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BTC Hyperscale Data Center Shuts Bitcoin Mining, Turning to AI Customers
Hyperscale Data closed its Bitcoin Mining operation at its Michigan data center on Tuesday to make room for an artificial intelligence customer. The company said the customer's contract could generate more than $1.2 billion in revenue over the next 20 years.
In an announcement released on Wednesday, the hyperscale data center company pointed out that the previously announced contract could generate more than $1.2 billion in revenue if customers exercised two five-year renewal options based on the initial 10-year period. The agreement covers 20 megawatts of capacity and the customer is an undisclosed California-based company that provides cloud computing services for artificial intelligence.
"Shut down Bitcoin mining immediately, allowing our team to focus on leveraging the facility's power and infrastructure resources to prepare customers for their arrival." CEO William Horn said in the announcement.
According to the ultra-large data center company, the agreement gives customers the option to add an additional 32 MW of capacity in the first two years. The company said if customers exercised the option and renewed it twice for five years, total contract revenue could exceed $3 billion.
"In addition, as the facility is expanded to support the advancement of artificial intelligence computing infrastructure, I believe our shareholders will be rewarded-because the company's current market value is at a significant discount to other data center companies, and valuations in terms of available contract power capacity will gradually normalize." Horn added.
Hyperscale data center companies plan to sell these mining servers and expect to benefit from these sales. The company has not announced a launch date for its artificial intelligence business, and the mining shutdown only involves its Michigan site.
Other miners are also transforming their sites to serve AI customers. Matthew Segal, head of digital asset research at VanEck, said in March that miners are "sitting on a gold mine" and that as demand for artificial intelligence computing grows, they can make money by transforming their infrastructure.
However, the cost of transformation can be quite high, as IREN's quarterly results released last month showed: AI cloud revenue exceeded Bitcoin mining revenue for the first time, but the company also wrote down $450.4 million in asset value, most of which was related to its retired mining equipment.
