Hyperscale Data Subsidiary Reaches Agreement in Principle to Add Capability for an Incremental 40 Megawatts to its Michigan Data Center, Boosting AI Infrastructure Development

Rhea-AI Summary

Hyperscale Data (NYSE: GPUS) announced that its subsidiary Alliance Cloud Services (ACS) has reached an agreement to add 40 megawatts (MW) of power capacity to its Michigan data center through natural gas utility. This expansion would increase the facility's total power capacity from 30 MW to 340 MW, building upon the previously announced 300 MW expansion.

The new 40 MW natural gas-powered addition is expected to be completed within 18 months of finalizing definitive agreements and will be delivered faster than the main grid utility expansion. The company is also exploring options for an additional 85 MW capability.

This expansion aims to meet the growing demand for high-performance computing (HPC) services supporting AI infrastructure. The project faces various risks including funding requirements, regulatory approvals, and potential delays.

Positive

• Secured agreement for quick deployment of 40 MW additional power capacity
• Total power capacity to increase substantially from 30 MW to 340 MW
• Natural gas expansion to be completed faster than main grid upgrade
• Potential for additional 85 MW power capability being explored

Negative

• Project subject to multiple execution risks including funding requirements
• Final agreements not yet signed - only agreement in principle reached
• Multiple regulatory approvals still needed
• Significant land rights and easements still required

Insights

Data Center Infrastructure Analyst

Hyperscale Data's announcement represents a strategic acceleration in its data center capacity expansion, with subsidiary Alliance Cloud Services securing an agreement to add 40 megawatts of natural gas-powered capacity to its Michigan facility. This supplement to their previously announced 300 MW grid-based expansion (including nuclear power) brings their total planned capacity to 340 MW, with potential for an additional 85 MW under exploration.

The significance lies in the timing advantage: this natural gas-powered increment can be implemented substantially faster than the larger grid-based expansion, allowing Hyperscale to capture near-term demand in the rapidly growing AI computing market while their more substantial expansion progresses. This dual-track approach demonstrates strategic agility in addressing both immediate market opportunities and long-term growth.

For context, this expansion represents a transformative scaling of operations, increasing capacity more than 11-fold from the current 30 MW. With a market capitalization of approximately $3.64 billion, Hyperscale is making a proportionally significant bet on AI infrastructure demand, which continues to outpace supply across North America.

The hybrid power approach (combining grid and natural gas sources) provides redundancy while potentially offering different cost structures and reliability profiles. However, investors should note the execution risks highlighted in the announcement, particularly financing challenges for a company of Hyperscale's size undertaking such ambitious expansion. The 18-month timeline assumes smooth regulatory approvals and successful capital raising, both of which represent meaningful hurdles in the current environment.

This announcement reinforces Hyperscale's strategic pivot from a diversified holding company to a focused data center operator targeting the high-margin AI computing segment, where demand from AI model training and inference continues to drive premium pricing for properly configured facilities.

Energy Infrastructure Specialist

Hyperscale Data's dual-track power expansion strategy reveals sophisticated energy infrastructure planning that balances speed-to-market with long-term capacity needs. The 40 MW natural gas component will likely utilize on-site generation (possibly gas turbines or reciprocating engines), which explains the accelerated timeline compared to the 300 MW grid expansion that requires extensive utility infrastructure development and interconnection processes.

This approach follows an emerging trend among data center operators facing grid capacity constraints in prime markets. Natural gas generation provides several advantages: deployment in 12-18 months versus 3-5 years for major grid expansions, enhanced reliability through fuel diversity, and potential cost advantages depending on regional gas pricing.

The capital intensity differs significantly between these approaches. On-site gas generation typically costs $1-1.5 million per MW in capex, potentially requiring $40-60 million for this component. However, this represents a fraction of the company's $3.64 billion market cap and provides important revenue-generating capacity while awaiting the larger expansion.

Michigan's regulatory environment for energy infrastructure is relatively favorable for natural gas projects compared to some coastal states, though interconnection and air permits will still present hurdles. The mention of exploring an additional 85 MW suggests Hyperscale may be considering larger-scale cogeneration or combined cycle gas turbine solutions, which offer improved efficiency but require more complex engineering and permitting.

From a sustainability perspective, this hybrid approach creates a mixed profile. While natural gas produces approximately half the carbon emissions of coal, it still represents a fossil fuel solution at a time when many hyperscalers are pursuing renewable-powered facilities. However, the mention of nuclear power in their grid expansion demonstrates awareness of low-carbon options for their longer-term power needs, potentially mitigating ESG concerns for investors focused on decarbonization pathways.

Michigan Data Center to Reach 340 Megawatts

LAS VEGAS, Feb. 27, 2025 (GLOBE NEWSWIRE) -- Hyperscale Data, Inc. (NYSE American: GPUS), a diversified holding company (“Hyperscale Data” or the “Company”), today announced that its indirectly wholly owned subsidiary Alliance Cloud Services, LLC (“ACS”) has reached an agreement in principle with the local natural gas utility to provide the capability to energize ACS’ Michigan data center (the “Data Center”), with an additional 40 megawatts (“MW”). This would enable ACS to increase its power capacity from approximately 30 MW to approximately 340 MW. This announcement follows the Company’s recent announcement detailing ACS’ ability to expand the Data Center to 300 MW. The project is expected to be completed within 18 months of the execution of definitive agreements.

As the Company recently stated, the expansion of the Data Center to 300 MW is a crucial long-term goal for ACS, enabling ACS to better serve the rapidly growing demand for high-performance computing (“HPC”) services powering artificial intelligence (“AI”) infrastructure. The Company notes that the incremental 40 MW of power would be delivered significantly sooner than the previously announced power upgrade. This is due, in part, to the difference in power supply, as the approximately 300 MW increase would be coming from grid utility sources, including nuclear power, while the approximately 40 MW would be coming from natural gas delivered to the Data Center. The Company is working through multiple approaches that could utilize the natural gas supply and provide incremental power to the Data Center while the larger power upgrade project is under way. Additionally, the Company is exploring options that could potentially provide a further incremental capability to energize another approximately 85 MW. As Hyperscale Data moves forward in the coming months with both its short-term transition to HPC services and its power upgrade expansion process, it will provide ongoing updates to its stockholders and the public as developments warrant.

William B. Horne, Chief Executive Officer of Hyperscale Data, commented, “We are excited to take another step in the right direction for the Company’s long-term goal of becoming a pureplay data center business. The use of alternative power sources will be critical in ACS’ plans to bring incremental power to the Data Center and serve the growing AI data center industry.”

The completion of the power upgrades is subject to a number of risks and uncertainties, one or more which could result in the project being curtailed, delayed or terminated, including, but not limited to: failure to agree upon terms and execute definitive agreements; the inability of the Company to raise sufficient funds to pay for the power upgrades; failure to obtain regulatory consents and approvals; the inability to obtain sufficient easements, rights-of-way and land rights necessary to the work to be performed, and other presently unforeseen events or conditions.

For more information on Hyperscale Data and its subsidiaries, Hyperscale Data recommends that stockholders, investors and any other interested parties read Hyperscale Data’s public filings and press releases available under the Investor Relations section at hyperscaledata.com or available at www.sec.gov.

About Hyperscale Data, Inc.

Through its wholly owned subsidiaries, Hyperscale Data owns and operates a data center at which it mines digital assets and offers colocation and hosting services for the emerging AI ecosystems and other industries. Hyperscale Data’s subsidiary, Ault Capital Group, Inc. (“ACG”), is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact.

Hyperscale Data intends to completely divest itself of ACG on or about December 31, 2025, at which time it would be solely an owner and operator of data centers to support HPC services. Until then, however, the Company provides, through ACG and its wholly and majority-owned subsidiaries and strategic investments, mission-critical products that support a diverse range of industries, including an artificial intelligence software platform, social gaming platform, equipment rental services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations. In addition, ACG is actively engaged in private credit and structured finance through a licensed lending subsidiary. Hyperscale Data’s headquarters are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties.

Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s Forms 10-K, 10-Q and 8-K. All filings are available at www.sec.gov and on the Company’s website at www.hyperscaledata.com.

Hyperscale Data Investor Contact:
IR@hyperscaledata.com or 1-888-753-2235

FAQ

What is the total power capacity planned for GPUS's Michigan data center after the expansion?

The Michigan data center's power capacity will increase from 30 MW to 340 MW, combining the previously announced 300 MW expansion with the new 40 MW natural gas-powered addition.

How long will it take GPUS to complete the 40 MW natural gas power expansion?

The 40 MW natural gas power expansion is expected to be completed within 18 months after finalizing definitive agreements.

What additional power expansion is GPUS exploring for its Michigan facility?

GPUS is exploring options that could potentially provide an additional 85 MW of power capability to the data center.

What are the main risks to GPUS's power expansion project?

Key risks include failure to execute definitive agreements, insufficient funding, regulatory approval delays, inability to obtain necessary easements and land rights, and unforeseen events.