Hyperscale Data halts Michigan bitcoin mining for $1.2B AI deal

Hyperscale Data switched off its bitcoin miners at Dowagiac, Michigan, on Sept. 1 and is converting the site to an AI co-location contract that could generate more than $1.2 billion in revenue.

"The immediate shutdown of the bitcoin mining operations allows our team to focus the Facility's power, infrastructure and resources in preparing the Facility for its usage by our Customer," Chief Executive Officer William Horne said.

Through subsidiary Alliance Cloud Services, the NYSE American-listed company signed a master services agreement with a California-based neocloud provider covering an initial 20 megawatts of AI compute over a 10-year term with two five-year extension options. If the customer exercises the full maximum term, the contract is expected to exceed $1.2 billion; an option for an additional 32 MW could push the total past $3 billion. The Dowagiac campus spans 617,000 square feet across 34.5 acres with roughly 340 MW of potential power capacity, so the current deal taps only about 20 percent of the site.

The pivot trades a volatile, commodity-driven mining stream for a decade-long contracted one, and it removes another slice of global hash rate as operators redirect power toward AI workloads. Hyperscale expects to book additional gains from selling the idled mining servers and plans to divest Ault Capital Group in 2027, leaving it focused on data center operations and digital asset holdings.

Why the math favors AI colocation

Horne framed the decision as a profitability call, pointing to AI colocation as a higher-margin use of the company's power and physical infrastructure. Discussions began as early as June 2026, months before the switch was flipped. He also cited VanEck's head of digital asset research, who said earlier this year that bitcoin miners able to repurpose sites for AI were "sitting on a gold mine" because they traded at a steep discount to traditional data center operators.

Hyperscale is not abandoning bitcoin entirely. It said it has retained bitcoin in its treasury and will selectively sell holdings to fund the Dowagiac buildout. Recent sales of about 65 BTC netted roughly $5.1 million, an average near $78,500 per coin, with the proceeds recycled into AI infrastructure. The company holds approximately 215 BTC worth about $16.7 million.

A shrinking slice of global hash rate

The shutdown extends a trend in which miners redirect power contracts toward AI workloads as mining economics tighten. Hyperscale's chairman, Milton "Todd" Ault III, separately told stockholders the company is undervalued, citing preliminary 2027 guidance of $300 million to $350 million in consolidated revenue and $60 million to $80 million in adjusted EBITDA, and said he intends to buy shares when legally permitted.

For the broader mining sector, each conversion of this kind trims the hash rate underpinning network security while steering cheap power toward AI demand — a trade-off reshaping how miners value their sites. Hyperscale's remaining upside rests on whether the customer exercises the 32 MW option and whether the roughly 80 percent of uncommitted capacity finds tenants.

This article is for informational purposes only and does not constitute investment advice.