Google Secures 5.4% Stake in Cipher Mining, Expands into AI

• Google secures 5.4% stake in Cipher Mining, boosting its presence in AI and crypto.
• A $1.4B guarantee strengthens Google’s dominance in blockchain and AI infrastructure.
• The convergence of AI and blockchain under Google could centralize industry resources.

Marking an innovative step, Google has secured a 5.4% stake in Cipher Mining as part of a $3 billion deal with Fluidstack. In exchange for its stake, Google guarantees $1.4 billion of Fluidstack’s obligations to Cipher. This deal signals a growing trend of Big Tech companies expanding into the decentralized world of blockchain and AI infrastructure.

Cipher Mining, a leading Bitcoin mining company, will supply 168 megawatts of computing power to Fluidstack at its Barber Lake site in Colorado City, Texas. The site is capable of growing to 500 MW, making it a bet on HPC. The transaction is a significant step for Google to increase its presence in the burgeoning blockchain and artificial intelligence (AI) sectors.

Shifting Stance of Mining Firms

Under the deal with Cipher Mining, Google will purchase warrants for about 24 million shares of Cipher, which gives Google a holding of approximately 5.4% in the company. Cipher CEO Tyler Page, stated that the move is a “significant milestone” in Cipher’s expansion in HPC. He further added that AI and blockchain are set to become increasingly more important industries.

While the deal brings Google into the crypto mining sector, it also highlights a shift toward centralization. Notably, blockchain and crypto mining, which are traditionally decentralized, could see their dynamics shift with tech giants like Google.

The growing enthusiasm for AI and blockchain is also visible in other industries. Companies like CleanSpark are also making the pivot to AI infrastructure, as it raised a $100 million in funding to build out an artificial intelligence lab. This change highlights that mining companies are not concentrating solely on blockchain, but diversifying their business into AI to be competitive.

Cipher Mining Plans $800M Note Offering

On the other hand, Cipher Mining announced a proposed private offering of $800 million in convertible senior notes due October 2031. The notes won’t bear interest and will be convertible under specific conditions into shares, cash, or a combination of both. 

Cipher also plans to grant initial purchasers a 13-day option to buy up to an additional $120 million in notes. The proceeds from this offering are intended for several strategic purposes, including funding the Barber Lake project build, supporting its broader 2.4 GW HPC pipeline, and expanding other site development efforts.

As of press time, Cipher Mining’s stock (CIFR) is now $11.66 per share with its market capitalization at $5.6 billion. Despite market fluctuations, the company’s 192% year-to-date growth highlights the growing potential of businesses at the intersection of AI and crypto.

Related: Google Cloud Unveils GCUL, L1 Blockchain for Institutional Finance

Reportedly, this is Google’s second partnership with a mining company. In late August, it took a 14% stake in Bitcoin mining company TeraWulf. The deal with TeraWulf featured a backstop that saw Google guarantee Fluidstack’s obligations in exchange for an equity stake in the mining company. With this approach, Google is making inroads with not just the blockchain market but also AI. With this, Google could open up more opportunities in tech, and following its entry into blockchain, the distinction between centralized control and decentralized infrastructure may become less clear. 

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