- Abilene, Texas, is set to host a 200-megawatt AI data center by Lancium and Crusoe Energy, aiming to support advanced cloud computing and relying mainly on renewable energy.
- Bitcoin miners are pivoting to AI infrastructure, driven by diminishing profitability in bitcoin mining, leveraging their extensive data center capabilities for AI operations.
- Companies like Bit Digital, Hut 8, and Core Scientific are successfully transitioning to AI, securing significant investments and partnerships, and generating substantial revenue from AI services.
In the heart of West Texas lies Abilene, a town of 125,000 people. Once a crucial stop along a cross-country cattle trail during the American Old West era, this small outpost is now venturing into the burgeoning field of artificial intelligence.
Recently, Houston-based tech company Lancium and Denver-based Crusoe Energy announced a multibillion-dollar agreement to construct a 200-megawatt data center just outside Abilene. This facility is specifically tailored to meet the specialized requirements of AI companies, facilitating advanced cloud computing for applications such as medical research and aircraft design. The initial phase of this project is part of a larger build-out plan totaling 1.2 gigawatts.
According to Lancium President Ali Fenn, once fully operational, this site will rank among the world’s largest AI data center campuses. The facility in Abilene is set to launch in 2025 and is planning to rely mainly on renewable energy sources. This development underscores the accelerating shift away from bitcoin mining towards powering artificial intelligence technologies.
Chase Lochmiller, co-founder and CEO of Crusoe, emphasized the evolving nature of data centers to support modern AI workloads, necessitating innovations like high-density rack space, direct-to-chip liquid cooling, and significantly increased energy demands.
Since the bitcoin halving event in April, which occurs approximately every four years, the profitability of creating new tokens has significantly diminished. As the reward for mining new Bitcoin reduced by 50%, from 6.25 BItcoin to 3.125 Bitcoin. According to a June report by JPMorgan Chase analysts, “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.”
In response to these challenges, as the burgeoning AI industry seeks additional capacity and bitcoin miners seek alternative avenues to achieve returns on their substantial investments, mergers, financing deals, and partnerships are swiftly materializing.
Bitcoin miners are shifting their focus to AI
As the AI industry expands and demands increase, Bitcoin miners are looking for new ways to generate and diversify their income. In this context, AI appears to be a promising and stable option for them. The similarities between bitcoin mining and AI infrastructure businesses is notable. Mining companies possess extensive data center infrastructure with robust power capacities and fiber connectivity across the United States, making them ideal candidates to support compute-intensive AI operations. This convergence highlights the growing demand for their facilities and technology in the AI sector. Lancium and Crusoe are among many miners shifting their focus from bitcoin to artificial intelligence, and initial results indicate success.
According to a research note from June 17 by JPMorgan, the combined market capitalization of 14 major U.S.-listed bitcoin miners reached a record high of $22.8 billion on June 15, marking a $4.4 billion increase in just two weeks.
Bit Digital, a bitcoin mining company now generating approximately 27% of its revenue from AI operations, disclosed in June a three-year agreement to supply Nvidia GPUs to a data center in Iceland. This arrangement is expected to yield $92 million in annual revenue, funded in part by selling off some of its cryptocurrency assets.
Meanwhile, Hut 8, headquartered in Miami, secured $150 million in debt from private equity firm Coatue to expand its data center portfolio for AI. Hut 8 CEO Asher Genoot recently informed CNBC that the company has finalized commercial agreements for its new AI initiative, adopting a GPU-as-a-service model. These agreements include a customer contract involving fixed infrastructure payments and revenue sharing.
Core Scientific has particularly excelled in its transition to AI, rebounding from bankruptcy in January. Recently, B. Riley upgraded its stock rating from neutral to buy and raised the price target to $13, up from 50 cents, citing Core Scientific’s series of partnerships with CoreWeave, an Nvidia-backed startup pivotal in deploying Nvidia’s AI technology.
In a significant move last month, CoreWeave proposed a $1.02 billion acquisition of Core Scientific, following an expansion of their existing partnership. However, Core Scientific rejected the bid, with the company currently valued at approximately $2 billion.