Hut 8 Secures $150 Million Investment Amid Growing Interest in Bitcoin Mining from AI Companies
Coatue Management has committed $150 million to crypto miner Hut 8 to advance AI-related infrastructure, a move that has had a positive impact on Hut 8’s shares and other bitcoin mining-related data-center stocks like SHLN and APLD. Coatue Management is also linked to CoreWeave, a cloud-computing company eyeing the acquisition of Hut 8 competitor Core Scientific.
The thirst for power from Artificial Intelligence (AI) companies remains strong, with bitcoin miners reaping the benefits. Hut 8 shares saw a surge after securing a $150 million investment from Coatue Management to develop AI infrastructure. This investment, facilitated through convertible notes carrying an 8% annual interest rate and a conversion rate of $16.395 per share, led to a nearly 4% increase in Hut 8 shares during Monday trading sessions.
Furthermore, the funding injection not only bolstered Hut 8 but also provided a lift for other bitcoin mining-related data centers servicing AI and high-performance computing (HPC). Soluna Holdings (SLNH) experienced a nearly 17% surge, while Applied Digital (APLD) added around 10%.
AI and HPC companies are increasingly turning to the bitcoin mining sector to meet their computing power requirements. These miners often possess the necessary computing capacity and power agreements coveted by AI and HPC firms. JPMorgan suggests that the escalating power demand from large-scale data centers and AI companies could spark a new wave of mergers and acquisitions among bitcoin miners with attractive power contracts.
Recently, cloud computing provider CoreWeave struck a 200-megawatt deal with miner Core Scientific (CORZ) for AI-related services and expressed interest in acquiring the entire company for over $1 billion. Despite CoreWeave’s buyout offer, Core Scientific rejected it, deeming the valuation inadequate.
Notably, Coatue Management, an investor in CoreWeave, underscores the keen interest in leveraging bitcoin miners’ existing infrastructure to support AI-related services. Hut 8 emphasized the crucial need for power in its recent press release, highlighting the challenges faced by traditional data center operators in meeting the escalating demand for AI compute capacity.
In conclusion, the investment from Coatue Management into Hut 8 signifies a significant step towards bridging the gap in power demand for AI and HPC services, showcasing the evolving landscape where bitcoin miners play a pivotal role in supporting cutting-edge technologies.
