AIDC, computing power leasing, and cloud: The "tripartite theory" of AI transformation in crypto mining farms

Summary

**The “AI transformation” of crypto mining farms is not a slogan—it is unfolding in three identifiable stages: **Stage 1 is “Colocation,” where power, land, and facilities are directly leased to AI computing clients; Stage 2 is “Bare Metal Rental,” where the operator leases its own GPU servers to cloud customers in a “bare metal” form; Stage 3 is “Neocloud,” where GPU hardware is hosted as a cloud service with container orchestration, scheduling, and enterprise services. The differences between the three stages are not about the concept itself, but about the vertical extension of production factors—every additional layer requires the mining farm to fill in a set of critical capabilities. At the same time, the contract value per MW jumps sharply from about $1.78 million/MW/year (Stage 1) to $9.70–$11.00 million/MW/year or more (Stages 2 and 3). The value leap is extremely steep.

The five-year, $3.4 billion AI cloud contract signed by IREN and NVIDIA on May 7, 2026 signifies that a crypto mining farm company directly provides hosted GPU cloud services to a leading semiconductor manufacturer group, marking the crypto mining farms’ transformation as officially having crossed into Stage 3. In parallel, NVIDIA also secured the right to purchase up to 30 million shares of IREN common stock at $70 per share over five years (corresponding to an equity consideration value capped at approximately $2.1 billion). The two companies further announced a strategic cooperation framework for AI infrastructure with a scale reach of up to 5GW. The “long-term order + strategic share option” structure directly binds operators’ interests with the GPU supply chain, with no precedent within the sector.

We believe this deal will further drive a reappraisal of valuations across the sector, but the divergence will be even more pronounced: operators that have substantial already-grid-connected power and are able to “thicken” all three layers—electricity, machinery, and cloud—will secure higher contract density and longer contract durations. Currently, the sector shows a clear three-tier hierarchy: the first tier is the “stronger get stronger” group of five companies that have already signed extremely large cloud vendor contracts—or orders at a corresponding level—namely IREN, Hut 8, Applied Digital, Cipher, and TeraWulf; the second tier consists of companies that only have customers from new clouds or chip vendors—Galaxy Digital, Core Scientific, and Riot; the third tier includes companies that have not yet signed orders, but have North American AI power generation capacity and/or experience running self-operated GPU cloud services—Bitdeer, Marathon, CleanSpark, Bitfarms, and Hive.

Investment advice: We recommend focusing on the “Three Golden Flowers”—the No. 1, IREN (IREN.O), is the full-stack leader across all three stages. It holds a $9.7 billion Microsoft bare metal order (including a $1.94 billion prepayment) and a $3.4 billion Neocloud contract with NVIDIA, and it further completes the software control plane through the acquisition of Mirantis; the No. 2, Hut 8 (HUT.O), has the largest “Triple Net, Pay-As-You-Go” orders in the sector (totaling $9.8 billion, unit price $1.85+ million/MW/year), with the highest contract quality and cash flow certainty; the potential target is Bitdeer (BTDR.O), which owns a self-operated GPU cloud and has substantial AI power capacity in the United States.

Risk warnings: High concentration risk of counterparties and customers; risk of tighter power grid connection and regulatory cycles; risk that GPU depreciation and hardware generations will iterate too quickly; risk that crypto price volatility will disrupt cash flow from the original core business.

1. Event: IREN wins NVIDIA’s $3.4 billion AI cloud order

On May 7, 2026, IREN Limited (stock code: IREN.O, hereinafter “IREN”) announced that it has signed a managed GPU cloud services contract with NVIDIA (NVIDIA Corporation, stock code: NVDA.O) with a term of 5 years and a total contract value of approximately $3.4 billion. The contract will be delivered within IREN’s existing data center located in the Childress campus in Texas, United States, with space for about 60MW of critical IT load. It will use NVIDIA Blackwell air-cooled systems. The orchestration and cluster management software will be provided by IREN together with Mirantis, a Kubernetes software company that signed an acquisition agreement recently.

In parallel, NVIDIA obtained the right to purchase up to 30 million shares of IREN common stock at $70 per share over five years, corresponding to an equity consideration value cap of approximately $2.1 billion. The two companies also announced a strategic cooperation framework for AI infrastructure with a scale reach of up to 5GW.

We believe there are three key implications of this transaction: (1) NVIDIA deeply binds a computing power supplier with a crypto mining background in the form of “long-term orders + strategic equity options,” which is equivalent to a dual endorsement of industry creditworthiness and technical recognition; (2) the subject of the contract is “hosted GPU cloud services,” meaning IREN is not only providing a data center or GPU servers, but a complete cloud service with orchestration, scheduling, and operations—namely the “Neocloud” capability commonly referred to in the industry; (3) IREN already signed a 5-year, $9.7 billion GB300 bare metal contract with Microsoft (Microsoft, stock code: MSFT.O) in November 2025, and this $3.4 billion order runs in parallel, showing that the same mining asset can support multiple business models at the same time.

2. Three stages of crypto mining farm transformation

By placing IREN’s two orders (with NVIDIA and Microsoft) back into the sector’s overall evolution sequence, we can extract a “three-step framework” for the transition of crypto mining farms into AI infrastructure. The three stages are not strictly sequential in time—multiple companies roll out in two stages in parallel—but the structure of production factors and the contract value per MW differ very clearly, making them the most direct intuitive coordinates for identifying a company’s positioning.

Stage 1 (Colocation)

• Number of signed contracts currently: 15;

• Total critical IT load and total contract value involved in the contracts: 2,941MW and $78.3 billion;

• Average critical IT load per contract: $1.78 million/MW/year;

• Average contract duration: 14 years.

Stage 2 (Bare Metal Rental)

• Number of signed contracts currently: 1;

• Total critical IT load and total contract value involved in the contracts: 200MW and $9.7 billion;

• Average critical IT load per contract: $9.70 million/MW/year;

• Average contract duration: 5 years.

Stage 3 (GPU cloud services / Neocloud)

• Number of signed contracts currently: 1;

• Total critical IT load and total contract value involved in the contracts: 60MW and $3.4 billion;

• Average critical IT load per contract: $11.33 million/MW/year;

• Average contract duration: 5 years.

2.1.1 Services provided by mining farms in this stage

In colocation, the mining farm leases its own data center’s critical IT load capacity (MW) to customers in long-term leases; customers bring their own GPU servers and operate their own AI clusters. The mining farm’s product is essentially a “power-space combination” that is already grid-connected, already built, and retrofitted according to AI standards.

• Capacity and grid interconnection (grid interconnection): the scarcest part in the current expansion of data centers.

• Land: large contiguous plots near main power grid nodes and close to fiber trunk lines;

• Facilities and power backbone: part of the original mining farm facilities can be reused as outer shells and medium-voltage distribution, but large-scale renovations are required.

Bare metal rental means the mining farm is no longer just renting “space + power.” Instead, it integrates GPU servers into the data center and sells full racks or entire clusters to cloud customers based on reserved capacity. It interfaces mainly with hyperscalers or large enterprise-level AI labs. The customer’s workloads run directly on physical servers, but the mining farm does not provide a software stack above the operating system. Its main deliverables are bare-metal attributes such as compute performance, power availability, networking, and operations.

2.2.3 Additional production factors the mining farm must obtain to provide this service: GPU computing power

• All elements in Stage 2: grid-connected power capacity, land, facilities, and GPU servers.

3.1.1 Ranking basis: customer tier, contract quality, and amount of financial backing

Within the first tier, we use the following tiered ranking logic: (1) business stage priority—cloud orders (Stage 3 Neocloud) > bare metal (Stage 2) > colocation (Stage 1); (2) contract quality priority—among colocation contracts, “Triple Net, Pay-As-You-Go” > “large prepayments” > “none of the above terms”; (3) customer tier—direct signing with hyperscalers (such as Microsoft, Amazon, NVIDIA) > new cloud customers supported by hyperscalers > new cloud customers without hyperscaler support; (4) the scale of hyperscaler financial backing. Based on the above dimensions, the order of the first tier from high to low is: IREN > HUT > APLD > CIFR > WULF.

IREN (IREN.O): Wins NVIDIA’s $3.4 billion AI cloud order (5-year term, about 60MW, unit price $11.33 million/MW/year), making it one of the few companies in the sector that has already entered the Stage 3 Neocloud business.

At the same time, the company signed a 5-year, $9.7 billion GB300 bare metal contract with Microsoft (200MW, unit price $9.70 million/MW/year), including a 20% prepayment (approximately $1.94 billion), which provides very strong cash flow safety.

The Mirantis acquisition announced in the same week as this order is a key puzzle piece for IREN’s entry into the Neocloud business. Mirantis is NVIDIA’s founding ISV partner of the “AI Cloud Ready Initiative.” Its k0rdent AI platform can unify management of AI infrastructure across bare metal, virtual machine, and Kubernetes environments, and it also integrates the original Docker Enterprise business, covering more than 1,500 enterprise customers.

Through this acquisition, IREN will obtain the “software control plane” capability that it previously lacked as a bare metal/GPU cloud provider, directly targeting the full-stack Neocloud model offered by Nebius and CoreWeave.

Hut 8 (HUT.O): Has the largest “Triple Net” (NNN: Net 1 = Property Taxes (property taxes), Net 2 = Building Insurance (building insurance), Net 3 = Common Area Maintenance (CAM) (public area maintenance fees)) orders in the sector—signed with Fluidstack (Anthropic as the end user, and funded by Google) for 245MW and a $7.0 billion contract (December 2025, 15-year term, unit price $1.905 million/MW/year), plus a new contract signed on May 7, 2026 with a “certain investment-grade customer” for 352MW and $9.8 billion (15-year term, unit price $1.856 million/MW/year, pay-as-you-go). Total: 597MW and $16.8 billion.

“Triple Net, Pay-As-You-Go” is currently the highest quality contract form in the sector: property taxes, building insurance, public-area maintenance fees, and other items are borne by the tenant, and regardless of actual usage, the tenant must pay the full contract amount. This provides the highest cash flow certainty for operators and also enables the most favorable terms for leveraged financing.

Applied Digital (APLD.O): The only company in the sector that currently holds long-term contracts with two “investment-grade hyperscalers” at the same time—one with “a certain U.S. investment-grade hyperscaler A” (200MW, $5.0 billion, 15-year term, unit price $1.667 million/MW/year, signed October 2025) and another with “a certain U.S. investment-grade hyperscaler B” (300MW, $7.5 billion, 15-year term, signed April 2026). The combined contract value for the related projects totals $12.5 billion.

The credit tier of the “investment-grade hyperscaler” counterparties for these two orders is significantly higher than that of new-cloud customers such as Fluidstack or CoreWeave. This is the core differentiating factor that sets APLD apart from other companies in the first tier.

In addition, APLD has also signed a $7.0 billion contract for 250MW with CoreWeave.

The company has already signed total critical IT load of 750MW, the highest in the sector.

Cipher Mining (CIFR.O): Signed a 300MW, $5.5 billion, 15-year contract with Amazon cloud (Amazon Web Services) (November 2025, unit price $1.222 million/MW/year, to go live in July 2026, and rent payments start in August). This is the first and only order in the sector directly signed by a “Big Seven”-level public cloud provider.

The company also signed a 168MW, $3.8 billion, 10-year contract with Fluidstack, with Google providing $1.73 billion in lease backing.

Cipher’s total signed critical IT load is 468MW.

TeraWulf (WULF.O): Signed two contracts with Fluidstack, totaling 368MW and $13.2 billion, and both are supported by long-term lease arrangements provided by Google (total $3.1 billion).

In addition to that, combining the 70MW/$1.0 billion contract signed in 2024 with Core42, TeraWulf’s total signed critical IT load is 438MW, and the total contract value is $14.2 billion.

Within the first tier, WULF’s counterparties are entirely composed of new-cloud Fluidstack and Core42, with no direct hyperscaler counterparties. Therefore, it ranks at the bottom.

3.2.1 Ranking basis: order amount and execution progress

Galaxy Digital (GLXY.O): Signed two contracts with CoreWeave, totaling 393MW and $13.5 billion, with the second-highest total contract value in the second tier of the sector.

Core Scientific (CORZ.O): Signed two contracts with CoreWeave, totaling 270MW and $4.725 billion, making it the company with the earliest signed AI data center hosting contracts in the sector.

In CoreWeave’s two contracts, CoreWeave bears all capital investments related to the infrastructure. About $405 million will be included in the hosting payment sharing and repaid at an amount no more than 50% of the monthly fee.

Riot Platforms (RIOT.O): Signed a 25MW, $311 million, 10-year contract with AMD (January 2026, unit price $1.244 million/MW/year). The order size is significantly smaller than other second-tier companies, but AMD is a leading semiconductor manufacturer, so the counterparty has a certain distinctive credit profile.

Considering that Riot has 2,000MW of North American AI power capacity but has only signed 25MW for hosting (a proportion of only 1.25%), there is significant room for future pipeline growth. Its ranking at the bottom does not mean we deny potential valuation reappraisal upside.

3.3.1 Ranking basis: North American AI power scale and experience running self-operated GPU cloud business

4.2 No. 2: Hut 8 (HUT.O) — the “cash cow” with the best contract quality

HUT is the company with the best contract quality in the sector—its 245MW, $7.0 billion contract with Fluidstack (Anthropic as the end user, and funded by Google) (December 2025) and its 352MW, $9.8 billion contract with “a certain investment-grade customer” (May 2026, pay-as-you-go) both adopt a “Triple Net” (NNN) structure. Together they total 597MW and $16.8 billion, representing the largest “Triple Net” order package in the sector. The unit price is $1.85+ million/MW/year. Under the “Triple Net” model, the operator bears the least operating expenditures, while the operator locks in the lowest revenue floor across the entire contract period. Cash flow certainty is significantly higher than other colocation peers.

Power grid interconnection and regulatory cycle risks

Before the AI business scales up, most companies’ main cash flows still come from Bitcoin mining. Once the price of Bitcoin declines, it will weaken the companies’ ability to fund capital expenditures for AI data center transformation, thereby delaying order deliveries and creating an “endogenous” risk that is decoupled from AI demand.

This excerpt is taken from the report titled “AIDC, Computing Power Leasing and Cloud: The ‘Three-Stage Theory’ of Crypto Mining Farm AI Transformation,” published by Guosheng Securities Research Institute on May 23, 2026. For the specific details, please refer to the related report.