Just off Interstate 20, nestled in the heart of West Texas, lies Abilene, a town of 125,000 people. Once a crucial stop along a cross-country cattle trail during the American Old West era, this small outpost is now entering the burgeoning artificial intelligence sector.
On Thursday morning, Houston-based tech firm Lancium and Denver’s Crusoe Energy Systems announced a multibillion-dollar agreement to construct a 200-megawatt data center just outside Abilene. This facility is tailored to meet the specialized needs of AI companies, facilitating advanced cloud computing for applications such as medical research and aircraft design. It marks the initial phase of a larger 1.2-gigawatt expansion.
Ali Fenn, President of Lancium, revealed to CNBC that once fully operational, this campus will rank among the world’s largest AI data centers. This development underscores the accelerating shift away from bitcoin mining towards powering AI technologies.
“Data centers are rapidly evolving to support modern AI workloads, necessitating high-density rack space, direct-to-chip liquid cooling, and unprecedented energy demands,” explained Chase Lochmiller, Co-founder and CEO of Crusoe.
There exists substantial synergy between the bitcoin mining and AI infrastructure sectors. Mining companies possess expansive data centers equipped with fiber optic connections and ample power resources across the United States—ideal for compute-intensive AI tasks. Consequently, their facilities and technologies are in high demand. Meanwhile, miners seek diversification options. Following the bitcoin halving event in April, which occurs approximately every four years and slashes industry revenues in half, operators are exploring new strategies due to reduced profitability. JPMorgan Chase analysts noted in a June report that “some operators are feeling the financial impact” and actively pursuing exit plans.
With the burgeoning demand for AI infrastructure and miners seeking alternative revenue streams, a flurry of mergers, financing deals, and partnerships are rapidly materializing.
Bitcoin miners are transitioning to AI
Lancium and Crusoe are among the many miners shifting their focus from bitcoin to artificial intelligence, a strategy that appears to be paying off.
According to JPMorgan’s June 17 research note, the combined market capitalization of the 14 major U.S.-listed bitcoin miners reached a record high of $22.8 billion on June 15, marking a $4.4 billion increase in just two weeks.
Bit Digital, which now generates around 27% of its revenue from AI, announced in June a significant deal to supply Nvidia GPUs to a data center in Iceland over three years. This agreement is anticipated to generate $92 million in annual revenue, partly financed by liquidating some of its cryptocurrency holdings.
Miami-based Hut 8 secured $150 million in debt financing from private equity firm Coatue to expand its AI-focused data center portfolio. CEO Asher Genoot highlighted recent agreements under a GPU-as-a-service model, including fixed infrastructure payments and revenue sharing.
Core Scientific, which successfully emerged from bankruptcy in January, has seen notable success in its AI pivot. B. Riley upgraded its stock rating to buy from neutral, raising the price target from $0.50 to $13. This upgrade cited Core Scientific’s recent deals with CoreWeave, a key provider of Nvidia’s AI technology.
CoreWeave made headlines with a $1.02 billion bid to acquire Core Scientific, following their expanded partnership announcement. However, Core Scientific declined the offer, currently valuing the company at approximately $2 billion.
These moves underscore a broader trend among bitcoin miners toward AI, leveraging their infrastructure and expertise to capitalize on the burgeoning demand for AI technologies and services.
Enhancing Grid Capability
Crusoe has long been synonymous with the bitcoin mining industry, utilizing its technology to convert wasted energy, such as flare gas from oil operations, into a valuable resource. Many bitcoin miners have strategically positioned their operations near these sites to leverage this cost-effective power source. For instance, Exxon Mobil began collaborating with Crusoe in 2021 to mine bitcoin in North Dakota.
Despite its roots in bitcoin mining, Crusoe’s CEO, Lochmiller, revealed to CNBC that AI infrastructure has been part of the company’s vision since its inception six years ago. “We’re redesigning AI infrastructure comprehensively—from our energy solutions and the engineering of specialized AI data centers, to manufacturing capabilities with Crusoe Industries for crucial electrical data center infrastructure, and ultimately to our purpose-built AI computing stack,” he explained.
The upcoming facility in Abilene, projected to launch in 2025, aims to primarily utilize renewable energy sources. Lancium’s President, Fenn, emphasized to CNBC that their power orchestration technology allows energy demand to be adjusted rapidly, balancing volatile energy sources like wind and solar power.
Originally focused on leveraging abundant renewable energy for large-scale loads, Lancium’s strategy evolved from bitcoin mining. Fenn noted, “Our vision, campuses, and technology are ideally positioned for the expanded opportunity of AI data centers, optimized for scalability, cost-effectiveness, and environmental sustainability.”
Looking ahead, analysts from Needham anticipate significant growth in the power capacity of large publicly traded bitcoin miners over the next one to two years, encompassing both mining operations and high-performance computing expansions.
Data centers are projected to consume up to 9% of the nation’s electricity by 2030, highlighting the increasing importance of sustainable energy solutions like nuclear power. TeraWulf, for example, is transitioning its energy infrastructure toward AI and high-performance computing, utilizing nuclear energy to power its mining sites.
OpenAI CEO Sam Altman has advocated for nuclear energy as pivotal for meeting the energy demands of AI workloads, emphasizing its reliability and potential compared to solar and storage solutions alone.
