Six companies hold the GPUs and leases at the center of the AI buildout. Converted bitcoin miners own the buildings; NVIDIA and Google guarantee the rent — Microsoft simply buys the compute.
Fair, though who carries the leverage is worth separating. Over $15 billion of senior secured notes sits at the landlord level against Fluidstack's five leases alone, issued by TeraWulf, Cipher, Hut 8 and the JV vehicles. The neocloud holds the lease, while the landlord holds that paper.
The issue though is that the publicly traded bonds have traded like cr@p and therefore every time they go to the Bond market they have to pay more and more and at some point it becomes a vicious spiral and the markets are just closed to you. So at that point there is no borrowing from Peter to pay Paul so you default and that is the end. I have seen this movie a few times. WeWork was another good example of the same problem.
Agreed, and it is showing up at the top of the stack first. Meta's El Paso JV priced A+ rated, Meta-guaranteed notes last month at 2.875% over Treasuries, the widest spread on anything rated A or better in 3 years, and syndication ran nearly a week without tightening.
Agreed, Andrew. IREN is in the article for that reason. Section V describes it as a vertically integrated AI cloud whose customer list now includes Fluidstack itself. I profiled six companies for length. The category runs much longer, and Together AI and Scaleway belong on that list too.
CoreWeave carries a $99B backlog on buildings it mostly doesn't own, while Google guarantees Fluidstack's lease so landlords can borrow against it.
Infrastructure structured like a financing product.
The charts and the data are really helpful - thanks a ton!
Thanks for reading it closely. Financing product is the right frame, and glad the charts were helpful.
sent you a linkedin connect - happy to stay in touch :)
Got it, connected!
Thank you for this write up.
They do “own” quite a lot debt however and have mostly never made a dime
Fair, though who carries the leverage is worth separating. Over $15 billion of senior secured notes sits at the landlord level against Fluidstack's five leases alone, issued by TeraWulf, Cipher, Hut 8 and the JV vehicles. The neocloud holds the lease, while the landlord holds that paper.
The issue though is that the publicly traded bonds have traded like cr@p and therefore every time they go to the Bond market they have to pay more and more and at some point it becomes a vicious spiral and the markets are just closed to you. So at that point there is no borrowing from Peter to pay Paul so you default and that is the end. I have seen this movie a few times. WeWork was another good example of the same problem.
Agreed, and it is showing up at the top of the stack first. Meta's El Paso JV priced A+ rated, Meta-guaranteed notes last month at 2.875% over Treasuries, the widest spread on anything rated A or better in 3 years, and syndication ran nearly a week without tightening.
FYI. IREN is a fully integrated Neocloud.
Agreed, Andrew. IREN is in the article for that reason. Section V describes it as a vertically integrated AI cloud whose customer list now includes Fluidstack itself. I profiled six companies for length. The category runs much longer, and Together AI and Scaleway belong on that list too.