Hut 8 Secures $7B AI Data Center Lease, Spurred by Google Guarantee

Hut 8, a former Bitcoin miner, has secured a $7 billion, 15-year lease for an artificial intelligence (AI) data center in Louisiana, marking one of the largest infrastructure deals between a crypto-native firm and a hyperscaler. The agreement involves Fluidstack leasing 245 megawatts of IT capacity at Hut 8's River Bend campus, backed by a financial guarantee from Alphabet subsidiary Google. The project, supported by J.P. Morgan and Goldman Sachs, aims to reduce upfront capital costs.

The deal represents a strategic pivot for Hut 8 from cryptocurrency mining to AI infrastructure, aligning with growing demand for high-performance computing in the AI sector. The lease is expected to generate $6.9 billion in net operating income over 15 years, with potential to reach $17.7 billion if three five-year renewal options are exercised. This shift reflects broader trends among crypto firms repurposing their energy and real estate assets to accommodate AI developers' surging power needs.

Construction of the first data hall is slated for completion in Q2 2027, with additional facilities following through the remainder of that year. The project will create hundreds of jobs during construction and dozens of permanent positions in the region. Entergy, Jacobs, and Vertiv are also involved in the project, handling utility, engineering, and infrastructure needs.

Strategic Implications for Hut 8

The lease agreement underscores Hut 8's transition into a broader energy infrastructure platform, leveraging its access to high-voltage power and cooling systems. CEO Asher Genoot emphasized the strength of the company's "power-first, innovation-driven" development model, validated by partners like Google, J.P. Morgan, and Entergy. This deal also aligns with Hut 8's broader AI strategy, which began with the launch of its GPU-as-a-Service subsidiary, Highrise AI, in September 2024 according to press release.

The project will be funded through an 85% loan-to-cost structure, significantly reducing Hut 8's required capital investment. This approach de-risks the project's financial execution, allowing the company to focus on construction and operations while institutional partners manage liquidity and credit concerns. Google's role as a financial backstop adds an additional layer of security, covering payments if Fluidstack defaults.

Broader Industry Trends and Market Response

The deal reflects a growing trend in the crypto and data center sectors, where firms are repurposing assets for AI infrastructure. Competitors such as Core Scientific and Galaxy Digital have also secured major AI data center deals, highlighting the sector's rapid expansion. Investors appear to be recognizing the shift, with Hut 8's shares rising nearly 21% in premarket trading following the announcement.

The project also ties into broader energy and infrastructure trends. Morgan Stanley analysts predict that data center demand will drive a 3% annual growth in U.S. electricity consumption through 2030, with AI infrastructure accounting for a significant portion of that increase. Clean tech and power utilities are expected to benefit from this demand, with solar, gas, and battery storage seeing expanded deployment .

Risks and Uncertainties

Despite the optimism, the project is not without risks. Hut 8 faces potential delays, cost overruns, and supply chain constraints during construction. Regulatory and permitting hurdles could also slow development. Additionally, the company remains exposed to market volatility, with fluctuations in equity and credit markets potentially impacting its ability to secure additional financing . However, the institutional-grade execution model and Google's financial backstop are designed to mitigate these uncertainties .

For investors, the lease represents a long-duration revenue stream with relatively low exposure to the volatility of the crypto market. With AI demand expected to grow rapidly, Hut 8's shift into data center infrastructure positions it to benefit from the sector's expansion while leveraging its existing energy and real estate assets .