Core Scientific has agreed to end its remaining bitcoin mining-hardware purchase contract with Block and Proto Global LLC, taking a $41.9 million loss as it shifts capital and power capacity toward long-term data-center leasing, according to its latest quarterly filing.
The agreement releases Core Scientific from outstanding delivery obligations under the Proto mining-chip contract, which was originally intended to support roughly 15 exahashes per second of mining capacity. The cancellation arrived one day after Core Scientific signed a 15-year data-center lease covering 529 megawatts, most of which is expected to serve AMD under agreements that Core Scientific says could produce more than $14 billion in contracted revenue.
The back-to-back decisions place Core Scientific’s bitcoin mining equipment strategy behind an expanding effort to supply high-power computing infrastructure for artificial intelligence workloads. Mining remains part of the company’s business, but the latest financial results show the revenue profile moving sharply toward data-center services.
Core Scientific exits the remaining Proto order
Core Scientific has paid Block at least $67.9 million since 2024 for mining chips and related contractual commitments, according to the filing. The payments included $10 million in July 2024, $21.3 million in January 2025 and $36.6 million in January 2026.
Block announced in July 2024 that it would supply Core Scientific with its in-house three-nanometer mining chips through Proto, its bitcoin mining hardware unit. Core Scientific was the first announced customer for the product and remains the only major buyer publicly identified in connection with the rollout.
By January 2025, Core Scientific had recorded $31.3 million in deposits and prepayments under the arrangement, while estimating that another $64.8 million could become due. Some equipment was delivered before the January 2026 payment, but the new settlement ends the remaining purchase commitment.
The company recorded the $41.9 million charge in connection with the termination and settlement agreement. Its filing does not provide a detailed breakdown of the loss, such as the portions related to deposits, delivered equipment or settlement costs.
The scale of the charge shows that Core Scientific was willing to absorb a substantial near-term expense to remove a hardware obligation that had been designed for a much larger self-mining expansion. That approach fits a business increasingly organized around leasing electricity-rich data-center space rather than committing capital to machines whose returns depend on bitcoin prices, network difficulty and operating costs.
Leasing revenue overtakes self-mining income
Core Scientific reported $21.5 million in self-mining revenue during the second quarter of 2026, a 66% decline from the prior period cited in the filing. Data-center hosting and leasing revenue reached $136.7 million over the same quarter.
The two figures are not directly comparable as business-line revenue streams with different costs and contract structures, yet they illustrate the company’s changing economics. Self-mining revenue fluctuates with bitcoin production conditions, while multi-year infrastructure contracts can give an operator more predictable revenue visibility if customers maintain their capacity commitments.
The 529-megawatt lease signed after the Proto termination adds another large block of contracted computing capacity. Core Scientific said most of the site’s capacity would be leased to AMD, extending its role as a provider of power, cooling and data-center infrastructure for high-performance computing workloads.
For a company operating facilities built around access to large amounts of electricity, AI and cloud-computing tenants can use much of the same underlying infrastructure that previously supported mining fleets. Converting or expanding those sites for advanced computing is not cost-free: AI workloads often require denser rack configurations, specialized cooling systems and network upgrades. Yet a long lease can support financing and construction planning in a way that self-mining cash flow often cannot.
Proto loses its only publicly identified large customer
The cancellation creates a setback for Block’s effort to establish Proto as an alternative supplier in the concentrated market for bitcoin mining machines. Block had positioned its three-nanometer chip program as an effort to make mining hardware more accessible and reduce dependence on a small group of established manufacturers.
Core Scientific’s original order gave that initiative a major early deployment partner. Losing the remaining commitment removes the largest publicly disclosed demand channel for the chips at a moment when bitcoin miners are scrutinizing capital spending after the April 2024 halving cut the block subsidy.
Block has also been restructuring parts of its bitcoin and technology operations. The company shut down TBD in November 2024, an arm that had housed an incubated bitcoin mining project alongside Web5 identity work. The Proto hardware initiative remained part of Block’s wider bitcoin-focused product efforts.
Block had not publicly responded to Core Scientific’s termination disclosure at the time of the report. It is scheduled to release second-quarter 2026 results after the U.S. market closes on Aug. 5.
Block faces pressure beyond mining hardware
The Proto cancellation comes during a difficult stretch for Block’s broader business. Block shares have fallen 68% over the past five years, based on figures cited in the report.
In January 2025, the Consumer Financial Protection Bureau ordered Block to pay a $55 million penalty and provide up to $120 million in customer compensation related to Cash App fraud-complaint handling. State financial regulators imposed a separate $80 million fine the previous day, according to the regulators’ orders.
Block has also taken material charges on earlier acquisitions. The company bought Jay-Z’s music platform Tidal in 2021 for $237.3 million on an adjusted basis and later recorded a $132.3 million goodwill impairment related to the deal.
In February 2026, Block told shareholders that it planned to reduce its workforce from more than 10,000 employees to fewer than 6,000. The restructuring places additional pressure on management to show that product areas such as Proto can find durable commercial demand beyond an initial flagship customer.
For Core Scientific, the termination narrows its exposure to that uncertainty while freeing the company to prioritize a data-center pipeline measured in megawatts and long-duration lease revenue rather than future mining-machine deliveries.
Explore how shifting mining economics impact bitcoin prices in our analysis: bitcoin mining fundamentals and profitability drivers.
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