🚨NVDA just put a 20-year floor under AI data center terminal value; valuation looks bullish for powered-shell developers. What we know from the 8-K: >NVIDIA is providing residual value guarantees to SB Energy covering approximately 4.25 GW of IT load at the Portsmouth site in Ohio. OpenAI is the tenant. Each guarantee can run for up to 20 years from the start of the applicable lease. >If OpenAI defaults, SB Energy can relet the facility or sell it, with NVIDIA covering the shortfall versus a contractually defined guaranteed minimum value. NVIDIA can also assume the lease. The guarantees apply to completed facilities, not buildings still under construction. >NVIDIA's cumulative obligation is capped at $105B. >Guarantees start in 2028 when the first buildings come online. >$105B / 4,250 MW = $24.7M/MW of maximum guarantee capacity. >Importantly, $24.7M/MW is NOT the guaranteed residual value. We don't know that yet. The Agreements will be filed with NVIDIA's 10-Q later this month and will include the guaranteed minimum values that determine what NVIDIA actually owes. The scale of the guarantee has interesting implications: >A greenfield AI data center costs roughly $50M/MW all-in today, including silicon. NVIDIA's release implies roughly $19-25M/MW of silicon per generation, leaving approximately $25-31M/MW for the non-silicon infrastructure. >So NVIDIA's $24.7M/MW of maximum guarantee capacity is roughly equal to the entire non-silicon cost of building a greenfield AI data center. That's potentially very important for brownfield conversions like those being leased by bitcoin miners, who already own much of the expensive, scarce and long-lived infrastructure: land, substations and interconnects. Replicating those assets from scratch is increasingly expensive and, just as importantly, slow. At current prices, we estimate landlords like $WULF and $HUT are being valued with nearly zero terminal value on their signed leases. NVIDIA has just given the market a very useful new framework for what those assets could still be worth when the initial leases expire.

🚨NVDA just put a 20-year floor under AI data center terminal value; valuation looks bullish for powered-shell developers. What we know from the 8-K: >NVIDIA is providing residual value guarantees to SB Energy covering approximately 4.25 GW of IT load at the Portsmouth site in Ohio. OpenAI is the tenant. Each guarantee can run for up to 20 years from the start of the applicable lease. >If OpenAI defaults, SB Energy can relet the facility or sell it, with NVIDIA covering the shortfall versus a contractually defined guaranteed minimum value. NVIDIA can also assume the lease. The guarantees apply to completed facilities, not buildings still under construction. >NVIDIA's cumulative obligation is capped at $105B. >Guarantees start in 2028 when the first buildings come online. >$105B / 4,250 MW = $24.7M/MW of maximum guarantee capacity. >Importantly, $24.7M/MW is NOT the guaranteed residual value. We don't know that yet. The Agreements will be filed with NVIDIA's 10-Q later this month and will include the guaranteed minimum values that determine what NVIDIA actually owes. The scale of the guarantee has interesting implications: >A greenfield AI data center costs roughly $50M/MW all-in today, including silicon. NVIDIA's release implies roughly $19-25M/MW of silicon per generation, leaving approximately $25-31M/MW for the non-silicon infrastructure. >So NVIDIA's $24.7M/MW of maximum guarantee capacity is roughly equal to the entire non-silicon cost of building a greenfield AI data center. That's potentially very important for brownfield conversions like those being leased by bitcoin miners, who already own much of the expensive, scarce and long-lived infrastructure: land, substations and interconnects. Replicating those assets from scratch is increasingly expensive and, just as importantly, slow. At current prices, we estimate landlords like $WULF and $HUT are being valued with nearly zero terminal value on their signed leases. NVIDIA has just given the market a very useful new framework for what those assets could still be worth when the initial leases expire.

Source:https://x.com/matthew_sigel/status/2089364516106629147