Source: CNBC

Compiled by: Scott Liu, BitpushNews

Houston-based technology company Lancium and Denver-based Crusoe Energy Systems announced a multi-billion dollar project on Thursday to build a 200-megawatt data center near Abilene, Texas. Designed to meet the unique needs of AI companies, the center is the first phase of a larger 1.2-gigawatt construction project. When the data center is fully operational, it is expected to be one of the largest AI data centers in the world.

Interestingly, the location chosen to build the data center has some connection to the history of the Old West of the United States, adding a touch of nostalgia to this high-tech project. Abilene was once an important stop on the Cattle Trail, and now it will become a hub for cutting-edge AI technology.

Cryptocurrency mining companies have vast data centers with access to fiber optic lines and large amounts of electricity across the United States. These data centers are exactly the type of facilities needed for computationally intensive artificial intelligence businesses, which means that cryptocurrency mining and AI facilities are highly synergistic and provide mining companies with a reasonable exit strategy.

Lancium plans to open the new facility in 2025 and will also use its patented technology for efficient energy management, balancing grid demand and supporting the broader energy transition. The new data center will meet the unique needs of AI applications such as medical research and aircraft design, demonstrating the diversity and potential of AI technology. "Data centers are rapidly evolving to support modern AI workloads, requiring new high-density rack space, direct-to-chip liquid cooling and unprecedented overall energy demands," said Crusoe's Lochmiller.

Cryptocurrency mining companies turn to artificial intelligence

Cryptocurrency mining companies have faced declining profitability in recent years, especially after the Bitcoin halving, where the business of generating new tokens became even less profitable. “Some operators are feeling the financial pressure from the recent block reward halving and are actively exploring exit strategies,” analysts at JPMorgan Chase wrote in a June report. The decline in profitability has boosted cryptocurrency mining Mining companies seek to diversify their businesses, and in order to better utilize existing facilities, Bitcoin mining companies are gradually turning to AI. For example, Bit Digital and Hut 8 have seen significant revenue from AI-related businesses. Lancium and Crusoe's plans, which rely heavily on renewable energy, are representative of this wider industry shift.

“Lancium’s original vision was to bring large-scale loads to locations with the best, abundant renewable energy to facilitate energy transition,” said Lancium President Fenn. Initially, Bitcoin mining was the best fit for this vision, but now Lancium is shifting its strategy to AI.

So far, the strategy seems to be working:

According to a June 17 research note from JPMorgan Chase, the combined market capitalization of 14 major U.S.-listed bitcoin miners hit an all-time high of $22.8 billion on June 15, an increase of $4.4 billion in just two weeks.

Bit Digital, which said AI now accounts for about 27% of its revenue, announced in June that it had struck a three-year deal to supply Nvidia GPUs that it expects to generate $92 million in revenue annually. It is funded in part by liquidating some cryptocurrencies.

Miami-based Hut 8 announced it has raised $150 million in debt from private equity firm Coatue to expand its artificial intelligence data centers. Hut 8 CEO Asher Genoot said the company has reached multiple commercial agreements for its new AI business, including customer agreements with fixed infrastructure payments plus revenue sharing.

The adjustment is particularly good for Core Scientific, which emerged from bankruptcy in January. On Tuesday, B. Riley upgraded its stock rating to buy from neutral and raised its price target from $0.50 to $13, citing the company's recent series of deals with Nvidia-backed startup CoreWeave, which last month offered to buy Core Scientific for $1.02 billion but was rejected. Core Scientific is currently valued at about $2 billion.

The power grid is "full of confidence"

For years, Crusoe's work has been almost inseparable from the Bitcoin mining industry. Crusoe's technology helps oil companies turn waste gas into useful resources. Many cryptocurrency mining companies set up machines near these sites with the help of Crusoe to take advantage of this cheaper source of electricity. For example, starting in 2021, Exxon Mobil worked with Crusoe to mine Bitcoin in North Dakota.

But Crusoe’s Lochmiller told CNBC that AI infrastructure is actually part of the company’s six-year-old vision. “We are reimagining AI infrastructure from the ground up — from our energy solutions, to the design, engineering and construction of our purpose-built AI data centers, to Crusoe Industries’ manufacturing capabilities for critical power data center infrastructure, and ultimately to our purpose-built AI compute stacks,” he said.

The Abilene facility, scheduled to open in 2025, also plans to run primarily on renewable energy. “Our power orchestration technology is positioned to ensure that hyperscale AI data center campuses become an asset to the grid, not a burden,” said Lancium President Fenn. Lancium’s patented technology allows it to gradually ramp up or down energy buyers’ demands in as little as five seconds to balance an inherently volatile grid.

“The original vision of Lancium was to bring large-scale loads to locations with the best, abundant renewable energy to facilitate the energy transition,” Fenn said. In 2018, the only suitable load was Bitcoin mining. One of the best features of Bitcoin is that it is completely location-independent. Miners only need power and an internet connection, unlike other industries that need to be close to end users.

However, Lancium’s strategy has now shifted to artificial intelligence. “Traditional data centers have primarily optimized proximity to urban areas and users,” said Fenn. “Now, everything has changed, and AI data centers optimize for large-scale energy supply, cost, and greenness. Our vision, campus, and technology are perfectly positioned for this larger, broader opportunity.”

This shift is expected to have a significant impact on the cryptocurrency market. As more cryptocurrency mining companies turn to AI, it may reduce the computing power used for Bitcoin mining, affecting the security of the network and transaction processing time. But at the same time, this move may reduce the energy consumption associated with Bitcoin mining and solve some environmental problems that plague the industry.

In short, this transformation of Lancium and Crusoe not only marks that Bitcoin miners are adapting to new market demands, but also demonstrates the huge potential and importance of AI technology in the future. With the rapid development of the AI ​​industry, similar cooperation and transformation will become more and more common.