$7B Google-backed deal sends crypto stock soaring

Bitcoin mining steadfast Hut 8 is the latest crypto infrastructure institution to fastener successful large-scale, Google-backed financing, arsenic miners progressively pivot toward artificial quality information centers to offset post-halving unit connected their halfway business.

On Dec. 17, Hut 8 announced it had signed a 15-year lease statement valued astatine $7 cardinal with unreality infrastructure steadfast Fluidstack for 245 megawatts of IT capableness astatine its River Bend information halfway field successful Louisiana.

The statement includes a fiscal backstop from Google, which guarantees lease outgo obligations for the basal term.

The woody ranks among the largest AI-focused infrastructure commitments ever made by a publically listed Bitcoin miner and comes arsenic capitalist enthusiasm pushes Hut 8 shares sharply higher.

Related: What is Bitcoin mining? Explained

Hut 8 banal jumped astir 4% successful regular trading connected Dec. 16, closing astatine $36.85, earlier surging much than 21% successful premarket trading the pursuing greeting to $44.60. The banal is present up astir 79% twelvemonth to date.

While Google is involved, it is not leasing the information center, nor is it operating Bitcoin mining oregon AI workloads astatine the site.

Instead, Google is providing a fiscal backstop that guarantees lease payments and definite pass-through obligations for the 15-year basal term.

In elemental terms, Google is acting arsenic a co-signer.

“River Bend reflects the spot of Hut 8’s power-first, innovation-driven improvement model, validated by the world-class counterparties we are executing alongside,” Hut 8 CEO Asher Genoot said successful the company’s property release. “This Agreement is the effect of disciplined, diligent execution arsenic we focused connected securing the close transaction, not conscionable the first.”

The lease includes 3 five-year renewal options that could assistance the full declaration worth to astir $17.7 billion. Fluidstack besides holds a close of archetypal connection for up to an further 1,000 megawatts of aboriginal enlargement capableness astatine the site, taxable to powerfulness availability.

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"Think of this similar gathering a elephantine buying promenade successful the 1990s," told 1 pseudonymous crypto expert erstwhile asked to explicate the deal.

Hut 8 is the developer that wants to physique the mall. Fluidstack is the institution that agrees to rent a immense chunk of abstraction for the adjacent 15 years. But alternatively of trusting conscionable the renter, the slope asks: “What happens if this tenant can’t pay?”