The United States Department of Commerce has pledged $389 million towards four firms manufacturing the power semiconductors necessary for the development of commercial fusion and AI data centers. It’s an investment that has the potential to ultimately flow to Bitcoin miners switching to AI hosting in search of cheaper electricity.
The link between the two is not direct. But it is very real. Several miners have been spending the last two years acquiring data center space and electricity for AI clients, and Cryptopolitan has noted before that miners are looking at high-performance computing as part of their revenue diversification strategy. When the fusion projects that the government is backing deliver competitively priced power, the same miners will be natural customers.
US takes equity stakes in four chip firms
Commerce Department issued letters of intent to four companies on October 22, providing research and development funding through the CHIPS and Science Act – a 2022 law supported by Congress with a $10 billion fund for semiconductor research in the U.S. As per the National Institute of Standards and Technology statement, the grants are expected to fund semiconductor and material technologies for power regulation, conversion, and distribution through power grid, defense, and data center applications.
Each grant comes with a condition attached. The federal government will take an equity interest, which is both non-controlling and non-voting, in each recipient of the grant, as stated by the department. Reuters, which first reported the grants, added that the Commerce Department has granted 19 similar R&D grants in recent months.
“The Trump Administration is accelerating American semiconductor innovation to enhance our domestic energy and power resources,” commented the Commerce Secretary Howard Lutnick.
Helion and Commonwealth lead the fusion money
Two fusion ventures captured the biggest slices. Helion, which is located in Everett, Washington, will get up to $175 million for high-voltage power semiconductors and energy modules that provide the magnetic field for its fusion reactors. According to the company’s statement, the definitive award will be accompanied by $50 million in additional private funding to make up a total of $225 million.
“Deploying fusion power plants at scale will require that we accelerate the development of certain technologies, such as semiconductors,” said David Kirtley, CEO of Helion, in the statement announcing the award. Helion also indicated that Commerce would have a non-voting $175 million interest priced off of its Series G, which valued the company at $15.5 billion. This represents about a 1% stake, according to TechCrunch.
Commonwealth Fusion Systems, based in Massachusetts, will receive up to $85 million for radio frequency plasma heating semiconductors, power electronics, fusion diagnostics, and radiation hardening technology. “These innovations will be an important part of our efforts to build out global deployment of fusion,” said Bob Mumgaard, CEO of Commonwealth Fusion Systems.
AI data-center piece that miners should watch
The final two grants have a more intimate relation to computing. Vertical Semiconductor, a company spun out of MIT, will receive up to $73 million in funding to develop vertical gallium nitride power chips for AI server racks, including NIST’s reported development of the first 2.5 megawatt data center rack. Sibelco will receive up to $56 million in funding for high-purity quartz necessary for chip production.
Rack-level power efficiency is the link between this story and crypto. Bitcoin miners are competing based on their ability to reduce their cost per hashrate, and the companies that are running AI workloads now have the same pressures regarding power efficiency and cooling. Improved conversion chips and, in the long run, power from fusion reactors, could reduce one of the highest costs common to both enterprises.
Equity strings and a signal to private capital
These awards are insignificant compared to what these companies have raised. Commonwealth has secured around $4 billion and Helion some $3.2 billion in committed capital, while TechCrunch writes that investors have bet more than $14 billion on the whole fusion sector. The Fusion Industry Association has requested that Washington inject $10 billion into the industry as one-time funding, with $5.4 billion going to startups.
The government stake is unique in the way it differs from the previous approach of federal funding. Previously, these were non-dilutive grants, and nothing touched the cap table of these companies.
The same equity structure was seen in deals with MP Materials, USA Rare Earth, and Intel. The big question for venture capitalists is whether this dilution is worthwhile given that the message from Washington is clear: fusion power is a strategically important technology for the country. The message from the miners is where the grid economics will go next.
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