Russian Crypto Miner Intelion Plunges $135 Million into AI: A Strategic Diversification?

In a bold move signaling a significant shift in the digital landscape, Russian crypto mining firms are doubling down on their infrastructure, not just for cryptocurrency, but for the burgeoning field of Artificial Intelligence. Leading the charge is Intelion, a major player in the Russian crypto mining sector, who recently announced a staggering $135 million investment in AI. But why is a crypto mining company making such a substantial bet on AI, and what does it mean for the future of both industries?

Intelion’s $135 Million AI Gambit: What’s the Deal?

Intelion Business Group, a heavyweight in Russia’s industrial mining operations, is channeling a massive $135 million into what they term “server equipment for AI computing.” This isn’t just pocket change; it’s a clear indicator that crypto miners are eyeing new horizons beyond digital currencies.

According to reports from Russian media outlet RBC, Intelion’s investment will power a new data center project nestled in the Samara Oblast region. These “new capacities” will function as “part of” this expansive “data center,” suggesting a hybrid approach where infrastructure serves both crypto mining and AI demands.

Russian Crypto Miners: Spending Big and Thinking Bigger

Intelion isn’t just dipping its toes into AI; they’re diving in headfirst. To manage this ambitious AI venture, Intelion is spinning off its “high-performance computing business” into a dedicated subsidiary named Intelion Cloud. This new entity will squarely focus on “developing a group of companies in the AI field,” and crucially, “provide clients with access to high-performance computing power.”

The growth of domestic crypto mining in Russia has been nothing short of explosive, fueled by the global crypto boom, access to cheap energy in cooler regions, and strategic partnerships with local energy providers. This rapid expansion has created a fertile ground for diversification, and AI seems to be the next logical frontier.

Furthermore, Russian crypto miners are strategically positioning themselves to support Moscow’s nationwide IT development project. By offering cutting-edge data center infrastructure, they’re hoping to curry favor with regulators and potentially pave the way for a more accommodating regulatory environment for the crypto industry.

AI: The New Frontier for Crypto Miners?

Could AI become the next big revenue stream for crypto miners? Russian experts certainly think so. They predict that AI development will dramatically increase energy consumption, projecting that by 2035, the AI sector in Russia alone will consume a whopping “4.5 GW” of electricity. This surge in demand necessitates “new infrastructure and advanced GPUs,” creating a perfect opportunity for crypto miners with existing data center expertise.

Maxim Vyaznikov, the newly appointed CEO of Intelion Cloud, aptly highlights this synergy: “Industrial crypto mining allows us to create and maintain large-scale infrastructure designed for the future. It will also help recoup investments due to the high current demand for computing power.”

Intelion’s Samara data center is slated to launch its “first phase” in the “fourth quarter of 2024,” with an additional $48.2 million earmarked for further construction over the subsequent “two and a half years.”

Beyond Crypto: Miners Expanding Horizons

Intelion Cloud isn’t starting from scratch. They boast an existing arsenal of modern servers, including “advanced” Nvidia A100 series graphics accelerators. This positions them perfectly to offer “per-second pricing” for AI firms seeking flexible and scalable server access.

RBC points out that the escalating electricity demand from “the uninterrupted operation of AI systems” translates to “additional income for Bitcoin miners.” This symbiotic relationship is becoming increasingly apparent, with miners in other countries, like the United States, also exploring similar diversification strategies.

American mining firm Core Scientific, for example, recently inked a monumental $3.5 billion, 12-year agreement with cloud service provider CoreWeave. This deal will see Core Scientific dedicate 200 MW of power to AI projects, potentially generating an average annual revenue of around $290 million. This move underscores a global trend of crypto miners leveraging their infrastructure for the burgeoning AI market.

Hoping for a Regulatory Nod

Beyond immediate revenue gains, crypto miners are strategically using their AI pivot to advocate for regulatory clarity and legitimacy. The industry is actively pushing for the legalization of industrial mining, hoping to gain recognition as a legitimate form of “entrepreneurship.”

Government officials have indicated support for such moves, suggesting a potential thawing in the regulatory landscape. This could be a game-changer for the Russian crypto mining industry, which has often operated in a grey area.

BitRiver, another Russian crypto mining heavyweight, announced in February the construction of a new 100 MW data center in Buryatia, further demonstrating the industry’s expansion. Notably, many new data centers are being strategically located outside traditional Bitcoin mining hubs like Irkutsk, potentially to diversify risk and leverage different regional advantages.

Samara Oblast, Intelion’s chosen location, offers a unique blend of benefits. While summers can be hot, the region’s cold winters are ideal for cooling data centers. Furthermore, Samara’s established oil refining and petrochemical industries provide a skilled workforce and potentially advantageous energy infrastructure.

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