- Houston-based tech company Lancium and Denver-based Crusoe Energy Systems announced on Thursday morning a multibillion-dollar deal to build a 200-megawatt data center just outside Abilene, Texas, that is designed to “meet the unique needs of AI companies.”
- It is the first phase of a larger 1.2-gigawatt build-out.
- At full capacity, Lancium President Ali Fenn tells CNBC that this will be one of the largest artificial intelligence data center campuses in the world, in the latest example that the race to power AI — and leave bitcoin mining behind — is accelerating.
There are a lot of synergies between the bitcoin mining and AI infrastructure businesses.
Mining firms have expansive data centers, with access to fiber lines and large amounts of power across the U.S. They’re exactly the types of facilities needed for compute-intensive AI operations, which means their sites and technology are in high demand.
Meanwhile, miners need to diversify. Following the bitcoin halving in April, an event that happens about once every four years, the business of generating new tokens has become much less profitable. JPMorgan Chase analysts wrote in a report in June that “some operators are feeling the financial pinch from the recent block reward halving, which cut industry revenues in half, and are actively exploring exit strategies.”
With the burgeoning AI industry in need of capacity and bitcoin miners in search of new ways to generate returns on their hefty investments, mergers, financings and partnerships are rapidly coming together.
Lancium and Crusoe join a long list of miners looking to trade bitcoin for artificial intelligence, and so far, the strategy appears to be working.
The combined market capitalization of the 14 major U.S.-listed bitcoin miners tracked by JPMorgan hit a record high of $22.8 billion on June 15 — adding $4.4 billion in just two weeks, according to a June 17 research note from the bank.
Bit Digital, a bitcoin miner that now derives an estimated 27% of its revenue from AI, said in June that it had entered into an agreement with a customer to supply Nvidia GPUs over three years at a data center in Iceland, in a deal that is expected to generate $92 million in annual revenue. It’s paying for the general processing units, in part, by liquidating some of its crypto holdings.
Hut 8, based in Miami, said it raised $150 million in debt from private equity firm Coatue to help it build out its data center portfolio for AI.
Hut 8 CEO Asher Genoot recently told CNBC his company “finalized commercial agreements for our new AI vertical under a GPU-as-a-service model, including a customer agreement which provides for fixed infrastructure payments plus revenue sharing.”
The pivot to AI has been going especially well for Core Scientific, which emerged from bankruptcy in January.
On Tuesday, B. Riley upgraded its stock to buy from neutral and raised its price target on the shares to $13 from 50 cents, citing the company’s recent spate of deals with CoreWeave, an Nvidia-backed startup that’s one of the main providers of the chipmaker’s technology for running AI models.
Last month, CoreWeave offered to buy Core Scientific for $1.02 billion, not long after the pair announced an expansion of their existing partnership. Core Scientific rejected the bid. The company is currently worth about $2 billion.
