Alphabet’s Google is playing a key role in another agreement involving a Bitcoin mining company. Cipher Mining revealed on Thursday that it has leased a data center in Colorado City, Texas, to an artificial intelligence startup. The Bitcoin miner anticipates the deal will generate $3 billion over the initial 10-year period, potentially reaching $7 billion if both five-year extension options are activated.
Cipher Mining’s partner in this venture is Fluidstack, a U.K.-based AI computing firm. Google has committed to providing financial backing of $1.4 billion to Fluidstack’s leasing obligations. In exchange, Google will receive a 5.4% ownership stake in Cipher Mining.
Cipher Mining CEO, Tyler Page, stated, “We expect this agreement to be the first of several within the high-performance computing (HPC) sector,” using the industry term often associated with AI technologies.
The agreement will see Cipher Mining transition its Texas-based Bitcoin mining data center for AI services and potentially enlarge the existing facility to meet growing needs.
This is not Google’s first venture assisting a Bitcoin miner with expansion into AI. In August, TeraWulf announced a $3.7 billion agreement to lease a data center it owns in western New York to Fluidstack. Google committed to backing $1.8 billion of that deal, receiving an 8% equity stake in TeraWulf in return.
The Shift From Bitcoin to AI
These partnerships between Google, Cipher Mining, and TeraWulf occur as AI developers actively seek increased computing resources to stay competitive. Recently, OpenAI unveiled plans alongside chipmaker Nvidia to build AI data centers with a potential energy consumption equivalent to the combined usage of New York City and San Diego.
Beyond established chip manufacturers, major players in the AI industry, such as OpenAI and Google, are also turning to Bitcoin miners for support.
Bitcoin mining involves solving complex mathematical problems to validate cryptocurrency transactions and introduce new Bitcoins into the market. Leading Bitcoin miners operate expansive data centers packed with specialized computers, all competing to acquire new units of the cryptocurrency.
Although AI data centers utilize different servers and require separate network configurations, crypto companies have recognized the underlying commonalities between Bitcoin mining and AI processing.
CoreWeave, for instance, strategically shifted its focus from Ethereum mining to creating AI-focused data centers, and their clients include OpenAI, Google, Cloudflare, plus a range of other tech leaders. Following its public offering in March, the company’s valuation reached approximately $65 billion as of Thursday afternoon.
Other Bitcoin miners have also explored replicating CoreWeave’s transition, one such instance being Core Scientific, which CoreWeave initially agreed to acquire for $9 billion in July. However, Core Scientific shareholders have since expressed concerns over the deal, claiming the purchase price undervalued the Bitcoin mining operation.