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The Transaction, Diligence, and Restructuring Issues Behind the Shift

Across the United States (and especially in Texas), cryptocurrency mining sites are being marketed as platforms for artificial intelligence and high-performance computing (“AI/HPC”). Demand for AI/HPC capacity is pushing some operators to look again at mining sites that already have land, buildings, electrical infrastructure, and grid connections. The pitch is simple: reuse should be faster and cheaper than a new build.

That simple pitch tends to understate the harder questions around power availability, interconnection status, permits, contract control, and distress risk. Marketing materials may describe a ready platform, but diligence may show a narrower bundle of assets, such as land, a substation, and some electrical infrastructure, without the firm power, approvals, contracts, water, or customer commitments needed for AI/HPC.

Power Demand Is Driving the Conversion Trade

The trend is real, and conversion efforts are already underway.

• Galaxy Digital; Helios (West Texas). Galaxy completed Phase I of its Helios conversion in July 2026, delivering approximately 200 MW of gross power, including 133 MW of critical IT load, to AI cloud provider CoreWeave under a 15-year lease. Galaxy separately disclosed that ERCOT approved another 830 MW after Galaxy completed a Large Load Interconnection Study and signed a service agreement with AEP Texas for this additional capacity.
• Cipher Digital, formerly Cipher Mining; Black Pearl (Wink, Texas). Cipher disclosed in its 2025 Form 10-K that, through its wholly owned subsidiary Cipher Black Pearl LLC, it entered into a 15-year lease with Amazon Web Services, Inc. to deliver approximately 300 gross MW of turnkey data center capacity at Black Pearl, a 300 MW facility near Wink, Texas. Cipher also disclosed that the facility received approvals for 300 MW of interconnection and entered into the agreements needed to participate in ERCOT.
• Bitfarms; Washington. Bitfarms plans to fully convert its Washington bitcoin-mining site to HPC/AI hosting, including an 18 MW project expected to be completed by December 2026.

Those deals monetize a power position more than a shell building. Value turns on the amount of electricity the site can draw, the reliability and price of that power, and whether the rights survive a change in use or control.

Conversion Is Often a Redevelopment Project

Crypto mining and AI/HPC facilities have different operating demands. Bitcoin-mining machines, often referred to as ASIC miners, are frequently air-cooled and interruptible; AI/HPC generally requires liquid or hybrid cooling, redundant power, higher rack densities, stronger network connectivity, and tighter uptime commitments. Conversion can therefore require new electrical, cooling, water, structural, fiber, and security systems as part of the work of removing or repurposing the mining rigs. Permitting is part of the conversion. A site approved for industrial mining may need new zoning, building, water-supply, wastewater, or environmental approvals for data-center use. Cooling can materially change water demand, and legacy noise or community concerns may follow the project into its next phase.

Texas, ERCOT, and PUCT

Texas has made the interconnection gate more visible. ERCOT’s Batch Zero process evaluates eligible large-load projects on a portfolio basis, distinguishing base load from studied load and developing transmission plans and allocations for studied demand. For a conversion project, an existing meter or interconnection application still leaves a practical question: whether the site has an approved, usable path to serve new, firm AI/HPC load.

Rule 25.114 of the Public Utility Commission of Texas (“PUCT”) requires qualifying virtual-currency-mining facilities receiving retail service in ERCOT to register as large flexible loads when total load exceeds 75 MW and interruptible load is at least 10% of annual peak demand; a registrant must amend its registration within 30 days after a change to the required registration information, and the registration must be renewed annually on or before March 1. A conversion should trigger review of the facility’s PUCT and ERCOT registrations, interconnection studies, service agreements, load-profile restrictions, and upstream transmission capacity. Power purchase and retail contracts deserve the same kind of review, including assignment and change-of-control rights, pricing, curtailment provisions, and whether a contract built around interruptible mining can support firm AI/HPC demand.

Contracts, Financing, and Control

Contract control is often the transaction. Map the interconnection, utility, power purchase agreement (PPA), land, construction, hosting, and incentive agreements together, as each may contain a separate consent, default, termination, or change-of-control provision. Tax abatements and other incentives may be use- or owner-specific. Financing follows the same logic. Existing lenders may have liens on equipment, real property, or power contracts; conversion capex may require new money; and an AI/HPC lease is only as valuable as the tenant’s credit, enforceability, and ability to deliver.

Distress Is a Transaction Issue

Delays in interconnection, permitting, or construction can leave a project carrying land costs, financing expense, contractor obligations, and customer commitments before revenue ever begins. Our representation of RELLIS Campus Data and Research Center, LLC in its Chapter 11 bankruptcy illustrates the point. After its capital partner withdrew its funding commitment, the company faced cross-defaults with its construction lender, its general contractor, and the ground lessor, forcing the company to file for Chapter 11 relief. A favorable outcome demanded the successful navigation through a labyrinth of legal and logistical issues including multi-tiered financing, construction, real estate, public-sector relationships, tax incentives, contracts, and operations, and ultimately provided a path to interim funding and a sale to a new partner intending to complete the project. In a distressed sale, the questions include whether the valuable contracts and approvals can be assumed, assigned, or re-papered; whether regulatory consents are available; the nature and priority of liens encumbering the assets; and how best to harmonize viewpoints and align the requisite stakeholders to marry both short and long-term interests to successfully emerge from Chapter 11.

Conclusion

The crypto-to-AI conversion trend is real and economically understandable. The asset being sold is a bundle of power, interconnection, permits, contracts, stakeholder relationships, and, in some cases, a distressed capital structure. Early diligence gives buyers, lenders, and developers a clearer view of value and execution risk.