Watt's Next? Iris Energy and Core Scientific's Bold Vision for AI-Powered Data Centers
Crypto Mining Giants Flip the Switch on the Future of High-Performance Computing
The rise of generative AI is creating an insatiable appetite for computing power. Training large language models and running AI applications at scale requires enormous processing capacity. As tech giants and startups alike race to capitalize on the AI boom, they face a critical bottleneck - data center capacity.
Building new, specialized AI data centers is highly capital and time intensive. Securing access to power and fiber connectivity in proximity is a major challenge. The equipment is also expensive, with costs estimated at $16 million per MW for the latest NVIDIA H100-powered systems. All in, a single 100MW Hopper-based data center could cost over $3 billion.
As we discussed in a previous post, Crypto's Second Act: Powering the AI Revolution, the untapped potential of Bitcoin mining sites for repurposing as AI data centers is significant.
The race to deploy AI infrastructure is heating up, and two crypto mining leaders are positioning themselves as key enablers of the generative AI revolution.
Australia-based Iris Energy (NASDAQ: $IREN) and US-based Core Scientific (NASDAQ: $CORZ) are moving quickly to convert their Bitcoin mining data centers into high performance AI compute facilities. In the process, they are offering a preview of how crypto infrastructure could be repurposed to power the next wave of cloud computing.
Iris Energy's Play: Swapping Mining Rigs for AI Accelerators
Iris Energy management recently highlighted the opportunity in a recent presentation. Noting the company's access to abundant power capacity, executives outlined plans to swap out Bitcoin mining rigs for high-end NVIDIA H100 GPUs. These AI accelerators are tailor-made for machine learning workloads, but require access to 2-3x the power of traditional data center builds.
By leveraging existing sites with robust grid connections, Iris believes it can reallocate power to AI data centers at gross margins approaching 98% and ROI within 24 months. A key constraint is long lead times to procure the H100 systems amidst surging demand.
Core Scientific's Approach: Hyperscale AI Data Centers
Core Scientific is taking an even more aggressive approach. The company recently inked a 12-year deal with CoreWeave to convert 200MW of Bitcoin mining capacity to AI compute. Over the contract term, Core expects to generate nearly $3 billion in revenue at 80% profit margins from the repurposed site. Management outlined ambitions to convert another 300MW for AI customers by 2028.
On its investor day, Core Scientific offered a deeper look at its "application-specific data center" approach optimized for large language models. The company is focusing on delivering ultra-high density racks (over 100kW per cabinet), all-in liquid cooling, and modular designs tailored for the latest AI chips.
Core is betting these purpose-built AI facilities operated at hyperscale will prove more attractive than traditional colocation offerings. The company believes it can offer a superior solution for the unique power, cooling and space needs of high performance AI compute.
The Economics of the AI Opportunity
For both Iris Energy and Core Scientific, the economics of the AI opportunity are proving more attractive than Bitcoin mining at current prices. By moving early to repurpose capacity, they are aiming to become critical players in the AI infrastructure arms race.
The Broader Trend
Crypto Mining's Pivot to AI Other crypto mining operations are likely to pursue similar strategies in the months ahead. Access to power capacity and the ability to efficiently cool high performance AI hardware will be key differentiators. Expect to see more partnerships between crypto miners and AI hardware vendors to enable these conversions.
Final Thoughts
Iris Energy and Core Scientific offer a real-time case study in how crypto infrastructure can be repurposed for the next generation of cloud computing. Their early moves could pave the way for crypto mining facilities worldwide to become unlikely heroes in the race to enable the AI revolution.
As the AI arms race heats up, the humble crypto mining rig may just prove to be the secret weapon in the cloud computing wars. Tech investors should keep a close eye on Iris Energy, Core Scientific and others pursuing this strategy. Their success could light the way for the rapid deployment of AI at scale in the years ahead.
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