Bitcoin Miners' Power Contracts and AI Infrastructure Expansion

Bitcoin miners hold electricity connections that could be worth far more in AI development, but customer, builder and lender contracts will determine what shareholders ultimately receive. Mining ASICs offer little value for AI training. Converting a mining site requires substantial construction, denser cooling, advanced networking, financing and committed customers. Core Scientific runs a hosting business that provides facilities and supporting infrastructure for customer computing equipment. SWI Group plans to sell computing capacity directly, a model that requires GPU investment and exposes SWI to equipment utilization and obsolescence risk. SWI initially invested $500 million for about 38.3% of Genesis Digital Assets equity and rights to 77.2% of the value of certain preferred-share liquidation preferences. SWI gained control of the Bitcoin miner earlier this year. On October 12, SWI announced an €800 million capital increase to expand AI infrastructure. It reported first-half profit of €631.6 million, mainly from value recognized on the Genesis investment. SWI said in June that Genesis properties spanned 15 facilities with more than 1.3 GW of connections that were energized or approved. Its September half-year results described about 1.2 GW of secured connections. SWI has not reconciled the figures, broken out usable capacity by site, identified Genesis sites for GPUs, disclosed economically convertible capacity or revenue timing, or allocated a disclosed fundraising amount to Genesis. SWI Compute announced about $1 billion of NVIDIA system orders and initial customers on October 26, though some customer contracts remained unfinished. SWI also announced an infrastructure partnership covering 13 MW in Spain. Core Scientific recorded a first-quarter impairment of $266.5 million in its second-quarter filing, including $151.6 million for mining machines and $114.9 million for mining infrastructure. Its mining business has posted gross losses as Bitcoin prices, mining revenue per unit of computing power and used-equipment values weakened. Its AI hosting business has generated a positive gross margin. Texas regulators approved the ERCOT Batch Zero review procedure in June. Texas also ordered an audit covering about 474 GW of proposed connections for large electricity users. Power already available at a site, approved future capacity and a queue position represent different stages of readiness for AI operations. At a power usage effectiveness of 1.25, a 100 MW electricity supply would allocate about 80 MW to computing and 20 MW to supporting operations. Nvidia GB300 NVL72 specifications describe liquid-cooled racks with 72 GPUs and up to 142 kilowatts of consumption per rack. A September mining report from CoinShares estimated AI conversion costs at roughly $8 million to $15 million per MW, versus $700,000 to $1 million per MW for conventional mining infrastructure. A review of more than $100 billion of AI agreements found about 550 MW generating bills against contracted capacity exceeding 4 GW. HIVE announced a $350 million AI contract that required an estimated $185 million hardware investment before most associated revenue could materialize. Core Scientific reported second-quarter colocation revenue of $136.7 million. It had 437 MW generating customer bills by mid-July. The quarterly filing identified $98.8 million of license fees and $35.1 million of reimbursed electricity costs, which carried matching expenses; other services supplied the remainder. April disclosures set the initial base license fee at most CoreWeave locations at $100 per kilowatt monthly, with annual increases of 3.5% and utility expenses payable by CoreWeave. CoreWeave funds or reimburses approved construction expenses and can receive future fee credits of up to $1.5 million per MW for specified landlord-owned equipment, potentially halving relevant monthly payments. At the initial rate, a 1 MW allocation would yield $100,000 monthly before a 50% credit, cutting cash payments to $50,000 and recovering $1.5 million over 30 months before increases and other provisions. The Core Scientific filing explains that prepayments, construction credits and straight-line accounting can separate recognized revenue from cash receipts under a 12-year agreement. The agreements specify daily delay credits of $20,000 and subsequently $30,000 under particular circumstances, while certain delays allow CoreWeave to cancel an order. One ground lease remains dependent on the associated electricity agreement staying in effect. April disclosures describe an uncapped guarantee from Core Scientific to complete specified financed projects if available construction funding falls short. Core Scientific recorded first-half 2026 capital expenditure of $954.2 million, including $180.9 million funded by CoreWeave. A financing subsidiary issued $3.3 billion of secured notes in May at 7.75%, backed by specified datacenter assets and rights, implying about $255.8 million in annual coupons before principal repayments. Principal installments are scheduled to start after the applicable rent commencement and exhaustion of tenant credits, but interest remains payable while credits are used. Reuters reported on October 22 that short sellers had about $6 billion in unrealized October gains across five AI infrastructure companies, with CoreWeave and Core Scientific attracting substantial short interest. Reuters reported on October 26 that CoreWeave fell 4.5% and Core Scientific fell 1.7% before regular trading after Elon Musk warned about lenders being reluctant to finance specialized AI cloud providers. Cipher recently raised $850 million, illustrating another funding route for miners making the transition, alongside potential additional debt obligations or shareholder dilution.