Hyperscale Data closes Michigan Bitcoin mine for $1.2 billion AI deal

Another batch of Bitcoin's global computing power is offline

This week, another part of Bitcoin's global mining capacity was announced to be offline. Very Large Scale Data Corporation (NYSE: GPASS) shut down its Bitcoin mining machine at its Dawagiak, Michigan plant on September 1 and is transforming the site into an AI-managed cash contract worth more than $1.2 billion, details can be found in the company's September 2 statement.

For miners, this shutdown is of great significance in the context of changes in global computing power because it is not an isolated incident. Another electrified and licensed facility is withdrawing from Bitcoin mining and preparing for artificial intelligence customers instead.

What did Hyperscale Data actually sign?

According to the company's June 24 press release and 8-K filing, the deal was concluded between Alliance Cloud Services, a wholly-owned subsidiary of Hyperscale Data, and an unnamed California-based cloud service provider. The contract involves 20 megawatts of artificial intelligence computing power and is based on the main service contract signed by the two parties on June 23. The initial term of the contract is 10 years and is subject to two renewals of 5 years each. This will give contractors up to $1.2 billion in revenue. In addition, the contractor is entitled to priority access to an additional 32 MW of capacity. If that energy is acquired within the first two years and used throughout the renewal period, expected revenue could reach $3 billion. The contract stipulated that the customer paid the developer a $5 million advance payment and a $5.6 million bond.

"Shut down Bitcoin mining immediately allows our team to focus on using the factory's power, infrastructure and resources to prepare the site for customers."-- Hyperscale Data CEO William Horn

Hyperscale Data plans to make a profit by selling mining servers. It is estimated that the company could eventually supply approximately 340 megawatts of electricity to its Michigan plant.

Why an operating mine was shut down

The reason for this shift can be attributed to economic factors. According to a previous report, ultra-large data companies sold nearly 150.5 bitcoins worth approximately $9.6 million. Data cited in the same report showed that in the fourth quarter of 2025, the average cash cost of producing a bitcoin was approximately US$79,995, much higher than the bitcoin price of US$68,000 to US$70,000 at the time. With mining profit margins squeezed and artificial intelligence customers offering stable contracts, a mine that can provide power may be more valuable when running a GPU business than its ASIC business. According to Horn, the value of ultra-large data companies should increase as their businesses receive more contract power, which is generally in line with a research institution's valuation philosophy of treating miners as artificial intelligence infrastructure.

Loss of mining capacity

Hyperscale data companies 'agreements are small compared to the major deals that are changing the industry. One company has a $9.7 billion deal with Microsoft, another company has signed a contract with an artificial intelligence company for approximately $19 billion, and another company reports expected contract revenue of more than $14 billion. According to a report from a computing power data platform, listed miners have announced AI and high-performance computing contracts totaling more than US$70 billion.

This transformation comes at a time when the Bitcoin network is relatively weak. Data shows that the average monthly computing power dropped from approximately 1066 EH/s in the first quarter of 2026 to 1004 EH/s in the second quarter, and further dropped to 940 EH/s in the third quarter. This equates to a quarter-on-quarter decline of 6.3% and an overall decline of approximately 12% from the December 2025 high.

"This is a structural shift, not just a cyclical trough. Miners everywhere are being revalued as energy and artificial intelligence infrastructure."-- According to a certain data platform

, the chief operating officer of a mining pool, according to a certain computing power data platform, the main reason for the decline in computing power is low mining profitability. At the same time, artificial intelligence and high-performance computing are creating additional structural tensions in the long term. According to a research institute, the miners most suitable for artificial intelligence are those with large facilities, access to cooling water, dark optical fiber, stable electricity and necessary licenses. Hyperscale Data Company plans to continue mining at its Montana factory.

Follow-up Focus

Ultrascale Data has not announced a launch date for its new artificial intelligence at its Michigan plant. The company's June 8-K filing showed that the first phase was expected to be operational on September 21, but the accompanying press release noted that substantial revenue could begin to be generated by the end of September. In the broader market, the key message is trends: The deteriorating economic conditions in the mining industry are driving the shutdown of high-cost operations, and artificial intelligence is creating better opportunities for the use of these power facilities.