Crusoe Energy Sells Bitcoin Mining Unit to NYDIG, Shifts Focus to AI Infrastructure

Crusoe Energy sells bitcoin mining unit to focus on 'huge opportunity' in AI

Cully Cavness, Crusoe's co-founder and chief operating officer, and Chase Lochmiller, co-founder and chief executive officer. Seven years ago, the founders of Crusoe Energy set out to solve a dirty problem. Their mission was to take gas burned off by oil producers, convert it into electricity, and use that power to mine bitcoin. It turned into a good business. But then came the artificial intelligence boom, and Crusoe co-founders Chase Lochmiller and Cully Cavness started to see a much bigger opportunity. As the company focuses on AI and races to complete what it says could be one of most powerful clusters of graphics processing units, or GPUs, in the world, Crusoe is getting out of bitcoin mining. The company said Tuesday that it's struck a deal to offload that operation to NYDIG, a power and financial services firm focused exclusively on bitcoin. Terms of the deal weren't disclosed. NYDIG will take on about 135 Crusoe employees, who will continue operating the business under the new ownership. Crusoe will become a major equity holder in the combined entity -- second only to Stone Ridge, NYDIG's parent company. The deal includes Crusoe's technology that captures and converts flared gas from oil fields, and more than 425 modular data centers spread across seven U.S. states and parts of Argentina. Altogether, the operation accounts for roughly 1% of the world's bitcoin mining, according to Crusoe, which was valued late last year at $2.8 billion. NYDIG is also privately held and valued at about $7 billion. Lochmiller told CNBC that Crusoe started investing in AI infrastructure it its earliest days, and that the business increasingly became a central focus.

Crusoe to sell Bitcoin mining business to NYDIG to focus on AI

The deal will see NYDIG acquire 425 modular data centers across seven US states and Argentina used to mine Bitcoin. Crusoe Energy, a company that captures waste gas from oil to power high-performance compute, is selling its Bitcoin mining business to New York Digital Investment Group (NYDIG) to focus on artificial intelligence. In a March 25 announcement, Crusoe said it plans to sell its Bitcoin (BTC) mining operation, including its digital flare mitigation business, to NYDIG, subject to regulatory approvals and other consents. The deal includes Crusoe's 270 megawatts of power generation technology from more than 425 modular data centers across the United States and Argentina, along with 135 Crusoe employees who will join NYDIG, as no roles will be eliminated as a result of the transaction. Crusoe was founded in 2018 and pioneered technology that captures waste gas created during oil extraction and refinement that would be normally burned off in a process called gas flaring in order to power Bitcoin miners. It converts the gas or "stranded energy" into electricity used to power the high-performance compute required for Bitcoin mining and AI data centers. Some reports suggest that Crusoe's Bitcoin mining operation accounts for 1% of the world's Bitcoin mining. However, Crusoe says it now wants to focus its tech on building out AI infrastructure. "The AI business -- it's become the majority of our revenue," Cully Cavness, the co-founder, president and chief operating officer of Crusoe, told CNBC. The company recently expanded its AI data center in Abilene, Texas, to 1.2 gigawatts around the same time it announced a joint venture with investment firm Engine No. 1 to develop large-scale data center campuses across the US to build out AI capabilities. Last year in December, it closed $600 million in a Series D round at a $2.8 billion valuation to power AI. "We see a huge opportunity in front of us, and we have a big advantage and a big head start with what we've already announced -- and more coming soon," added Cavness. Related: Tokenized US gold could ultimately benefit Bitcoin: NYDIG NYDIG said that the acquisition of Crusoe's Bitcoin mining business will help expand its role in supporting Bitcoin's proof-of-work security. NYDIG founder and executive chairman Ross Stevens said that "it is critically important to keep the Bitcoin network secure, and at the lowest possible cost," claiming that fiat currencies are "collapsing against Bitcoin around the world."