Bitcoin mining company Hut 8 announced on Wednesday a 7 billion USD AI data center lease contract with cloud infrastructure provider Fluidstack. This move indicates a trend of more crypto mining businesses shifting towards AI infrastructure.
Immediately after the announcement, Hut 8's stock surged, ending a prolonged period of volatility and attracting renewed interest from investors.
Inside Hut 8's prominent AI rental contract
This agreement includes 245 megawatts of AI computing power located at Hut 8's River Bend campus in Louisiana during a basic lease term of 15 years.
The contract also includes three additional extension options, each for five years, raising the total contract value to approximately 17.7 billion USD if fully utilized. Additionally, Fluidstack has the right of first refusal to lease up to a maximum of 1,000 megawatts as this campus expands.
Not only limited to the initial lease contract, this agreement is part of a larger collaboration between Hut 8 and AI developer Anthropic with the ultimate goal of potentially increasing capacity to 2.3 gigawatts.
Google, a company under Alphabet, will be the financial guarantor for the initial lease term, indicating that major cloud providers are very interested in securing a stable long-term energy supply for energy-intensive AI operations.
Hut 8 expects the project to yield approximately 6.9 billion USD in net profit from operations during the initial lease period.
Investors reacted positively as Hut 8's stock rose about 20% before the main trading session right after this announcement.
This move reflects Hut 8's efforts to stabilize its business operations while also showcasing the general trend of Bitcoin mining companies transitioning to the AI computing sector for sustainable growth.
The Bitcoin mining industry faces a major structural change
Over the past year, Bitcoin mining has become increasingly challenging. Network difficulty has risen, hash rates have fluctuated continuously, electricity costs have soared, and the environment post-halving has further squeezed profits.
Therefore, many publicly listed Bitcoin mining businesses struggle to maintain stable profits or build a clear growth narrative. To adapt, more and more entities have chosen to diversify their activities rather than just traditional mining.
At the same time, the rapid development of artificial intelligence has caused a surge in demand for computational processing power. Since Bitcoin mining companies possess large-scale industrial facilities and have access to strong power sources, transitioning to AI data centers has become practical and increasingly necessary.
Hut 8 has recognized this general landscape, especially as their stock has been highly volatile recently due to fluctuating Bitcoin prices.
