Blockworks

Cipher Mining Inc. has signed a 10-year high-performance computing (HPC) colocation agreement with Fluidstack, securing approximately $3 billion in contracted revenue.



The deal, <a href="https://investors.ciphermining.com/news-releases/news-release-details/cipher-mining-signs-168-mw-10-year-ai-hosting-agreement">announced</a> Thursday, positions Cipher as a significant player in the artificial intelligence infrastructure sector. Cipher, traditionally known for its bitcoin mining operations, will deliver 168 megawatts of critical IT load at its Barber Lake site in Colorado City, Texas, with expected completion by September 2026. The facility could expand to 500 MW, supported by 587 acres of surrounding land.



The agreement includes two optional five-year extensions that would raise the total contract value to $7 billion. Cipher expects net operating income margins of 80% to 85%, with project costs estimated at $9 million to $11 million per megawatt.



Google will guarantee $1.4 billion of Fluidstack’s lease obligations to support debt financing and has secured warrants for an approximately 5.4% equity stake in Cipher, subject to adjustments. Cipher will retain full ownership of the project and may tap capital markets to finance its build-out.



Cipher CEO Tyler Page said the partnership reflects growing momentum in HPC development, while Fluidstack co-founder César Maklary emphasized the deal’s role in supporting frontier AI companies. The announcement comes as data center developers race to secure capacity for AI workloads, with Cipher highlighting its 2.4 gigawatt pipeline.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Cipher Mining inks $3B AI hosting deal with Fluidstack

Darren Kleine

The cloud.



It’s a fabric that connects people in ways that were impossible just a few years ago — and we all pay for it.



“All of us pay a ‘cloud tax,’” Greg Osuri says. “We just don&#8217;t realize it.” According to Osuri, 50% of online subscription fees, for example, end up in the pockets of cloud providers.



On the 0xResearch podcast (<a href="https://open.spotify.com/episode/0Yp0lVKgctwNLopL2hvlYh?si=za4xuSQ-TS-SCglvw4_1nQ&amp;nd=1">Spotify</a>/<a href="https://podcasts.apple.com/us/podcast/how-akash-network-is-democratizing-access-to-cloud/id1651683074?i=1000632688427">Apple</a>), the founder and CEO of Overclock Labs and core contributor to Akash says that the cloud “keeps a modern society together.”



Cloud technology brings incredible value by enabling “amazing services for us and storing our data” but users have little to no control over this “invisible layer” of society, he says.



Osuri explains that this lack of individual control results in “uncontrollable costs, selective innovation, sometimes extremely anti-competitive practices and essentially, an oligopoly” that persists behind the scenes.



“That&#8217;s the current state of the cloud — an extremely important layer that is extremely opaque.”



<h2 class="wp-block-heading">A computing power marketplace</h2>



The goal of Akash, a decentralized computing network built on <a href="https://blockworks.co/tag/cosmos">Cosmos</a>, is to “reverse that opacity,” Osuri says. It seeks to create an “open, transparent, permissionless layer [so] that all of us have a degree of ownership and a degree of sovereignty.”



Akash acts as a marketplace that matches users with providers who might otherwise be sitting on idle computing power. Osuri explains that, at its core, it is a “super cloud,” that aggregates computing resources across a range of public and private providers and offers “a federated access point.”



Users get access to providers by leasing services in an “open setting,” he says, typically using a reverse auction mechanism. “You specify your needs and you specify what you&#8217;re willing to pay and providers bid on it.”



One key advantage of Akash, Osuri points out, is that “you have a degree of concentration of computational power where [it] has been traditionally hyper-fragmented.”



As of now, Akash is experiencing “near 100% <a href="https://blockworks.co/news/hive-anticipates-100m-revenue-gpu-computing">utilization for high density GPUs</a>,” Osuri says, “and about 50% utilization cumulative for all resources, all types of GPUs, including the low end GPUs.”&nbsp;



That’s quite a bit higher utilization than pretty much anything else out there in crypto, Osuri says. “Traditionally, crypto has been good at oversupply and less demand. Here, we have the opposite problem: high demand and less supply, or supply that&#8217;s not yet on the market.”



Most demand for computing power right now is for high-end H100 chips and “data center grade homogenous hardware,” Osuri says — equipment that powers <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> apps like ChatGPT.&nbsp;



“Every time you hit a prompt in <a href="https://blockworks.co/news/ai-web3-decentralization">ChatGPT</a>, the time it takes to come back, it requires one H100 per concurrent user for that time,” Osuri explains. “Now, do the math. 100 million users. All of them at the same time.”



“That&#8217;s impossible,” he says. “They have to prioritize the H100 time based on how many concurrent users they want to support and that dictates how fast the application works.”



“More users, less chips means slower. More chips, less users means faster.”



<h2 class="wp-block-heading">Mixing things up</h2>



Osuri mentions one team that is working with a broader mix of chipsets for “heterogeneous” computing power. “You can train on a 4090 and H100 at the same time, leveraging the compute power from each of those chips,” he says.



“There are lots of teams working on it,” he says, adding that at some point in time in the near future, idle home gaming PCs and consoles might even be able to provide computing power to the marketplace.



As of now, Osuri says that most demand for the Akash service comes from machine learning developers looking for on-demand A100, H100 or A6000 chipsets.&nbsp;



“There is no place right now on the cloud where you can get on-demand access to 100’s,” he says. “Amazon, Google, Microsoft do not have A100s or H100s.”



Read more: <a href="https://blockworks.co/news/big-tech-data-depin">Don’t give your life to Big Tech for free</a>



Osuri reiterates that the Akash marketplace operates as a free market, with low demand resources costing around 80% less than they would via traditional services like AWS. On the flip side, high demand services like H100s are more expensive than what one would normally expect to pay.



“We don&#8217;t have any control over price,” he says. “It is a free market that sets the price.”&nbsp;



Osuri explains that Overclock Labs might provide guidance regarding pricing, “but we don&#8217;t dictate what the price should be. And we never will. And that&#8217;s critical for the protocol to function.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG7401400450" width="100%"></iframe>







“We need to learn how to deploy these models on a decentralized network versus a centralized network,” he says. “It&#8217;s always been centralized because <a href="https://blockworks.co/news/ai-should-be-decentralized">that was the only option</a>.”



“For the first time, we actually have a viable decentralized option.”



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0xResearch

Cloud computing is operated by an anti-competitive oligopoly, says Osuri

Brian Nibley

<div id="highlights-block_626a9366c3b21" class="highlights">
 <ul>
 <li>Soluna Computing integrates the computational work of mining into its overall model of computing</li>
 <li>Proof-of-work blockchains such as Bitcoin have the potential to increase the efficiency and sustainability of the world’s electrical infrastructure</li>
 </ul>
 
</div>



The science of crypto mining isn’t about spending computational energy. It&#8217;s about building the most efficient computational infrastructure. When you understand the science through this lens, crypto mining is really an entrepreneurial endeavor that will revolutionize data centers and move the world toward green energy.



As you may have heard, the mining industry has been the subject of much scrutiny for its proof-of-work energy consumption. But mining advocates argue these accusations are not fair, considering that they only account for <a href="https://bitcoinminingcouncil.com/wp-content/uploads/2021/10/2021.10.19-Q3-BMC-Presentation-Materials-Final.pdf" target="_blank" rel="noreferrer noopener">0.1% of global energy usage</a>. But more importantly, they argue that mining is a paradigm changer. Its protocols incentivise innovations in green energy.&nbsp;&nbsp;



Crypto users, by no means, have escaped similar criticisms. Some have even gone as far as to suggest that they might be <a href="https://www.linkedin.com/posts/freelance-cryptocurrency-writer_fud-buybitcoin-earnbitcoin-activity-6922646884394176512-21gT?utm_source=linkedin_share&amp;utm_medium=member_desktop_web" target="_blank" rel="noreferrer noopener">right-wing extremists</a>.



Fortunately, we had a chance to sit down once more with the team at Soluna Computing to learn more about the realities of mining, minus the incendiary rhetoric.



<h3 class="wp-block-heading">Mining amid data center computing</h3>



Soluna is not a bitcoin mining company per se. Rather, they integrate the computational work of mining into their overall model of computing. Doing so provides benefits to their business endeavors and efforts toward sustainability.



“In our case, [mining is] a fully integrated solution to wasted energy and it&#8217;s really integrated in the sense that it monetizes itself right away. It allows us to pay for all of the infrastructure, electrical cost of buildings, etc., very quickly and then we can reinvest in that facility to put in more general-purpose equipment to go after these other markets,” CEO of Soluna Computing John Belizaire said. “So, mining is a really great catalyzer for the data center business we&#8217;re building. It&#8217;s also a great solution for the green energy problem. That&#8217;s why we invest in it, and we build it.”



John also had some things to say with regard to the factors would-be miners need to consider before setting up shop. There’s more to it than simply buying mining machines and plugging them in:



“So, if you&#8217;re self-miner, there&#8217;s a lot you have to do, you have to figure out how to source your power. Well, we do that by providing a service to the power generation companies. You have to run a multimillion-dollar construction project to build out a facility. You&#8217;ve got to negotiate very large complex relationships with vendors, everything from electrical to contractors, EPCs, and all the way up to the large mining companies that make the computing equipment. And if you&#8217;ve never done that before, it&#8217;s pretty challenging as an entrepreneur to figure that out.”



Mining alone involves bringing together a variety of factors, and as mentioned, mining is not Soluna’s sole endeavor.



<h3 class="wp-block-heading">The challenges of creating disruptive enterprises</h3>



Creating a business of any kind comes with plenty of challenges. But doing so in a brand new, disruptive way brings an added dimension of difficulty.



In response to the question, “What’s it like to start this kind of disruptive business?,” Belizaire used a provocative analogy after noting his 20 years of experience in this area: “The best way to describe it is, we&#8217;re all standing in a room, and we have to say, okay, I&#8217;m going to start pumping nitrogen into this room, and we all have to breath nitrogen from now on, and it&#8217;s the right thing to do. It&#8217;s going to make you stronger, actually, it might kill you, but it&#8217;s the right thing, and you&#8217;re like, what? Why is it good to breathe nitrogen? That&#8217;s what it&#8217;s like introducing a new disruptive technology, you have to convince people to change their whole perspective on the world.”



Doing something disruptive involves forcing a paradigm shift. To this end, a process of “missionary-style education” can be necessary, according to Belizaire. He went on to explain that “you have to help them see how the world is changing and the role that this technology will play in generating opportunities from that change.”



Proper education can result in the necessary paradigm shift, as people come to an understanding that goes beyond the mainstream narratives being pushed. As Belizaire puts it, “It&#8217;s a constant process of education. Many who are critical of bitcoin’s impact on the environment don’t see the bigger role it can play. Computing when housed in flexible data centers can be infrastructure, making it not just a power user, but an architectural resource for the grid. Computing is a better battery.”



In this way, mining can be beneficial for power grids and businesses that conduct other modes of computing. Far from a simple waste of energy, proof-of-work blockchains such as Bitcoin have the potential to increase the efficiency and sustainability of the world’s electrical infrastructure.



Check out Soluna’s <a href="https://www.subscribepage.com/cleanintegration" target="_blank" rel="noreferrer noopener">newsletter for</a> more insights into the acceleration of renewable energy through crypto mining.



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This content is sponsored by&nbsp;<a href="https://www.solunacomputing.com" target="_blank" rel="noreferrer noopener">Soluna Computing</a>.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



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