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Dallas-based Applied Blockchain Inc. is throwing its hat in the cryptocurrency hosting arena after raising $32.5 million through a private stock sale.
The company, which specializes in crypto mining and infrastructure, will use the money to buy land and build and equip the facilities. Once completed, the facilities will house up to 500 megawatts of power.
Blockchain product producer Bitmain, headquartered in Beijing, led the investment and will join SparkPool and GMR as strategic partners for the company. It will help in the operation and development of Applied Blockchain’s businesses and other initiatives.
“This industry is young and evolving rapidly, and as such it is important that a company can position itself to react quickly to capture opportunities like this one,” said Wes Cummins, Applied Blockchain chief executive officer and chairman.
The company has raised nearly $50 million in funding this year after securing $16.5 million in April to start its mining operations. The latest investment will help the company move away from relying on third-party hosts for crypto mining and create opportunities for stable capital growth.
Applied Blockchain’s new facilities will host some of the company’s own mining operations, as well as mining operations for others. Large-scale crypto mining requires ample space and equipment to function as efficiently and profitably as possible, making host centers necessary for companies looking to mine.
“The mining business is, right now, very profitable, but it can be extremely volatile,” Cummins said. “This hosting business lets us have locked-in long-term contracts with customers and then we provide a service and make a profit from that. It’ll be much less volatile than our mining business.”
The company has already secured long-term hosting agreements with Bitmain and GMR.
Having its own hosting facilities, which will be located in the Midwest, will also lower the cost of Applied Blockchain’s mining business, Cummins said. He estimates that around 20 to 30 jobs will be created for every 100 megawatts of power, meaning a total of 150 jobs could result from the project.
“The successful private placement secures the project’s development to establish a large-scale data center in North America,” said Irene Gao, Antminer BD director of Bitmain’s North, Central and South America region. “We are confident that our partnership with Applied Blockchain will provide professional mining services to move the industry forward.”
The company didn’t originally plan on building a hosting business in the U.S., but its hand was forced after China cracked down on crypto mining with concerns over its environmental impact. According to a study in the scientific journal Nature Communications, bitcoin mining in China before the crackdown was projected to produce more than 130 million metric tons of carbon emissions by 2024.
Applied Blockchain’s new facilities will focus on renewable energy use.
“We found a state that has an abundance of wind power generation and they export a lot of power,” Cummins said. The specific location of the hosting sites has not been revealed. Iowa, Oklahoma, Kansas and Illinois are among the top states for electricity generation from wind.
The U.S. is quickly becoming a hub for crypto mining, accounting for about 17% of the world’s bitcoin miners as of 2021, CNBC reported. Core Scientific, the largest blockchain host and digital asset miner in North America, announced last week it would merge with Power & Digital Infrastructure Acquisition Corp., creating a company with a combined value of $4.3 billion.
Applied Blockchain expects its first 50 megawatts of capacity to be operational by the end of the year. Once the hosting business scales to all 500 megawatts, the company will be one of the largest hosting providers in the world.
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