AI Data Center Transition Fuels Nearly $2 Billion Profit for Core Scientific and TeraWulf

Financial Performance Overview

In an impressive financial performance, two companies that transitioned from Bitcoin mining to AI data center hosting, Core Scientific and TeraWulf, disclosed a staggering nearly $1.9 billion in profits for the third quarter of 2026. This shift has significantly redefined their revenue streams, primarily focusing on data services rather than cryptocurrency mining. A notable portion of their earnings, approximately $1.76 billion, was attributed to non-cash pretax gains stemming from the revaluation of financial instruments, revealing the complexities behind the numbers.

Company Financial Highlights

Core Scientific's financial statement, released on November 5, highlights its operating income at $72 million, as per U.S. accounting standards, while TeraWulf, which disclosed its results on November 6, reported a substantial operating loss of $88 million. Within Core’s results, a marked $19 million fair-value gain in digital assets contributed to its positive operating outcome. The major contributor to revenue for both companies now stems from hosting services, indicating a strategic pivot towards computing leases driven by an increasing demand for such services in the AI sector.

Combined Net Income and Revaluation Gains

The combined net income from both companies totaled approximately $1.89 billion, with Core Scientific’s individual report showing a consolidated net income of $1,178 million and TeraWulf’s amounting to $710 million. Both companies recorded significant gains from revaluations; Core identified $1,034 million from legacy warrants, while TeraWulf benefited from a $728 million revaluation relating to Google warrants tied to credit support for lease obligations with Fluidstack. Such revaluation gains, while contributing positively to earnings, are recorded as non-cash entries, impacting how profits are reported.

Tax Benefits and Earnings Per Share

Furthermore, the financial intricacies are further highlighted by respective tax benefits wherein Core realized a $106.5 million tax benefit tied to its Polaris acquisition, juxtaposed with TeraWulf's $95 million gain resulting from the sale of its joint venture stake in Abernathy.

When looking at shares, Core reported basic earnings of $3.42 and diluted earnings of $0.47, contrasting with TeraWulf's basic earnings of $1.42 but a diluted loss of $0.03. The diluted figures factor in reversals from warrant gains and changes in share counts, providing a fuller picture of profitability adjustments.

Colocation Services Growth

Both companies illustrated growth in their colocation services with Core generating $215 million in colocation revenue, comprising a significant portion of its total sales of $233 million, showing an increase from the previous quarter's $137 million. TeraWulf, on the other hand, reported $63 million from high-performance computing (HPC) leases, amounting to about 83% of their overall revenue for the quarter.

Operational Cash Generation and Future Outlook

Over the first nine months of 2026, Core Scientific demonstrated an operating cash generation of $296 million while investing heavily in capital expenses, amounting to $1.495 billion. Meanwhile, TeraWulf utilized $179 million in operating cash and reported even higher capital expenditures. Both firms received substantial inflows from financing activities, preparing them for operational and developmental needs moving forward.

As both companies navigate this new landscape, Core credits much of its hosting capacity funding to its customer, CoreWeave, while also indicating a need for further external financing for additional projects. TeraWulf, having also generated significant cash from the sale of its Abernathy stake, is enhancing its credit commitments, further positioning itself for future financing endeavors. Moving towards the next quarter, the clear operational divide—Core achieving positive operating income compared to TeraWulf’s ongoing losses—will likely critically shape future strategies and development capabilities.