Arkon Energy raises $110M to grow US bitcoin mining capacity, launch AI cloud service in Norway

Arkon Energy, a data center infrastructure company, closed a $110 million private funding round to expand its operations, the company’s CEO Josh Payne shared exclusively with TechCrunch.

The round was led by Bluesky Capital Management and included participation from Kestrel 0x1 and Nural Capital.

The company launched in 2021 and began with a 5-megawatt site in Australia. It’s since grown to over 130 megawatts and has expanded into other countries and regions like the U.S. and Europe.

“These sites appeal to both bitcoin miners and AI [or] machine learning clients who have very high power computing demands,” Payne said. For context, 1 megawatt can power between 400 to 900 homes a year, according to the Nuclear Regulatory Commission.

About $80 million will be used to acquire an additional 200-megawatt capacity across new data centers in Ohio, North Carolina and Texas as part of its plan to increase the company’s total megawatts by 130% by mid-2024. This is in addition to Arkon’s existing 100-megawatt facility in Ohio that it purchased in June, Payne noted.

“The U.S. is an attractive market for us in many ways, largely because of the enormous domestic customer demand, a mature and robust energy industry with several flexible and deregulated markets, political and regulatory stability, and attractiveness to institutional investors,” Payne said. “The U.S. has an abundance of stranded, underutilized power generation assets that are connected to some of the lowest-cost electricity sources in the world, many which are renewable.”

The company’s U.S. data center portfolio is largely occupied by institutional-grade bitcoin mining companies, Payne said. “We are essentially a landlord who owns the underlying infrastructure assets.”

Arkon’s business model focuses on strategically acquiring distressed data center assets across the globe. “The current and future demand for data center capacity of all types that we are seeing globally, but especially in the U.S., is unprecedented and monumental. The customers we service have energy-intensive platforms that require an immense amount of electrical infrastructure that is professionally managed and operated.”

The remaining $30 million will be used toward developing an artificial intelligence cloud service project at Arkon’s data center in Norway to help service generative AI and large language model training markets. “Over the last year, there has been a profound market acceleration in demand for generative AI and large learning model applications,” he said.

But, there is an undersupply of specialized physical infrastructure to power the computers and servers behind most of these products. Arkon aims to fill that gap by providing the underlying infrastructure layer that the AI sector relies on.

In the past year, there has been a “meteoric rise in AI applications” as well as potential growth and adoption for bitcoin in mainstream institutional markets as a spot ETF approval looms, which makes specialized data centers like Arkon’s “poised to continue scaling exponentially,” Payne said.

This story was updated to remove a reference to Florence Capital, which was initially mentioned as an investor in the round.