Crusoe Energy sells Bitcoin mining units to NYDIG to focus on AI

Seven years ago, the founders of Crusoe Energy set out to solve a dirty problem. Their mission was to burn out and remove the gas by oil producers, convert it into electricity, and use that power to use me. Bitcoin. That turned into a good business.

But then the artificial intelligence boom came, and Crusoe co-founders Chase Lochmiller and Cully Cavness began to see much bigger opportunities.

The company says it could be one of the most powerful clusters of the world’s most powerful graphics processing units (GPUs) as its focus on AI, making Crusoe slip out of Bitcoin mining. The company said Tuesday it had signed an agreement to offload its operations with Nydig, a power and financial services company that focuses solely on Bitcoin. The terms of the transaction have not been disclosed.

NYDIG will assume approximately 135 Crusoe employees and continue to operate the business under new ownership. Crusoe will become the leading equity holder for Combined Entity. This is second only to Stone Ridge, Nydig’s parent company.

The deal includes Crusoe’s technology to capture and convert flare gas from oil fields, with over 425 modular data centers spreading across seven US states and parts of Argentina. According to Crusoe, the business accounts for around 1% of the world’s Bitcoin mining, valued at $2.8 billion in the second half of last year. NYDIG is also private and valued at around $7 billion.

Lochmiller told CNBC that Crusoe began investing in AI infrastructure at the earliest times, and that business is becoming increasingly central.

“We’ve actually been building this AI business since the company started,” he said. “But over time, the business has grown into a truly meaningful part of our focus, our capital allocation, our growth.”

This is an area of ​​interest for large investors, mainly due to the rising demand for AI processors. nvidia. CoreWeave, which also started with Crypto before pivoting to AI, is also set to debut on the stock market this week, and could well exceed $25 billion.

CoreWeave provides cloud-based NVIDIA processors to businesses including Meta and Microsoft, and last year reported $1.92 billion with revenue growth of over 700%.

Crusoe has noticed that Bitcoin and AI businesses have fundamentally different requirements, including uptime, scalability, and energy procurement.

From the Abilene, Texas grassland, Crusoe plans to launch a hyperscale data center campus with a capacity of 206 megawatts, expected to scale to 1.2 gigawatts by mid-2026. Crusoe says it can set a speed record for Greenfield Data Center development. Construction began in June.

Crusoe expands its cloud platform to provide on-demand access to high-performance GPUs, and is already running AI workloads in Iceland with geothermal and hydroelectric power.

“AI business – it’s become a large part of our revenue,” Cavness, the company’s operations chief, told CNBC. “We see a huge opportunity right in front of us, and we have a huge advantage from what we have already announced and a big head start.

Crusoe’s early paper was that computing should go to places with low power and richness, not the best internet connection. It made it an outlier in the industry, but its approach attracted the attention of large energy companies. We have established partnerships with Devon Energy, Equinor and And Exxon Mobil.

Nydig and Crusoe have worked together for many years on the flare gas project and hosting each other’s equipment. Lochmiller first met Josh Burandt of Nydig, the company’s head of strategic investment. Met in person at the Bitcoin 2021 conference in Miami, he described it as “probably the biggest bitcoin conference ever.”

“Bitcoin mining is filled with many colorful characters, making it more reliable and reliable than others,” says Lochmiller. “They always stood out to me as someone I really wanted to do business,” attributed to some of the “best ethics” and “standards of top quality.”

Regarding the acquisition of Nydig, Lochmiller said, “In the end we decided that our business would be more together than separate.”