CORZ

MKT CAP $4.6BP/E —DIV YIELD —FCF YIELD -20.92%REV TTM $440.3M +26.4%NET INCOME −$1.4BNET DEBT $2.5B52W 13.48 – 29.16NEXT EARNINGS Nov 5SEC XBRL · TTM TO Invalid Date

How CORZ rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

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167

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+737

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Risks Related to our Businesses and Industries Our success depends in large part on our ability to timely and successfully convert our existing facilities to support our high- density colocation customers and to attract new high-density colocation customers.
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.
Our ability to timely and successfully convert our existing facilities or construct new facilities to support our high-density colocation customers may be negatively impacted by: • deficiencies, delays or failures in performance by construction firms retained to build, build-out or remodel our facilities; • disruptions in the supply chain or excessive demand for construction materials, electrical transformers, generators and other materials used in high performance data centers that delay receipt of, or make unavailable, required supplies, materials and equipment; • difficulties in generating sufficient cash flow or obtaining necessary financing that delay or prevent the completion of planned facilities; • failure on the part of our customers to timely pay or reimburse construction costs and expenses when due; or failure on our part to timely pay construction costs and expenses; • delays in obtaining necessary government approvals, receipt of power allocations, land acquisitions and easements, as well as change orders, modification to designs and construction plans that delay construction, increase costs or that reduce the usable electrical power footprint; • customer-initiated changes in project design, specification, scope, or delivery sequencing; or • severe weather events, natural disasters, or other force majeure conditions, including hurricanes, tornadoes, winter storms, extreme heat, or flooding, that disrupt construction timelines, damage facilities or equipment, or limit the availability of construction labor or materials.
Any failure to timely or successfully convert our existing facilities or construct new facilities to support our high-density colocation customers could result in reputational damage and harm our ability to retain existing customers or attract new customers to our business, any of which could impact our future growth and have a material adverse effect on our business, financial condition and results of operations.
Currently our high-density colocation business is highly dependent on a single customer.
One customer, CoreWeave, currently accounts for 100% of our Colocation segment revenue.
Our success in the Colocation segment is highly dependent on the success of CoreWeave and the fulfillment by it of its obligations under our existing contractual arrangements.
Our increased focus on high-density colocation may not be successful and depends on the continuing development and resource and computational requirements of high-density colocation applications such as cloud computing, machine learning and artificial intelligence and continuing need for the infrastructure and services we provide.
Our success also depends in large part on our ability to attract additional customers and retain our existing customer for our high-density colocation capabilities in a profitable manner, which we may not be able to do if: • there is a reduction in the demand for high-density colocation applications such as cloud computing, machine learning and artificial intelligence; • rapid innovation and technological disruption in cloud computing, machine learning and artificial intelligence decrease computational requirements and therefore lower demand for our high-density colocation offerings; • high energy costs, supply chain disruptions (including labor availability), government regulation, and compliance costs increase high-density colocation service costs, reduces potential demand for services and reduce revenue and profitability; • we fail to provide competitive hosting terms or effectively market them to potential customers; • we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity; • businesses decide to host internally as an alternative to the use of our services; • we fail to successfully communicate the benefits of our services to potential customers; • we are unable to strengthen awareness of our brand; or • we are unable to provide services that our existing and potential customers desire.
Our success in our digital asset segments depends in large part on our ability to mine bitcoin in a profitable manner which we may not be able to do if: • there is a reduction in the demand for bitcoin causing the price of bitcoin to fall reducing revenue from our self-mining operations; • high energy costs, supply chain disruptions or government regulation compliance costs increase mining costs and reduce revenue and profitability; or • we do not secure or are unable to secure an adequate supply of new generation digital asset mining equipment.
In the past, increases in power costs have impacted our ability to earn digital assets efficiently and a reduction in bitcoin’s market price has reduced our operating margins.
If we are not able to acquire and deploy additional miners on a timely basis, our proportion of the overall network hash rate will decrease and we will have a lower chance of solving new blocks and earning the related mining rewards, which will have an adverse effect on our business and results of operations.
The costs of constructing, developing, operating and maintaining our high-density colocation and digital mining facilities, and owning and operating a large fleet of the latest generation digital mining equipment, are substantial.
Our 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.
In order to manage growth and ensure adequate capacity for our new and existing high-density colocation customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements.
The costs of electric power therefore account for a significant portion of our cost of revenue.
For example, higher than expected power rates in 2022 materially and adversely impacted our operations.
To that end, public sentiment regarding electrical power generation, usage and storage, high volume electrical use and climate change may limit our access to electrical power, decrease available facility sites, and increase our costs and limit the demand for our high-density colocation services.
Our high-density colocation operations run on back-up generators in the event of a power outage or curtailment that may not be sufficient to support our operations for the magnitude or duration of the power outage or curtailment.
If our information technology systems or those of the third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigations; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation- state-supported actors.
Despite our efforts and processes to prevent these, our computer servers and computer systems may be vulnerable to cybersecurity risks.
We and the third parties with whom we work are subject to a variety of evolving threats, including, but not limited to, social- engineering attacks (including through deepfakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, physical or electronic break-ins, employee misconduct or error , ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, and other similar disruptions.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our services, reputational harm, and diversion of funds.
Extortion payments may alleviate the negative impact of ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident.
Our efforts to do so may not be successful.
Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business.
Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
For example, threat actors may use an initial compromise of one part of our environment to gain access to other parts of our environment, or leverage a compromise of our networks or systems to gain access to the networks or systems of third parties with whom we work, such as through phishing or supply chain attacks.
Additionally, f uture and past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.
We rely on third parties to operate critical business systems to process sensitive information in a variety of contexts.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
If the third parties with whom we work experience a security incident or other interruption, we could experience adverse consequences.
While we might be entitled to damages if the third parties with whom we work fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or that of the third parties with whom we work have not been compromised.
Our digital infrastructure and systems may be breached due to the actions of outside parties, error or malfeasance of one of our employees, or otherwise, and, as a result, an unauthorized party may obtain access to our digital asset accounts, private keys, data or digital assets.
Although we implement a number of security procedures with various elements such as two-factor verification, segregated accounts and secured facilities and plan to implement the maintenance of data on computers and/or storage media that is not directly connected to, or accessible from, the internet and/or networked with other computers (“cold storage”), to minimize the risk of loss, damage and theft, and we update such security procedures whenever reasonably practicable, there can be no assurance that these measures will be effective and we may be unable to prevent such loss, damage or theft, whether caused intentionally, accidentally or by an act of God.
Further, we have and may in the future experience delays in deploying remedial measures and patches designed to address identified vulnerabilities.

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Gone since FY2024

Summary of Selected Risk Factors Associated with an Investment in Our Securities The following is a summary of the principal risks associated with an investment in our securities: • Our success depends in large part on our ability to timely and successfully convert our existing facilities to support our HPC customers and to attract new HPC customers.
Delays in the expansion or modification of existing facilities or the construction of new facilities or significant cost overruns could present significant risks to our business and could have a material adverse effect on our business, financial condition and results of operations . • Currently our HPC business is highly dependent on a single customer. • Our increased focus on HPC hosting may not be successful and depends on the continuing development and resource and computational requirements of HPC hosting applications such as cloud computing, machine learning and artificial intelligence and continuing need for the infrastructure and services we provide.
If our target customer markets, which are new and still developing, do not grow or develop as expected or in a manner consistent with our current business model, our business, financial condition and results of operation would be adversely affected. • Our success is also dependent on our ability to earn bitcoin profitably, and we may not be able to maintain our competitive position as the Bitcoin network experience increases in total network hash rate. • Our business is capital intensive, we will need to raise additional capital, and failure to obtain the necessary capital when needed will force us to delay, limit or terminate our expansion efforts or other operations, which would have a material adverse effect on our business, financial condition and results of operations. • We are subject to risks associated with our need for significant electric power and the limited availability of electrical power and resources, equipment and materials designed to provide usable electrical power within our facilities.
In addition, public sentiment regarding electrical power generation, usage and storage, high volume electrical use and climate change, may limit our access to electrical power, decrease available facility sites, and increase our costs and limit the demand for our HPC colocation services.
An inability to purchase and develop additional sources of low-cost sources of energy effectively or to obtain real estate, materials and equipment to operate our facilities efficiently will have a material adverse effect on our business, financial condition and results of operations. • Any failure in our critical systems, facilities or services we provide could lead to disruptions in our and our customers’ businesses and could harm our reputation and result in financial penalty and legal liabilities, which would reduce our revenue and have a material adverse effect on our business, financial condition and results of operations. • If there are significant changes to the method of validating blockchain transactions, such changes could reduce demand for our blockchain hosting services. • We 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. • A slowdown in market and economic conditions, particularly those impacting the cloud computing, machine learning and AI industries, the demand for HPC infrastructure and services, and the blockchain industry and the blockchain hosting market, could have a material adverse effect on our business, financial condition and results of operations. • 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. • The “halving” of rewards available on the Bitcoin network, or the reduction of rewards on other networks, has had and in the future could have a negative impact on our ability to generate revenue as our customers may not have an adequate incentive to continue mining and customers may cease mining operations altogether, which could have a material adverse effect on our business, financial condition and results of operations. • If the award of bitcoin and/or transaction fees for solving blocks is not sufficiently high to incentivize transaction processors, such processors may reduce or cease expending processing power on a particular network, which could negatively impact the utility of the network, reduce the value of its bitcoin and have a material adverse effect on our business, financial condition and results of operations. • 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. • 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. • 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. • Increasing scrutiny and changing expectations from government regulators, investors, lenders, customers, and other market participants with respect to Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks. • Our 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. • We may not have adequate sources of recovery if the bitcoin or other digital assets 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. • Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial results or our projections filed with the Bankruptcy Court or otherwise made public in the course of the Chapter 11 Cases.
Risks Related to our Businesses and Industries Our success depends in large part on our ability to timely and successfully convert our existing facilities to support our HPC customers and to attract new HPC customers.
Our ability to timely and successfully convert our existing facilities to support our HPC customers will be negatively impacted by: • deficiencies, delays or failures in performance by construction firms retained to build, build-out or remodel our facilities; • disruptions in the supply chain or excessive demand for construction materials, electrical transformers, generators and other materials used in high performance data centers that delay receipt of, or make unavailable, required supplies, materials and equipment; • difficulties in generating sufficient cash flow or obtaining necessary financing that delay or prevent the completion of planned facilities; • failure to timely pay construction costs and expenses, including failure on the part of our customers to pay or reimburse costs and expenses when due; or • delays in obtaining necessary government approvals, receipt of power allocations, land acquisitions and easements, as well as change orders, modification to designs and construction plans that delay construction, increase costs or that reduce the usable electrical power footprint.
Currently our HPC business is highly dependent on a single customer.
One customer, CoreWeave, currently accounts for 100% of our HPC Hosting segment revenue.
Our success in the HPC Hosting segment is highly dependent on the success of CoreWeave and the fulfillment by it of its obligations under our existing contractual arrangements.
Our increased focus on HPC hosting may not be successful and depends on the continuing development and resource and computational requirements of HPC hosting applications such as cloud computing, machine learning and artificial intelligence and continuing need for the infrastructure and services we provide.
Our success also depends in large part on our ability to attract additional customers and retain our existing customer for our HPC Hosting capabilities in a profitable manner, which we may not be able to do if: • there is a reduction in the demand for HPC hosting applications such as cloud computing, machine learning and artificial intelligence; • rapid innovation and technological disruption in cloud computing, machine learning and artificial intelligence decrease computational requirements and therefore lower demand for our HPC hosting offerings; • high energy costs, supply chain disruptions (including labor availability), government regulation, and compliance costs increase HPC hosting service costs, reduces potential demand for services and reduce revenue and profitability; • we fail to provide competitive hosting terms or effectively market them to potential customers; • we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity; • businesses decide to host internally as an alternative to the use of our services; • we fail to successfully communicate the benefits of our services to potential customers; • we are unable to strengthen awareness of our brand; or • we are unable to provide services that our existing and potential customers desire.
Our success in our digital asset segments depends in large part on our ability to earn bitcoin in a profitable manner.
In the past, increases in power costs have impacted our ability to earn digital assets efficiently and reduced bitcoin pricing have reduced our operating margins.
Our success in our digital asset segments depends in large part on our ability to earn bitcoin and to provide services to the customers of our hosting capabilities in a profitable manner, which we may not be able to do if: • there is a reduction in the demand for bitcoin causing the price of bitcoin to fall reducing revenue from our self-mining operations; • high energy costs, supply chain disruptions or government regulation compliance costs increase mining costs and reduce revenue and profitability; or • we are unable to secure an adequate supply of new generation digital asset mining equipment.
If we are not able to acquire and deploy additional miners on a timely basis, our proportion of the overall network hash rate will decrease and we will have a lower chance of solving new blocks which will have an adverse effect on our business and results of operations.
The costs of constructing, developing, operating and maintaining our HPC and digital mining facilities, and owning and operating a large fleet of the latest generation digital mining equipment, are substantial.
Our HPC hosting 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.
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.
The market price and availability of new mining machines fluctuates with the price of bitcoin and can be volatile.
Higher bitcoin prices increase the demand for mining equipment and increases the cost.
There is no certainty that, in such circumstances, the Company would succeed in recovering any of its deposit, which could materially and adversely affect its business, financial condition, and results of operations.
In order to manage growth and ensure adequate capacity for our new and existing HPC hosting customers while minimizing unnecessary excess capacity costs, we continuously evaluate our short- and long-term data center capacity requirements.
Our businesses require a significant amount of electric power.
The costs of electric power account for a significant portion of our cost of revenue.
Higher than expected power rates in 2022 materially impacted our operations.
To that end, public sentiment regarding electrical power generation, usage and storage, high volume electrical use and climate change, may limit our access to electrical power, decrease available facility sites, and increase our costs and limit the demand for our HPC colocation services.
Our HPC operations run on back-up generators in the event of a power outage or curtailment that may not be sufficient to support our operations for the magnitude or duration of the power outage or curtailment.
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.
Despite our efforts and processes to prevent these, our computer servers and computer systems may be vulnerable to cybersecurity risks, including denial-of-service attacks, physical or electronic break-ins, employee theft or misuse and similar disruptions from unauthorized tampering with our computer servers and computer systems.
The preventive actions we take to reduce the risk of cyber incidents and protect our information technology and networks may be insufficient to repel a major cyber-attack in the future.
To the extent that any disruption or security breach results in a loss or damage to our network, in unauthorized disclosure of confidential information or in a loss of our digital assets, it could cause significant damage to our reputation, lead to claims against us and ultimately have a material adverse effect on our business, financial condition and results of operations.
Additionally, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.
In addition, any assertions of alleged security breaches or systems failure made against us, whether true or not, could harm our reputation, cause us to incur substantial legal fees and have a material adverse effect on our business, financial condition and results of operations.
Our digital infrastructure could be breached despite our security procedures.
Our operational digital infrastructure may be breached due to the actions of outside parties, error or malfeasance of one of our employees, or otherwise, and, as a result, an unauthorized party may obtain access to our digital asset accounts, private keys, data or digital assets.
Although we implement a number of security procedures with various elements such as two-factor verification, segregated accounts and secured facilities and plan to implement the maintenance of data on computers and/or storage media that is not directly connected to, or accessible from, the internet and/or networked with other computers (“cold storage”), to minimize the risk of loss, damage and theft, and we update such security procedures whenever reasonably practicable, we may be unable to prevent such loss, damage or theft, whether caused intentionally, accidentally or by an act of God.
New digital asset transaction protocols are continuously being deployed, and existing and new protocols are in a state of constant change and development.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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