Macquarie Asset Management to Invest Up to $5B in Crypto Firm Turned Data Centre Startup

Applied Digital’s under-construction Ellendale data centre in North Dakota (Image: MarketScale)

Less than a month after selling its majority stake in Asia Pacific server-hosting giant AirTrunk, Macquarie Asset Management has agreed to provide up to $5 billion in funding for US data centre startup Applied Digital.

Under the deal terms, a high-performance computing subsidiary of Applied Digital will issue perpetual preferred equity units and common equity units for an investment by Macquarie of $2.25 million for each executed lease of 1 megawatt of capacity, up to $900 million, to support the full 400MW build-out of the Ellendale HPC Campus in rural North Dakota.

NASDAQ-listed Applied Digital specialises in facilities tailored to HPC and AI-intensive tasks. The agreement with Macquarie gives the Australian finance giant the right of first refusal on future funding for Applied Digital’s HPC data centre projects, up to an additional $4.1 billion for 30 months after the deal’s closing, the companies said Tuesday in a release.

“Applied Digital has a differentiated strategy with access to a unique near-term power portfolio across North America in markets attractive for computing needs which address the most demanding AI and other HPC applications at scale,” said Anton Moldan, senior managing director of Macquarie Asset Management. “The significant progress at the Ellendale HPC campus makes this a very compelling opportunity for us as well as for potential hyperscale customers.”

2GW-Plus Pipeline
Dallas-based Applied Digital, led by co-founder, chairman and chief executive Wes Cummins, expects to use the investment proceeds from Macquarie to complete the under-construction Ellendale HPC Campus, repay existing bridge debt of $180 million and recover an estimated $300 million of its equity investment in Ellendale.

Anton Moldan, senior managing director of Macquarie Asset Management

Founded in 2021 as a cryptocurrency miner called Applied Blockchain, the company rebranded in 2022 and broke ground on the Ellendale project in September of that year. Applied Digital sold a similarly remote 200MW project in Garden City, a town in western Texas, to bitcoin miner Marathon Digital Holdings last year.

At current costs, the agreement with Macquarie will provide a significant portion of the equity needed for Applied Digital to build more than 2 gigawatts of HPC data centre capacity, inclusive of Ellendale, according to Cummins.

“With an 85 percent ownership stake in both existing and future HPC assets and access to a project-level preferred equity financing facility sufficient to fund our HPC project pipeline, we believe we are poised for transformative progress,” the CEO said.

The deal is conditioned upon Applied Digital executing a lease with a hyperscaler acceptable to Macquarie as a tenant for 100MW at Ellendale, the companies said.

No Let-Up in Server Sheds
Sydney-based Macquarie is making good on a vow to remain focused on digital infrastructure after settling the A$24 billion ($16.1 billion) AirTrunk transaction in late December.

Group CEO Shemara Wikramanayake told Bloomberg in November that she saw “a long way to run” in data centres, adding: “The sector at large is going to need a lot more investment.”

Wikramanayake noted that Macquarie owns 4.3GW of data centre capacity worldwide — with almost a third of the investments by the asset management arm allocated to digital infrastructure — and the firm is betting on higher income from sales of such assets in future.