HODL, originally a misspelling of "hold" that has morphed into the cryptominer community mantra “hold on for dear life” and a symbol of undying commitment to the cause, seems to be working out for many cryptomine data center firms.

But instead of relentlessly holding on to Bitcoin, the cryptomine companies that went all in on land and power are the ones that are coming good.

Cryptominers enter the AI fray

For a long time, we at DCD didn’t focus too much on the cryptomining industry. It was the data center industry’s awkward cousin, always taking in big numbers, but never clear on how much of it was true. Add in the fact that mining is something of an environmental nightmare, and we thought our time was better spent elsewhere.

Increasingly, however, cryptofirms are hitting mainstream financial press. More and more companies are publicly listed, securing billions of dollars in funding for data center build-outs, and are promising to bring gigawatts of capacity online if they haven’t already. The industry has become too big to ignore, and more importantly, too intermingled with the traditional data center industry to separate.

Cryptomine data center firms long claimed to serve both crypto and HPC workloads, but in truth, most were entirely devoted to hosting Bitcoin mining rigs for years. But as the AI boom accelerated, many quickly pivoted to actually taking GPU hosting seriously, simply buying their own Nvidia hardware and setting up cloud offerings, to various degrees of success. But now, we’re seeing many deals to lease crypto sites to hyperscale cloud providers in desperate need of near-term capacity, adding further legitimacy to what once was the wild west of the digital infrastructure industry.

The price of Bitcoin might be riding high, but the safety and secure recurring revenue of a hyperscaler locked into a long-term contract is more alluring for many investors. And the cryptomimers that have secured large tracts of powered land are reaping the benefits.

Hyperscalers come knocking

Many of the deals between crypto firms and data center companies in recent years have been with neoclouds like CoreWeave; upstart AI providers with money to burn and a need to be generating revenue quickly, lest the AI bubble burst.

Increasingly, however, we’re seeing the hyperscale cloud providers get in on the action.

Microsoft, which has openly admitted it has been struggling to find enough space and power to deploy all the billions of dollars’ worth of GPUs, is a major customer for a lot of these former cryptomine sites.

It has long been a customer of CoreWeave – itself a former cryptominer turned AI cloud that has been hoovering up capacity with both traditional data center providers and its former crypto peers – and in recent months has turned to other AI cloud firms, including Nebius, reportedly Lambda, and another crypto spin-out, Nscale.

This week saw Microsoft sign on the dotted line to lease AI capacity from Iren, another reformed crypto company. The $9.7bn, five-year deal will give the Redmond company access to Iren's Nvidia GB300s, which will be hosted at the latter’s 750MW Childress campus in Texas.

Nscale, an AI neocloud spun out of crypto firm Arkon Energy, has signed multiple deals with Microsoft, including one to lease crypto firm Ionic Digital’s 234MW campus in Texas for 10 years for $2bn. So that's a hyperscaler leasing from a crypto firm-turned neocloud leasing from another crypto firm. Got it?

OpenAI’s debut Stargate project alongside Oracle is at a site owned by former crypto firm Lancium and developed by former crypto firm, Crusoe.

Google has also been busy. The company – which has also said AI demand is outstripping supply – has been involved in several deals to help AI cloud firm Fluidstack secure capacity at sites owned by cryptominers.

Fluidstack has penned multiple deals with TeraWulf to secure more than 360MW of capacity at the latter’s campus in New York, based at a former coal power plant. TeraWulf is also developing a new 168MW campus in Texas for Fluidstack. Fluidstack has also signed a separate 10-year deal with Cipher Mining for 244MW of capacity in Texas.

Unusually, Google is acting as a guarantor for the deals, and will take over the capacity should Fluidstack go bust. Even more unusually, Google has also taken a stake in both TeraWulf and Cipher, giving the search giant a direct stake in data center provider/cryptomine firms. Imagine if Google started doing the same for all the traditional colocation/wholesale data center providers it deals with.

This week also saw Amazon sign a 300MW hosting deal with Cipher Mining. It's not clear which of Cipher's site(s) will host the capcity, but AWS has locked in for 15 years to the tune of $5.5 billion.

A new world

A few years ago, it would have been unthinkable to see investment-grade giants like Google doing business with fringe crypto operators like Cipher Mining. Now, we’re seeing deals announced weekly.

For the hyperscalers, the moves makes sense – they get the capacity they want on timelines they can accept. And if the power at these sites goes towards something slightly less Sisyphean than Bitcoin mining, perhaps that’s a bonus too. Even if some AI-generated content is truly heinous.

The knock-on effect is that we’re seeing many firms relocating miners out of facilities in order to host GPUs. Many of the sites have existing cryptomining facilities that will need either upgrading or replacing, as few mining sites meet the strict resilience and uptime demands of a hyperscaler. Some of these pivoting miners are doing away with their mining operations entirely to become pure-play hosts for AI firms.

Many might tell you this was always the plan, that they always knew that AI would boom and the world would come knocking for all the power they have been holding onto, with crypto just an interim strategy. The reality is that as energy prices increase and Bitcoin becomes harder and harder to mine, these companies needed an exit strategy, and the hyperscalers have arrived at the perfect time.