Bitcoin miner Hut 8 has secured a $150 million investment from Coatue Management to expand its AI infrastructure, signaling a major step forward in merging AI capabilities with bitcoin mining.
Bitcoin miner Hut 8 has secured a major investment from Coatue Management, amounting to $150 million, to expand its artificial intelligence (AI) infrastructure capabilities. The investment was announced on June 24, 2024, as reported by CoinDesk and confirmed through a press release by Hut 8.
We are incredibly excited to announce a $150 million strategic investment from @coatuemgmt to partner in building a next generation AI infrastructure platform. This investment will accelerate growth in our data center portfolio and provides access to Coatue's extensive network of… pic.twitter.com/BYvpHx50PS
— Hut 8 (@Hut8Corp) June 24, 2024
The financial boost came in the form of convertible notes with an 8% annual interest rate and a conversion rate of $16.395 per share. Following the announcement, Hut 8's shares saw a nearly 4% increase in Monday morning trading, outperforming many of its peers.
This investment has also influenced the broader bitcoin mining-related data center market. Companies such as Soluna Holdings (SLNH) and Applied Digital (APLD) experienced surges in their stock prices, with Soluna's shares jumping nearly 17% and Applied Digital's by about 10%.
Coatue's move underscores a growing trend where AI and high-performance computing (HPC) firms seek partnerships with bitcoin miners, who possess the necessary computing capacity and established energy supply arrangements. JPMorgan analysts have noted that the demand for power by large-scale data centers and AI companies could lead to a new wave of mergers and acquisitions within the bitcoin mining industry.
Interestingly, Coatue Management is also an investor in CoreWeave, a cloud-computing firm that has shown interest in acquiring Core Scientific, a competitor to Hut 8. Despite Core Scientific's rejection of CoreWeave's $1 billion takeover bid, the aggressive moves by AI firms into the bitcoin mining space highlight the intense competition for resources.
Hut 8 emphasized the growing demand for AI compute capacity and the challenges faced by traditional data center operators in meeting this demand due to power constraints and the need for significant upgrades. The company, through its partnership with Coatue, aims to leverage its proven expertise in developing and operating complex energy infrastructure to become a leader in the AI infrastructure market.
Philippe Laffont, Founder and Portfolio Manager of Coatue, expressed confidence in Hut 8's capabilities to unlock significant growth across the AI ecosystem. "We are committed to supporting innovators advancing AI and believe that compute capacity is crucial to unlocking significant growth across the ecosystem," said Laffont. "We believe their differentiated energy strategy and track record of fast, cost-efficient development will continue to drive competitive advantage as they execute on these opportunities," commented Robert Yin, Partner at Coatue.
Asher Genoot, Chief Executive Officer of Hut 8, welcomed the partnership with Coatue, highlighting the firm's deep expertise and successful investment history in the AI space. Genoot believes this strategic move will open up considerable opportunities for Hut 8 as it embarks on a new phase of growth.
