Hyperscale Data shut down Bitcoin mining operations at its Michigan data center on Tuesday to make room for an AI customer, with the company saying the contract could generate more than $1.2 billion over 20 years.
20 megawatts under the initial agreement
In a Wednesday announcement, the company said the previously disclosed agreement covers 20 megawatts of capacity for an unnamed California-based provider of cloud computing services for AI. The initial term is 10 years.
Hyperscale said the deal could produce more than $1.2 billion if the customer exercises both five-year extensions available after the initial term, taking the total contract length to 20 years.
Expansion option could push revenue above $3 billion
According to the company, the customer has an option to add 32 megawatts within the first two years. If that option is exercised and both five-year extensions are used, total contract revenue could rise above $3 billion.
CEO William Horne said, 「The immediate shutdown of the Bitcoin mining operations allows our team to focus the Facility's power, infrastructure and resources in preparing the Facility for its usage by our Customer.」
Horne also said that as the facility expands to support AI computing infrastructure, he believes shareholders will benefit if the company’s market capitalization, which he said currently trades at a significant discount to other data center companies, begins to normalize against its available contracted power capacity.
Mining servers will be sold
Hyperscale said it plans to sell the mining servers and expects gains from those sales. The company did not disclose a start date for AI operations, and said the mining shutdown concerns the Michigan site.
Other miners are making similar moves, with costs attached
Other mining companies have also been converting sites to serve AI customers. Decrypt reported that VanEck head of digital asset research Matthew Sigel argued in March that miners are 「sitting on a gold mine」 and could profit by repurposing their infrastructure as demand for AI computing grows.
That transition can also be expensive. IREN’s quarterly results released last month showed AI cloud revenue surpassing Bitcoin mining revenue for the first time, but the company also recorded a $450.4 million write-down in asset values, mostly tied to mining equipment it had retired.