Hut 8, a Bitcoin miner, disclosed that it would receive a $150 million convertible note investment from Coatue Management, a technology-focused investment management firm
Expansion of Data Centers
Hut 8 stated that the funds would expedite the expansion of its data center portfolio. Custom facilities that house large-scale crypto-mining operations are known as data centers. These facilities necessitate energy-intensive infrastructures capable of sustaining artificial intelligence computing.
Traditional data center operators are confronted with various challenges, such as power shortages, extended lead times to bring new capacity online, and extensive upgrades to support the most recent high-density computing due to the rapid growth of generative AI over the past year. As a result, AI firms are now competing for these facilities.
Nevertheless, Hut 8 is confident that it can capitalize on its extensive experience developing and operating intricate energy infrastructure to satisfy this substantial demand and establish itself as a market leader in the AI infrastructure sector.
19 facilities, including 10 Bitcoin mining, hosting, and managed services locations, are operated by Hut 8 in Alberta, Canada, New York, and Texas. Furthermore, it maintains four power generation assets in Ontario and five high-performance computing data centers in British Columbia and Ontario.
Asher Genoot, CEO of Hut 8 Mining, expressed enthusiasm for the partnership with Coatue, citing the company’s extensive investment track record and expertise in the AI ecosystem.
Additionally, he stated:
“We believe this partnership will allow us to unlock significant opportunities and connectivity to the broader space as we enter this next phase of growth.”
Notably, this investment is pivotal as several Bitcoin miners pivot towards AI due to declining revenues. Last month, Core Scientific secured a $3.5 billion contract with AI startup CoreWeave.
Note details
The convertible note will pay 8% interest annually and have an initial term of five years. Hut 8 can extend the term for up to three additional one-year periods.
Further, the note will be a senior unsecured obligation of the company. Its initial conversion price is $16.395 per share of common stock, a 45% premium to the 10-day volume-weighted average price. The transaction is expected to close by July 11.