The explosive growth of AI has made the data center industry one of the most attractive areas for investment. As The Register reports, NVIDIA, together with other investors, intends to invest $160 million in Texas data center operator Applied Digital, formerly known as Applied Blockchain. This is not the first notable player in the mining data center market to switch to AI and receive support from NVIDIA.
Applied Digital shares are traded on Nasdaq, but according to Silicon Angle, in this case the company raised funding through the so-called. “private placement”, which provides for the direct transfer of shares to investors without the intermediary of the stock exchange. In this case, pre-approved companies usually participate in the transaction. Applied Digital issued 49.38 million shares at $3.24 each.
Applied Digital is engaged in the construction of data centers with LSS for high-density computing. The company also rents accelerator clusters, in particular, NVIDIA H200 and A40. The cloud division is a fairly significant part of Applied Digital’s business. In the fiscal year ended March 31, it accounted for $29 million of $165.6 million in total revenue. Over the past four months, four new AI clusters have been put into operation, and two more will be launched in the coming months.
Image source: Applied Digital
In August, Applied Digital announced it was building 400 MW of capacity for an unnamed US cloud operator. We are talking about a 100-MW campus under construction in Allendale (North Dakota) and two other facilities. According to media reports, $160 million of new investment will be used to create the basis for debt financing rounds, which will already be spent on expanding the data center campus in North Dakota and the company’s cloud initiatives. Interestingly, it is in this state that two unknown companies are ready to spend $250 billion on giant AI data centers.
Since advanced NVIDIA accelerators cost about $30-40 thousand each, some operators are forced to apply for large loans. Thus, in July, the operator CyrusOne borrowed $7.9 billion to purchase the latest accelerators, not counting the $1.8 billion raised in the spring. CoreWeave raised $1.1 billion in May and a few weeks later convinced investors to lend another $7.5 billion. Lambda Labs started the year with a $320 million funding round, raised another $500 million in the spring, and now plans to purchase tens of thousands of new accelerators.
In addition to traditional venture investors like BlackRock, Magnetar Capital and Coatue, some of these projects include NVIDIA itself, which previously backed CoreWeave, which famously borrowed $2.3 billion against accelerators to buy even more accelerators. NVIDIA’s motivation is obvious – the company will be able to sell accelerators as long as there is demand for them, and demand can only be ensured by the construction of new data centers.