Cattle graze at the Buffalo Gap Wind Project in Taylor and Nolan counties south of Abilene, Texas.
Robert Demrich | Corbis | Getty Images
Just off Interstate 20, in the heart of West Texas, there is a small town of 125,000 people called Abilene. This small outpost was once a stop on the cattle trails of America’s Old West and is now entering the booming artificial intelligence industry.
Houston-based technology company Lancium and Denver-based Crusoe Energy Systems announced a multibillion-dollar deal Thursday morning to build a 200-megawatt data center outside Abilene aimed at ” “Meet the unique needs of artificial intelligence companies,” such as supporting advanced cloud computing for applications such as medical research and aircraft design. This is the first phase of a larger 1.2 GW expansion plan.
Ali Fenn, president of Lancium, told CNBC that when fully operational, it will become one of the largest artificial intelligence data center campuses in the world, the latest example of the race for artificial intelligence. Bitcoin The mining industry is accelerating.
“Data centers are evolving rapidly to support modern artificial intelligence workloads, requiring new levels of high-density rack space, direct-to-wafer liquid cooling and unprecedented overall energy demands,” said Chase Lochmiller, co-founder and CEO of Crusoe.
There are many synergies between Bitcoin mining and artificial intelligence infrastructure businesses.
Mining companies have huge data centers with access to fiber optic lines and large amounts of electricity across the United States. They are exactly the type of facilities needed for computationally intensive artificial intelligence operations, which means their sites and technology are in high demand.
At the same time, miners need to diversify. Following Bitcoin’s April halving, which occurs roughly every four years, profits from businesses that generate new coins have plummeted. “Some operators are actively exploring exit strategies as they feel the financial pressure from the recent block reward halving, which has cut industry revenue in half,” JPMorgan analysts wrote in a June report.
Mergers, financings and partnerships are coming together quickly as the booming artificial intelligence industry demands capacity and Bitcoin miners seek new ways to generate returns on their massive investments.
Bitcoin miners turn to artificial intelligence
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 J.P. Morgan hit an all-time high of $22.8 billion on June 15, an increase in just two weeks, according to a June 17 research note from the bank. 4.4 billion US dollars.
Bit Digital is a Bitcoin miner that currently derives an estimated 27% of its revenue from artificial intelligence. explain In June this year, the company reached an agreement with a customer to supply Nvidia GPUs to a data center in Iceland over three years, with the deal expected to bring in annual revenue of $92 million. It pays for GPU fees by liquidating some of its crypto assets.
Miami-based Hut 8 says Raises $150 million in debt from private equity firm Coatue Help it build its artificial intelligence data center product portfolio.
Hut 8 CEO Asher Genoot recently told CNBC that his company “finalized commercial agreements for our new artificial intelligence vertical under a GPU-as-a-service model, including customer agreements that provide fixed infrastructure payments and revenue sharing.”
The transition to artificial intelligence is going particularly well core sciencewhich emerged from bankruptcy in January.
On Tuesday, B. Riley upgraded its stock rating to “buy” from “neutral” and raised its price target to $13 from $0.50, citing the company’s recent large deal with CoreWeave, The Nvidia-backed startup is one of the chipmaker’s main suppliers of technology that runs artificial intelligence models.
Last month, CoreWeave supply The $1.02 billion acquisition of Core Scientific comes shortly after the parties announced an expansion of their existing partnership. Core Sciences rejected the bid. The company is currently valued at approximately $2 billion.
strengthen grid
Crusoe’s work has become virtually synonymous with the Bitcoin mining industry over the years.
Crusoe’s technology helps oil companies convert wasted energy or flare gas into useful resources. Many Bitcoin miners, with Crusoe’s help, set up machines near these locations to take advantage of this cheaper energy. For example, starting in 2021, ExxonMobil began working with Crusoe to mine Bitcoin in North Dakota.
But Crusoe’s Lochmiller told CNBC that AI infrastructure has actually been part of the company’s vision since it was founded six years ago.
“We are reimagining AI infrastructure from the ground up—from our energy solutions, to the design, engineering and construction of our purpose-built AI data centers, to our work with Crusoe Industries on critical power data center infrastructure. manufacturing capabilities, and ultimately our purpose-built AI computing stack,” he said.
The Abilene plant, expected to be operational by 2025, also plans to use primarily renewable energy.
“Our power orchestration technology is designed to ensure that hyperscale AI data center campuses become an asset to the grid, not a liability,” Lancium’s Fenn told CNBC.
Lancium has patented technology that translates energy buyers’ needs into a knob that can be turned progressively up or down in as little as five seconds. This helps balance the grid with inherently unstable energy sources like wind and solar.
“Lancium’s original vision was to bring large-scale loads to areas with the best, abundant renewable energy to facilitate the energy transition,” said Fenn.
Back in 2018, Fenn stated that the only workload suitable for this scenario was Bitcoin mining.
One of the greatest features of Bitcoin is that it is completely location-agnostic. Unlike other industries that must be relatively close to end users, miners only need power and an internet connection.
In some cases, the built-in benefits of minting cryptocurrencies provide enough financial incentives to merit building the necessary infrastructure to harness previously untapped sources of electricity — especially in Texas, a state known for its renewable energy The Holy Land is famous for energy sources such as wind and solar energy.
Bitcoin miners are also flexible consumers of electricity – essentially, they act as buyers who will get as much power as they can get, no matter the time of day, and are also willing to have the power cut off at a few seconds’ notice. .
But Lancium’s strategy has turned to artificial intelligence.
“Traditional data centers were and still are primarily optimized for proximity to urban areas and users,” Finn said. “That all changes now, with AI data centers optimized for large-scale energy availability, cost and green environmental protection. Our vision, campus and technology are perfectly ready for this larger and broader opportunity.”
Needham analysts estimate that the large publicly traded Bitcoin miner is expected to more than double its power capacity over the next one to two years, including expansion plans for its mining and HPC operations.
this Calculation from Electric Power Research Institute By 2030, data center electricity consumption may account for 9% of the country’s total electricity consumption, compared with about 4% in 2023.
TeraWulf uses nuclear energy to power its mining farms and is looking to get into machine learning. So far, the company has 2 MW of capacity dedicated to HPC, but it plans to shift its energy infrastructure toward artificial intelligence and HPC.
OpenAI CEO Sam Altman told CNBC last year that he is a strong believer in nuclear technology when it comes to meeting the needs of artificial intelligence workloads.
“I don’t think we can achieve this without nuclear weapons,” Altman said. “I mean, maybe we just need solar and storage to get there. But from my perspective, I feel like that’s the most likely and best way to get there.”
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