intellectual-property rights.
DroppedRisks Related to our Limited Operating History
We may not be able to compete effectively against our current and future competitors, which could have a material adverse effect on our business, financial condition and results of operations
Dependence on management and ability to attract, develop and retain qualified employees.
DroppedRisks Related to our Limited Operating History
We have experienced difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions to provide us with customary financial products and services, which could have a material adverse effect on our business, financial condition and results of operations
Exposure to social, political and economic events in the United States and abroad.
DroppedRisks Related to Regulatory Framework
Any change in the interpretive positions of the SEC or its staff with respect to digital asset mining firms could have a material adverse effect on us
Business disruption from global conflicts, sanctions, export controls and related economic effects.
DroppedRisks Related to Regulatory Framework
Recent developments have increased the likelihood that U.S. federal and state legislatures and regulatory agencies will enact laws and regulations to regulate digital assets and digital asset intermediaries, such as digital asset exchanges and custodians
DroppedRisks Related to Digital Assets
Digital asset transactions are irrevocable and, if incorrectly transferred, digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to Digital Assets
We may not have adequate sources of recovery if the bitcoin held by us are lost, stolen or destroyed due to third-party digital asset services, which could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to Digital Assets
Digital assets, including bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times and any mechanisms of increasing the scale of digital asset settlement may significantly alter the competitive dynamics in the market
DroppedRisks Related to Digital Assets
Malicious actors or botnet may obtain control of more than 50% of the processing power on the bitcoin or other network
DroppedRisks Related to Digital Assets
A soft or hard fork on a network could have a material adverse effect on our business, financial condition and results of operations
DroppedRisks Related to our Indebtedness and Liquidity
The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition and results of operations
DroppedRisks Related to our Indebtedness and Liquidity
The accounting method for the 2029 Convertible Notes and 2031 Convertible Notes, or any future notes, could adversely affect our reported financial condition and results
DroppedRisks Related to Ownership of Our Securities
We no longer qualify as an “emerging growth company” as of December 31, 2024, and, as a result, we will no longer be able to avail ourselves of certain reduced disclosure requirements applicable to emerging growth companies and/or smaller reporting companies
DroppedRisks Related to our Restructuring
Upon emergence from the Chapter 11 Cases, the composition of our Board of Directors changed significantly

Reworded

88% rewrittenRisks Related to Digital Assets
Intellectual property rights claims may adversely affect the operation of any or all networks
No substantive wording change is shown; the risk remains third-party intellectual-property claims affecting confidence in digital-asset networks or transfers.
88% rewrittenRisks Related to our Businesses and Industries
Physical risks and regulatory changes relating to climate change may impact our costs, our access to materials and resources and demand for cryptocurrencies, potentially adversely impacting our business, capital expenditures, results of operations, financial condition and competitive position
No substantive wording change is shown; climate-related physical damage, energy costs, regulation and insurance remain the focus.
81% rewrittenRisks Related to Digital Assets
The digital assets held by us are not subject to FDIC or SIPC protections
The text adds that digital assets face scaling obstacles that may cause high fees or slow settlement and alter market competition.
65% rewrittenRisks Related to our Businesses and Industries
Our future success depends on our ability to keep pace with rapid technological changes that could make our current or future technologies less competitive or obsolete
The current text omits the prior sentence on internet connectivity becoming insufficient; connectivity is addressed separately in risk 11.
55% rewrittenRisks Related to our Indebtedness and Liquidity
Provisions in our indentures could delay or prevent an otherwise beneficial takeover of us
No substantive wording change is shown; convertible-note provisions could make a takeover more difficult or expensive.
51% rewrittenRisks Related to Digital Assets
Latency in confirming transactions on a network could result in a loss of confidence in the network, which could have a material adverse effect on our business, financial condition and results of operations
No substantive wording change is shown; delayed blockchain confirmations could reduce confidence in the network.
49% rewrittenRisks Related to Regulatory Framework
Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology
No substantive wording change is shown; pseudonymous blockchain transactions could cause inadvertent OFAC sanctions violations and increase compliance costs.
47% rewrittenRisks Related to Digital Assets
Digital asset exchanges and other trading venues are relatively new and, in some cases, unregulated and some have experienced fraud and failure
No substantive wording change is shown; fraud, security failures or operational problems at digital-asset exchanges could reduce asset prices.
Was: Digital assets exchanges and other trading venues are relatively new and, in some cases, unregulated and some have experienced fraud and failure
43% rewrittenRisks Related to Ownership of Our Securities
Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline
43% rewrittenRisks Related to Taxes
Our ability to use some or all of our net operating loss and capital loss carryforwards and other tax attributes to offset future income may be limited
37% rewrittenRisks Related to the Price of Bitcoin
Digital assets, and bitcoin in particular, are subject to price volatility. The value of bitcoin is dependent on a number of factors, any of which could have a material adverse effect on our business, financial condition and results of operations
22% rewrittenRisks Related to our Businesses and Industries
If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for digital assets like bitcoin

All 50 risk factors

Headings as the filing states them, in filing order.

Risks Related to our Businesses and Industries

01In 2024, we initiated a significant strategic transition in our operations from bitcoin mining to colocation services, which will require the conversion of our existing infrastructure or development of new facilities to support our high-density colocation customersNew
02Further, increases in power costs could negatively impact our hosting customers’ demand for services, harm our growth prospects and could have a material adverse effect on our business, financial condition and results of operationsNew
03We may not be able to maintain our competitive position as the Bitcoin network experiences increases in total network hash rate
04Our high-density colocation operations may be impacted by costs and expenses beyond our control or require capital investment that neither we nor our customers are able to bear, reducing our revenue and profitability
05Raising additional debt or equity financing may be difficult and may not be available when needed or, if available, may not be available on satisfactory terms. An inability to generate sufficient cash from operations or to obtain additional debt or equity financing have adversely affected our results of operationsNew
06We may be vulnerable to physical security breaches, which could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations
07Physical risks and regulatory changes relating to climate change may impact our costs, our access to materials and resources and demand for cryptocurrencies, potentially adversely impacting our business, capital expenditures, results of operations, financial condition and competitive position88% rewritten
08Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligationsNew
09Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and securityNew
10Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating uncertaintyNew
11Our future success depends on our ability to keep pace with rapid technological changes that could make our current or future technologies less competitive or obsolete65% rewritten
12In addition, the systems that connect our facilities to the internet and other external networks may become insufficient, including with respect to latency, reliability and diversity of connectivityNew
13We may be required to record long-lived asset impairment charges, which could result in a significant charge to earnings
14Losses relating to our business may be uninsured, or insurance may be limited
15Our business is highly dependent on a small number of digital asset mining equipment suppliers
16Miner manufacturers may continue requiring significant advance deposits before orders are fulfilled and delivered
17Our reliance on third-party mining pool service providers for our earned mining reward payouts may have a negative impact on our operations
18If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for digital assets like bitcoin22% rewritten

Risks Related to Regulatory Framework

19Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology49% rewritten
20Bank Secrecy Act, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost- prohibitive. If we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operationsNew
21If we were deemed an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business
22Finally, we believe we are not an investment company under Section 3(b)(1) of the 1940 Act because we are primarily engaged in a non-investment company business
23We intend to conduct our operations so that we are not required to register as an investment company under the 1940 ActNew
24U.S. federal and state laws and regulations of digital assets and digital asset intermediaries, such as digital asset exchanges and custodians, may increase our compliance costs and adversely impact the market for digital assetsNew
25Increasing scrutiny and changing expectations from government regulators, investors, lenders, customers, and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks
26We may be subject to risks associated with misleading and/or fraudulent disclosure or use by the creators of digital assets
27Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition
28Changes in accounting standards and interpretations for crypto assets could materially affect our financial statements, results of operations, and the carrying value of our digital asset holdings, and could adversely impact our business and the market price of our securitiesNew

Risks Related to our Indebtedness and Liquidity

29We may incur additional indebtedness to execute our long-term growth strategy, which may reduce our profitability
30Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the notes
31Both the 2029 Convertible Notes and 2031 Convertible Notes might also be converted by noteholders based on certain triggering events based on the trading price of the Company’s common stock or the note, as applicable
32Provisions in our indentures could delay or prevent an otherwise beneficial takeover of us55% rewritten

Risks Related to Taxes

33Our ability to use some or all of our net operating loss and capital loss carryforwards and other tax attributes to offset future income may be limited43% rewritten
34Based upon the evaluation of ownership changes occurring upon the Company’s emergence from bankruptcy on January 23, 2024, an ownership change likely occurred, which may limit our ability to utilize our federal NOL and capital loss carryforwards and certain other tax attributesNew
35The IRS and certain states have taken the position that digital assets are “property” for income tax purposes
36In addition, under the Tax Cuts and Jobs Act of 2017, as of January 1, 2018, “like-kind exchange” treatment does not apply to digital assets. This means that gain from the sale or exchange of digital assets cannot be deferred by undertaking an exchange of one type of virtual currency for another
37Changes to, or changes to interpretations of, the U.S. federal, state, local or other jurisdictional tax laws could have a material adverse effect on our business, financial condition and results of operations

Risks Related to Ownership of Our Securities

38An investment in our securities is highly speculative. The trading price of our securities may be volatile, and you could lose all or part of your investment
39Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline43% rewritten
40The market price and trading volume of our securities could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business
41We do not intend to pay dividends for the foreseeable future

Risks Related to our Restructuring

42Our actual financial results after emergence from bankruptcy may not be comparable to our projections filed with the Bankruptcy Court or otherwise made public in the course of the Chapter 11 Cases
43The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy

Risks Related to the Price of Bitcoin

44Digital assets, and bitcoin in particular, are subject to price volatility. The value of bitcoin is dependent on a number of factors, any of which could have a material adverse effect on our business, financial condition and results of operations37% rewritten
45We are no longer required to sell our digital assets, including bitcoin, as we receive them under our existing debt agreementsNew

Risks Related to Digital Assets

46Digital asset exchanges and other trading venues are relatively new and, in some cases, unregulated and some have experienced fraud and failure47% rewritten
47Any loss or destruction of a private key required to access a digital asset is irreversible. Loss of access to digital assets may be permanent
48The digital assets held by us are not subject to FDIC or SIPC protections81% rewritten
49Latency in confirming transactions on a network could result in a loss of confidence in the network, which could have a material adverse effect on our business, financial condition and results of operations51% rewritten
50Intellectual property rights claims may adversely affect the operation of any or all networks88% rewritten

Other Core Scientific 10-Ks

FY2024 10-K risk factors
72 risks
Core Scientific relies entirely on CoreWeave for its HPC hosting revenue, exposing it to single-customer concentration risk. The business is heavily vulnerable to Bitcoin network hash rate increases and price volatility. Capital-intensive facility buildouts and equipment costs require continuous external financing and digital asset liquidation.
Filed Feb 27, 2025

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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.