Google has helped to secure a 10-year, $3 billion artificial intelligence hosting contract with Bitcoin miner Cipher Mining and U.K.-based AI computing startup Fluidstack.
In exchange, Google will receive a 5.4% equity stake in Cipher. But since AI training is known for being energy-intensive, and dirty fuels still power most facilities, the deal could spell bad news for the environment.
Google struck the agreement in late September and said it would support $1.4 billion of Fluidstack’s lease obligations to fund potential expansions, as per a statement by Cipher. The Bitcoin miner expects the contract to generate $3 billion in revenue over the first 10 years, with two five-year extension options that would net the company an additional $4 billion in earnings.
The deal marks the second between Google and Fluidstack since July, when the latter signed a 10-year leasing agreement with data center operator TeraWulf. Google backed $1.8 billion of the deal, receiving 8% equity in return.
It’s part of a larger trend among big tech companies to acquire AI resources as demand soars. These companies are leveraging the infrastructure of existing cryptocurrency mining facilities to power their AI needs, as it saves time and capital investment.
As Bloomberg reported, “Google is one of the largest spenders on computing capacity in Silicon Valley” and expects to spend at least $85 billion in capital expenditures this year due to the growing need for AI infrastructure — $10 billion more than initially forecasted, according to CNBC.
While more data centers are turning to renewable energy sources such as wind and solar to power their operations, 56% of the electricity supplied to data centers nationwide still comes from dirty energy, according to the Environmental and Energy Study Institute. The Department of Energy estimates that data centers could account for up to 12% of electricity demand by 2028.
Data centers also consume a significant amount of water to cool IT equipment and indirectly generate electricity. EESI stated that large data centers can require nearly 5 million gallons of water every day, equivalent to the consumption of a town of roughly 50,000 people.
As demand for AI services and cryptocurrency continues to grow, so will water and energy use, putting even more strain on the planet.
The bright side is that renewables are the fastest-growing energy source to power data centers, with the International Energy Agency reporting that they’re expected to meet nearly 50% of the sector’s electricity demand growth by 2030. Over the course of the contracts between Google and the cryptomining companies, it’s likely that at least a portion of the operations will be powered by clean energy.
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