- AI data centers cost 10-15x more per megawatt than Bitcoin mining infrastructure.
- Higher returns are the incentive behind Bitcoin miners’ pivot to AI data centers.
- Banks consider it more beneficial to finance higher-priced AI data center projects.
An AI data center costs 10-15x more per megawatt to build than a Bitcoin mine, yet Bitcoin mining companies are pivoting to AI infrastructure. MARA CEO Fred Thiel thinks the main reason behind the preference for AI data centers over Bitcoin mining is the former’s earning potential. According to Thiel, AI data centers earn far more per unit of power.
In a recently published podcast, Thiel noted that while it cost approximately $1 million per megawatt, between infrastructure and compute, to build a Bitcoin mining site, only infrastructure on an AI site costs $10 – $15 million per megawatt.
Meanwhile, Thiel acknowledged that banks will not hesitate to finance the construction of AI data centers, considering the category of clients typically involved in the business. Ironically, he noted that it is easier for banks to finance higher-priced AI data center construction projects.
How Banks Are Financing AI Data Centers
Notably, global banks are backing the AI data center boom by pivoting to a “capital-light” model, acting as originators and syndicators to offload massive debt onto private credit funds and institutional investors.
Traditional banks are adopting a new financing structure that involves underwriting deals and quickly distributing risks. It is a financing model that enables them to manage the capital requirements for AI computing infrastructure. Most banks utilize creative financial structures, such as packaging data center construction loans as “investment-grade” debt before the facilities are even built.
Some banks choose the partnership option by collaborating with private equity, infrastructure vehicles, and private credit funds to share the financial load. They also tie AI data center construction loans to green energy procurement, helping tech companies achieve carbon-neutral goals.
Examples of Bank-Backed Data Center Deals
A prominent example of a bank-backed deal in AI data center infrastructure is Bank of America and Morgan Stanley acting as joint placement agents for a massive $35 billion financing package. The banks orchestrated a $24 billion tranche of the debt, immediately trading and syndicating pieces of it to a wider pool of private credit lenders and institutional investors to clear it from their own books.
Meanwhile, JPMorgan Chase, Morgan Stanley, SMBC, and MUFG underwrote billions of dollars in construction debt for Oracle data center projects in Texas and Wisconsin. The loans were backed by Oracle’s future leases under its multi-billion-dollar agreement with OpenAI.
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Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred from utilizing the content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
