Northern Data Group is a specialist provider of high-performance computing (HPC) infrastructure solutions. By leveraging a successful cryptocurrency mining heritage to fund global growth, the group has been able to expand into generative artificial intelligence (AI) cloud services and liquid-cooled data centre infrastructure. The European generative AI opportunity is substantial, where demand has surged but compute power remains limited. As the owner of Europe’s largest AI data hardware cluster, and requisite specialised data centre housing, Northern Data can enable democratised access to this transformative technology. With its elite partnerships and access to scarce hardware, the group is positioned to capture underserved demand in the AI space for hardware and housing.
Three new divisions define strategy
Northern Data has pivoted from a pure cryptocurrency miner into a diversified provider of HPC infrastructure solutions, through its three business divisions: Taiga Cloud, Ardent Data Centers and Peak Mining. Taiga aims to democratise access to AI compute power, providing the hardware that start-ups, researchers and medium- sized organisations need to power generative AI models and cloud services. In 2023, Northern Data invested €730m to acquire NVIDIA’s latest H100 Tensor Core GPUs. These are in limited supply and are 30 times more powerful than the GPUs used for training systems like ChatGPT, establishing a competitive edge. Ardent is looking to expand the group’s portfolio of state-of-the-art,liquid-cooled data centres to initially house Taiga’s NVIDIA hardware and then provide colocation services to the market. Peak will continue Northern Data’s bitcoin mining operations.
Key milestones to demonstrate value
NVIDIA has confirmed that Northern Data owns Europe’s largest A100 and H100 GPU cluster and that Taiga is an elite NVIDIA partner/cloud service provider. This should enable Taiga to effectively capture demand by providing infrastructure as a service (IaaS) in 2024, then successfully upsell additional managed services and software from 2025. Ardent’s European data centres offer innovative, energy efficient and liquid-cooled environments, reducing latency and providing a compelling solution amid tightening data and environmental regulations. For Peak Mining, maintaining or growing market share will be key, particularly given the upcoming bitcoin halving, which the market expects around April 2024. Its US$150m investment in the latest bitcoin miners should support its positioning.
Valuation: Substantial upside if milestones are met
Northern Data has undergone significant change, causing internal disruption with FY22 results yet to be released. We are therefore unable to provide forecasts yet. Management guides to sales of €65-75m and an adjusted EBITDA loss of €5-20m in FY23, followed by €200-240m sales and €50-80m adjusted EBITDA in FY24, respectively. Management also sees FY25 sales and adjusted EBITDA potential of €520-570m and €300-350m, respectively. Later we provide several scenarios once full deployment of its hardware is achieved, with our base case indicating potential revenue of €572m, at the top-end of management’s FY25 guidance.
