Dallas-based Applied Blockchain Inc. is entering the crypto hosting business.
Last week, the company closed a $32.5 million private placement led by Bitmain, a producer of blockchain and AI application products. The proceeds will help Applied Blockchain acquire land, construct facilities, procure components, and other project costs related to the hosting business. The facility’s North American site was not disclosed.
With the deal, Bitmain joins SparkPool and GMR as strategic partners of Applied Blockchain, which has secured long-term hosting agreements with both Bitmain and GMR.
Mining crackdown in China
“The crackdown on mining operations in China created a unique opportunity for us to launch our own hosting operations with our current partners as well as add another blue-chip partner,” said Wes Cummins, Applied Blockchain’s CEO and chairman, in a statement.
The hosting facilities, once constructed, will house up to 500 megawatts of power and enable the Applied Blockchain to “generate a stable cash flow stream through long-term hosting agreements,” the company said in a news release. It can also lower the cost of power for its own mining operations.
Irene Gao, Antminer BD Director, NCSA Region at Bitmain sees the partnership moving the industry forward. “The successful private placement secures the project’s development to establish a large-scale data center in North America,” Gao says.
The new venture complements Applied Blockchain’s existing mining business and services “a real and growing demand for hosting capacity,” Cummins says, adding that the deal leverages also domestic resources and talent.
Cummins notes that the company has “assembled an impressive team of specialists including engineers and contractors that have experience in procurement and building out hosting facilities.” He emphasizes that they are experts, not only in their respective fields, but who also understand the company’s vision and focus.
The company is entering a long-term agreement with a utility and will strategically locate hosting operations in the Upper Midwest, according to Cummins. It’s a location that has “an abundance of energy production and ample real estate available at an attractive valuation for additional expansion.”
Cummins says the company expects the first 50 megawatts of capacity to be operational before year-end, ultimately scaling up to 500 megawatts, “making Applied one of the largest hosting providers in the world.”
“This industry is young and evolving rapidly, and as such, it’s important that a company can position itself to react quickly to capture opportunities like this one,” says Cummins.
Quincy Preston contributed to this report.
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