Bitcoin Mining Host Applied Digital Raises $160M With Backing from NVIDIA

Applied Digital, a data center operator for bitcoin mining and high-performance computing (HPC), is set to raise $160 million from a group of investors, including chip-making giant NVIDIA.

The company announced on Thursday that it had entered into definitive agreements for a $160 million private placement financing. The deal involves issuing nearly 50 million shares of its common stock at $3.24 per share, matching Wednesday’s closing price.

Applied Digital secured the equity financing from a group of institutional and accredited investors, alongside NVIDIA and Related Companies, a privately owned real estate firm based in New York.

Following the news, Applied Digital’s stock price (NASDAQ: APLD) surged 65% on Thursday, closing at $5.15 per share.

The company plans to use the new capital to strengthen its financial position and expand its HPC data center infrastructure and GPU cloud solutions. This private placement comes just days after Applied announced the issuance of convertible preferred stocks worth $53.2 million to a single investor, raising proceeds to fund HPC and AI data center growth.

Applied Digital started in 2021 as a GPU cryptocurrency mining firm through a partnership with Sparkpool, the now-defunct Ethereum mining pool. In 2022, the company pivoted to bitcoin mining colocation for companies including Marathon Digital (NASDAQ: MARA). Since 2023, Applied Digital has expanded into the cloud services segment and is currently constructing HPC hosting facilities.

While Applied has touted its expansion into HPC colocation since 2023, riding the wave of AI buzz, its business remains heavily reliant on bitcoin mining hosting.

For the year ending May 2024, Applied reported revenue of $165 million. A substantial 83% (or $137 million) originated from the mining hosting business, while the remaining 17% came from cloud services.

The company’s annual report highlights “material customer concentration” in its crypto data center hosting business. It states that it has entered into service contracts with all seven of its customers in this segment, who have collectively contracted to use the entire capacity of its two data center hosting facilities. Notably, one customer accounts for 62% of its revenue. This implies that a single bitcoin mining hosting client, likely Marathon, contributed approximately $102 million to Applied’s revenue for the year ending May 2024.

Applied also disclosed material customer concentration in the cloud services business, as it currently has only two customers.