Hut 8 Secures $7 Billion AI Data Center Lease Backed by Google

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Hut 8, a prominent Bitcoin mining company, has successfully secured a significant 15-year lease valued at $7 billion to deliver expansive AI data center services at its River Bend campus in Louisiana. This landmark deal highlights the innovative ways crypto miners are capitalizing on their resources to cater to the surging demand for artificial intelligence computing capabilities.

Key Takeaways

Hut 8 has signed a $7 billion lease for AI data center capacity at its River Bend facility.
The agreement includes a financial backstop from Google, ensuring payment support if needed.
The deal is expected to generate approximately $454 million annually, totaling around $6.9 billion in net operating income over 15 years.
Construction at the site has begun, with the first data hall projected to be completed by mid-2027.
This shift signifies a broader trend of cryptocurrency companies moving into AI for new revenue streams.

Major Infrastructure Deal by Hut 8

Hut 8 has made headlines by securing one of the most substantial infrastructure agreements ever made by a Bitcoin-focused organization. The contract allows the company to provide large-scale AI data center capacity at its River Bend campus in Louisiana over the next 15 years. This agreement showcases how cryptocurrency miners are leveraging their energy resources and infrastructure to fulfill the increasing demand for AI computing services.

Under the lease with Fluidstack, an AI infrastructure firm, Hut 8 will offer 245 megawatts (MW) of IT capacity with a stipulation of a 3% annual rent increase. Further enhancing confidence in the deal, Google has agreed to back the lease financially, ensuring Fluidstack can meet its payment obligations. This safety net reduces risks associated with the agreement.

Additionally, Fluidstack holds the option to lease up to 1,000 MW more as the campus expands.

Financial Guarantees and Risk Mitigation

Google’s role as a financial guarantor throughout the lease term is a crucial aspect of this agreement. Alongside this, Hut 8 and Fluidstack intend to establish an operational services agreement to manage the data center needs, further supported by Google's financial backstop.

The majority of the funding for this project will be sourced through loans, with banks expected to cover up to 85% of the costs. JPMorgan is leading the underwriting process, with Goldman Sachs also participating, significantly lessening the initial capital investment required from Hut 8. The company anticipates generating roughly $6.9 billion in total net operating income over 15 years, averaging about $454 million per year.

Construction Progress and Timeline

Construction activities at the River Bend site have already commenced. The first data hall is expected to be operational by the second quarter of 2027, with additional halls rolling out later that same year. CEO Asher Genoot emphasized that this project embodies Hut 8’s “power-first, innovation-driven” philosophy, where focusing on the right collaborations takes precedence over rapid progress.

Impact on Hut 8's Stock

The news of this substantial lease led to a surge in Hut 8’s stock, with shares climbing roughly 20% in pre-market trading, indicating strong investor enthusiasm about the company's strategic shift towards artificial intelligence and high-performance computing. This development builds on Hut 8’s previous foray into AI, having launched its Highrise AI subsidiary in 2024, which included deploying over 1,000 Nvidia H100 GPUs to provide GPU-as-a-Service offerings.

The Broader Shift of Crypto Miners into AI

Hut 8's recent agreement aligns with a growing trend among cryptocurrency firms exploring opportunities within the AI sector to diversify revenue streams. For example, Core Scientific has entered a $3.5 billion, 12-year contract with CoreWeave, projected to yield about $290 million each year. Additionally, Galaxy Digital has expanded its Helios AI data center in Texas and secured a long-term lease with CoreWeave, aiming for annual revenues around $1 billion. Cipher Mining has also formulated a high-performance computing arrangement with Fluidstack, backed by Google.

These agreements highlight how infrastructure originally developed for Bitcoin mining is being repurposed for large-scale AI operations, enabling crypto companies to potentially earn billions over the next decade.

Disclaimer: This article is intended for informational purposes and should not be construed as financial advice. The opinions expressed here may reflect the author's personal views and do not necessarily represent those of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions. The Crypto Basic is not accountable for any financial losses.