Applied Digital, a blockchain and artificial intelligence (AI) infrastructure provider, has opened its new 200-megawatt (MW) data center in Garden City, Texas.
The facility marks the company’s third blockchain hosting facility to go live in North America.
“Once fully energized, this location will bring Applied Digital to the full planned 480MW of total hosting capacity across its blockchain hosting facilities,” read the company’s announcement on Friday.
A megawatt (MW) is a unit of power equal to one million watts, while a gigawatt (GW) equals one billion watts. Riot Blockchain, another publicly traded Bitcoin miner, boasts a 1GW mining facility in the same state
For context, a standard home light bulb is powered by 60 watts. Meanwhile, Cambridge estimates that the entire Bitcoin network currently demands 14.83 GW, up from its 12.89 GW estimate in September.
What Bitcoin Miners Are Doing to Survive the Bear Market
Cryptocurrency miners have a lot of fixed costs, like power, real estate, and the souped-up computers, or rigs, that do the actual mining. That’s why it can be hell for their margins when the market takes a nosedive and dramatically drops the value of whatever funds they were holding in crypto, such as Bitcoin. And now that the crypto market is in what appears to be a prolonged bear market, miners are being forced to adjust. The global market capitalization of crypto is roughly $1 trillion today...
Bitcoin miners use such power to produce hashes, which are needed to construct the network’s next block of transactions, for which miners are rewarded with newly minted BTC.
According to Bitinfocharts, Bitcoin’s current hashrate is approximately 400 exahashes per second (EH/s). An exahash equals one quintillion hashes.
“Depending on the model of miners, the facility will support 7-8.5 EH,” Applied Digital Chairman and CEO Wes Cummins told Decrypt.
None of that hashrate is meant for the company itself, however. Cummins said his firm only hosts “other miners,” meaning other companies own the rigs that Allied houses and operates on their behalf. This business allowed Applied Digital to earn $22 million in revenue during the quarter ending in May 2023.
Yet like many mining firms, Applied Digital is turning its focus away from Bitcoin mining and toward high-performance computing (HPC)—another energy-intensive service supporting the AI industry.
Bitcoin Miners Are Pivoting in Search of Profits—And Hedging Their Bets
Bitcoin miners and hosting companies staying afloat in this market have had to venture outside the blockchain industry. At current prices and Bitcoin network difficulty, only Bitcoin miners with the newest, most efficient rigs and very competitive power rates are able to break even. That is, if they’re only relying on Bitcoin mining for their revenue. The firms keeping their heads above water have had to find other ways to generate cash with their hardware fleets. As a recent example, Applied Bl...
Like mining, HPC requires access to large data centers, cooling systems, and cheap energy to operate profitably. According to HIVE Digital Research Director Adam Sharp, HPC-cloud services are “far more profitable per unit of energy” than Bitcoin mining.
“We are focusing all new expansion on HPC/AI workloads,” said Allied’s Cummins.
But it seems investors aren’t convinced—at least not yet. Applied Digital stock, which trades on the NASDAQ under the APLD ticker, fell 5.3% on Friday.
Edited by Stacy Elliott.
