Core Scientific, Inc./tx

10. COMMITMENTS AND CONTINGENCIES

Commitments

Capital Expenditure Commitments

As of September 30, 2026, the Company had approximately $4.4 billion of expected future cash expenditures under its outstanding purchase and construction commitments, primarily related to infrastructure development costs, power utility deposits, equipment procurement, and labor. These commitments relate to (i) the remaining build out at existing customer conversion sites, (ii) new greenfield development, and (iii) the construction and delivery of contracted capacity under the AMD Leases, including fit out costs. Of this amount, $202.2 million will be passed through to CoreWeave as invoiced. Substantially all of these expenditures are expected to occur within the next 24 months as construction progresses across existing and new development sites. A portion of the Company's expenditures, primarily related to the AMD and Neocloud build-out, is expected to be funded through additional financing activities, and the Company is actively evaluating financing alternatives as discussed in the "Liquidity" section below.

Liquidity

The Company expects to complete project-level bond financing within the next twelve months to fund capital expenditures associated with the AMD and Neocloud build-out. The bond proceeds would provide funding during construction, with cash flows from the completed facilities expected to support repayment of the bonds. Additional anticipated sources of liquidity include proceeds from Tranche 1 warrant exercises and releases of restricted cash through the replacement of cash collateral with letters of credit. Management believes its existing liquidity, together with these anticipated funding sources, will support the Company's planned development activities and expected operating requirements. See Note 7 — Debt and Note 8 — Warrants for additional information on the Company's letters of credit and Tranche 1 warrants, respectively.

Vendor Terms

The Company routinely engages with construction vendors for the construction of its facilities. These engagements are governed by contracts containing standard terms and conditions, including certain milestones that obligate the Company to pay as work is completed. In the event of termination of any of these contracts by the Company, the Company would be liable for all work that has been completed or is in process, plus any applicable fees. The Company generally has the right to cancel open purchase orders prior to delivery or terminate the contracts without cause.

Letters of Credit

In connection with the Credit Facilities entered into on August 25, 2026, the Company may issue letters of credit under the L/C Facility of up to $500.0 million in aggregate to provide credit support for specific project obligations under utility agreements and for other general corporate purposes. As of September 30, 2026, no letters of credit were outstanding under the L/C Facility. Outstanding letters of credit reduce the available capacity under the L/C Facility but do not represent funded debt obligations unless drawn upon. See Note 7 — Debt for further detail on the terms of the Credit Facilities.

Block, Inc. Contract Termination

During the three months ended June 30, 2026, the Company entered into a termination and settlement agreement with Block, Inc. and Proto Global LLC that terminated the Company's existing contract and all future delivery obligations of mining equipment thereunder. As a result, the Company recognized a loss of $41.9 million within "Loss on contract termination" in the condensed consolidated statement of operations for the nine months ended September 30, 2026.

Legal Proceedings

The Company is subject to legal proceedings arising in the ordinary course of business. The Company accrues losses for a legal proceeding when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the uncertainties inherent in legal proceedings make it difficult to reasonably estimate the costs and effects of resolving these matters. Accordingly, actual costs incurred may differ materially from amounts accrued and could materially adversely affect the Company’s business, cash flows, results of operations, financial condition and prospects. Unless otherwise indicated, the Company is unable to estimate reasonably possible losses in excess of any amounts accrued.

Purported Shareholder Class Action (“Pang”)

On November 14, 2022, Plaintiff Mei Pang filed a purported class-action complaint against the Company, its former chief executive officer, Michael Levitt, and others in the United States District Court, Western District (Austin) of Texas asserting that the Company violated the Securities Act and Exchange Act by allegedly failing to disclose to investors that among other things the Company was vulnerable to litigation given its decision to pass power costs to its customers, that certain clients had breached their contracts, and that this impacted the Company’s profitability and ability to continue as a going concern. The complaint seeks monetary damages. The Company filed a notice of suggestion of bankruptcy stating that its petition for bankruptcy—filed on December 21, 2022—operates as a stay to the continuation of this matter. Plaintiff subsequently withdrew its claims against Core. A lead plaintiff was appointed in April 2023 and proofs of claim were filed in the Company’s Chapter 11 Cases. After the Company filed its motion to dismiss and a subsequent motion for consideration with respect to remaining claims not dismissed, all remaining claims in the complaint against the individual defendants were subsequently dismissed without prejudice in April 2024.

On December 7, 2023, the United States Bankruptcy Court for the Southern District of Texas in Houston sustained the Company’s objection to the filed class proof of claim without prejudice to re-file a proof of claim on an individual basis by December 20, 2023; and denied plaintiff’s Motion for Class Treatment under Fed. R. Bankr. P. 7023. No individual proof of claim was filed by any of the class representatives of the purported class action by December 20, 2023, and a separately filed objection to confirmation of Debtors’ Fourth Amended Chapter 11 Plan and Disclosure Statement was overruled by the Bankruptcy Court on January 16, 2024. On January 29, 2024, plaintiff filed a notice of appeal of the order confirming the Company’s Plan of Reorganization.

On June 7, 2024, Plaintiff refiled its complaint asserting that the individual defendants violated the Securities Exchange Act by allegedly failing to disclose to investors that among other things the Company failed to disclose known trends or uncertainties that would have an impact on the Company’s financial performance.

On March 7, 2025, the United States District Court for the Western District (Austin) of Texas referred Plaintiff's complaint to the United States Bankruptcy Court for the Southern District of Texas in Houston for determination of the issues raised by the Company's motion to dismiss, dismissed without prejudice the Company's motion to dismiss as moot and administratively closed the case. On March 19, 2025, the United States Bankruptcy Court Southern District of Texas Houston Division dismissed Plaintiff's appeal of the order confirming the Company's Plan of Reorganization as it related to the Plaintiffs as moot in light of the administrative closure of the securities case brought by the Plaintiffs in the United States District Court Western District of Texas. On April 2, 2025, the Plaintiff's filed a Motion for Reconsideration of the orders entered in each of the United States District Court for the Southern District of Texas Houston Division and the United States District Court for the Western District of Texas (Austin) each of which was denied and as to which Plaintiff has appealed. The parties have entered into an agreement to resolve the matter subject to United States District Court approval involving, in part, payment from the Company in an immaterial amount in satisfaction of certain indemnification claims of its former officers and directors.

Shareholder Class Action (“Ihle”)

On July 24, 2023, Plaintiff Brad Ihle filed a class action complaint against certain officers and directors of Power & Digital Infrastructure Acquisition Corp. (the former name of the current corporate entity operating our business, or “XPDI”) and XMS Sponsor LLC et al., in the Court of Chancery State of Delaware. The complaint alleges breach of fiduciary duties arising out of the merger of XPDI and the entity that conducted our business operations prior to the merger and the marketing and solicitation of shareholders pursuant to that merger agreement dated July 20, 2021. Certain of the defendants notified the Company of their intention to seek defense and indemnification in this matter pursuant to Delaware law and the Company’s bylaws. The matter was settled during the three months ended December 31, 2025, with the Company’s satisfying its existing indemnification obligation through a payment of $0.5 million made during the three months ended March 31, 2026. This payment is reflected in “Loss on legal settlements” in the Company’s condensed consolidated statements of operations.

Patent Infringement Claim

Malikie Innovations Ltd and Key Patents Innovations Ltd. (“Malikie”), filed suit in the United States District Court Eastern District of Texas Marshall Division against the Company, alleging infringement in the Company’s bitcoin mining business of U.S. Patent Nos. 8,788,827; 10,284,370; 8,666,062; 7,372,960; and 8,532,286. On July 20, 2025, the Company filed a motion to dismiss the claims on the basis that the patents are invalid under 35 U.S.C §101, and on July 25, 2025, the Company filed a motion to transfer the case to the United States District Court for the Western District of Texas (Austin). On November 14, 2025, Malikie filed a motion to amend the complaint to add allegations of infringement of U.S. Patent No. 8,712,039 by the Company’s bitcoin mining business and its HPC business. Malikie also asserted infringement of the previously asserted 8,532,286 patent against the Company’s HPC business. During the three months ended September 30, 2026, the Company resolved the patent dispute with Malikie through a confidential patent license agreement and the case was dismissed with prejudice.

Leases—See Note 6 — Leases for additional information.