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Google has collaborated with Cipher Mining to convert the Bitcoin mining facility into an artificial intelligence and high-performance computing (HPC) center. The 10-year deal, worth $3 billion, involves Fluidstack leasing 168 megawatts of computing power at Cipher's Barber Lake facility in Texas.
According to the Google AI deal, this agreement will help secure $1.4 billion of Fluidstack's lease to secure warrants worth approximately 5.4% of Cipher mining equity. The contract has the possibility of two five-year extensions that may bring its value to $7 billion. Cipher has been able to facilitate the Texas facility to 500 megawatts, which reflects the magnitude of its AI goals.
According to Cipher CEO Tyler Page, the acquisition was the company's first significant acquisition in the HPC market. Page noted that the company had plans to expand revenue
beyond mining cryptocurrencies. Cipher also issued an $800 million convertible senior note private offering to support the expansion and finance its 2.4-gigawatt development pipeline.
The presence of Google highlights Big Tech's growing reliance on existing cryptocurrency infrastructure to meet the increasing demand for AI computing. Instead of constructing new premises, Google is acquiring tenure of already operational energy-intensive premises. In August, Google had previously concluded a similar deal with TeraWulf, another US-based Bitcoin miner, acquiring an 8% equity interest in the agreement.
Also Read: Crypto News Today: Coinbase Acquires Deribit, Google Invests in TeraWulf, Bitcoin Plummets
This shift from digital asset mining to AI infrastructure is a notable industry trend. The company, CoreWeave, which shifted to Ethereum mining, has already acquired several large AI customers, such as OpenAI and Cloudflare. Its fast growth attests to the financial benefits of this change with a market value of $65 billion.
Cipher Mining stock has increased by over 700% since April, and analysts attribute the growth to investor confidence in the long-term AI hosting contracts. These agreements will help the company achieve net operating income margins between 80% and 85%, with the AI-based operations being profitable.
According to industry experts, AI and crypto demand large-scale computing and energy optimization, and Bitcoin miners are the logical partners of technology companies. As Google, Oracle, and other giants gain a stronger foothold in AI data hosting, it is expected that partnerships between miners and cloud hosting will increase in the years to come.
