In Conversation With Aroosh Thillainathan, Northern Data Group CEO: On AI, NVIDIA and HPC.

Northern Data Group’s heritage is rooted in Bitcoin mining, where it has been a leader for over a decade. Now, the Frankfurt-headquartered company, which is listed on the Frankfurt stock exchange (Bloomberg ticker NB2.DE), has evolved, having recently reorganized its business into three divisional brands that have been strategically structured to capitalize on the High-Performance Compute (HPC) market.

At the core of this strategy is Northern Data Group’s newly branded Cloud Service Provider (CSP) division: Taiga Cloud, which is fast becoming a European leader as a Generative AI CSP. With its coveted Elite status in NVIDIA’s Partner Network, as a result of a recent EUR 400 million investment into highly sought-after NVIDIA H100 GPUs, Taiga Cloud is at the forefront of Generative AI innovation. Similar-sized, US-based peers to Taiga Cloud are rumored to be achieving USD 7 – 9 billion valuations. 

The Group also owns two other divisions: Peak Mining, which encompasses the original Bitcoin Mining business, and Ardent Data Centers, a specialist GPU infrastructure provider. 

We spoke with Northern Data Group’s founder and CEO, Aroosh Thillainathan, to learn more about his diversification strategy, the growth opportunities that the Generative AI space offers, and what the future looks like for Northern Data Group.

Aroosh, firstly, can you tell us about your background?

Of course. I’ve always been fascinated by technology and soon started to explore the opportunities in HPC. I started my own business in 2014, mostly focusing on Bitcoin mining, the first true HPC application. In 2019, I merged this business with German Northern Bitcoin to become Northern Data Group.

Can you explain what you mean by HPC? Until recently, Northern Data was known purely for Bitcoin Mining. How has that changed, and what’s the reason behind this pivot?

As said, the first true large-scale HPC application was Bitcoin and ETH mining, but we’ve always had a much broader long-term vision for HPC. 

We recognized the disruptive potential of artificial intelligence already in 2020 – and specifically, the huge computing capacity that it requires. We have been preparing for the AI boom, and we have been a large customer and partner of NVIDIA since 2020. 

Can you tell us about the recently announced transaction that will result in you taking delivery of NVIDIA H100 GPUs before the end of the year? 

Through our acquisition of a company called Damoon, a special-purpose investment vehicle owned by crypto giant Tether, we have acquired 20 NVIDIA Pods, each with 512 H100 GPUs. The transaction has been done as a contribution in kind, in return for issuing new shares, at exactly the valuation that these pods would have cost us if we had bought them directly from NVIDIA. This is a very exciting deal for us, which will create great added value for our shareholders.

As a result of this acquisition, I’m proud to say that we are now one of just 15 elite-level CSPs in NVIDIA’s Partner Network (NPN) worldwide.

What does being part of the NVIDIA Partner Network mean?

This certification marks a major milestone in our long-term collaboration with NVIDIA. Our large-scale deployment of NVIDIA H100 Tensor Core GPUs will provide our customers with flexible and secure access to the latest and most advanced GPU compute power, shaping the Generative AI industry across Europe and beyond. 

How many data centers does Northern Data currently have?

We currently have ten locations across Sweden, Norway, Germany, the Netherlands, Canada, and the USA. Our largest HPC data center alone, based in Sweden, hosts more than 40 MW. This site is powered by 100% carbon-free energy, generated mostly by hydropower plants in the region, with a power-usage effectiveness score of 1.06. To put that into context, anything below 1.4 is considered efficient and the global industry average is 1.55. We’re continually looking at ways to reduce our Data Centers’ environmental impact and improve efficiency.

This year, you carried out several cash capital increases, partly by issuing shares and partly by issuing convertible bonds. Quite a hefty dilution. 

Yes, but totally worth it. Once all transactions have closed, we will have 53.5 million shares outstanding. What is crucial for our shareholders is that once all new hardware is fully deployed, we should generate much higher earnings per share than before. We have a unique opportunity to become one of the largest Gen AI Cloud Service Providers in the world. With the latest purchase of H100 GPUs via the acquisition of Damoon, we are already number one in Europe. 

Do you envisage more dilution for shareholders?

No. As of now, we plan to fund further hardware acquisitions with debt. 

And do you plan to buy further hardware?

Yes, we are currently finalizing credit lines. Because we aren’t done at all and our growth plans are massive.

What do you see the opportunity to be? 

I believe that unlimited HPC has the potential to unlock unprecedented opportunities for business, research and development, and ultimately societal progress. At Northern Data Group, it is our mission to build and develop computing infrastructure that meets these needs both today and in the future. I am confident that we’re uniquely positioned in Europe to capitalize on this market and the demand for Gen AI and ML computing power, and we’re doing this in a really exciting way. 

We make computing power accessible for many Generative AI applications, from accelerating autonomous vehicle innovation to drug discovery research and manufacturing digital twin development. By harnessing the power of AI, businesses can improve operational efficiencies and make data-driven decisions faster. Generative AI is supercharging digital transformation at an unprecedented pace. Enterprises need access to accelerated compute power to run Generative AI models but are also increasingly looking for solutions that are in line with their wider ESG strategies. We offer both. 

When is this latest generation GPU hardware expected to be online and generating revenue?

The first GPU pods will come online at the end of the 4^th quarter of this year, and the full rollout should be complete by the middle of next year.

Gen AI inference and training demands a huge amount of energy. Can this be done sustainably?

We believe it can. It’s about responsibly hosting this technology. We host our compute power within strategically located data centers powered by 100% carbon-free energy, ensuring the environmental footprint of our customers compute-intensive processes is as light as possible. 

With all that exciting development in your Cloud Service Provider division, will Bitcoin mining then completely lose its importance within your group?

No, not at all. We are also planning to continue to grow in the area of Bitcoin mining – especially in North America. In fact, we have just announced a USD 150m purchase of the latest ASIC miners. Our subsidiary Peak Mining is performing well with a current BTC price of over USD 25,000. We will update the market soon about our growth plans in that division. 

How much revenue and profit is your division Taiga Cloud expected to make in fiscal year 2024?

We have not yet published a specific forecast for 2024. However – and this is publicly available information - the 20 H100 pods alone are a total of 10,240 GPUs. The rental price per hour for one GPU is currently around USD 3.30 – 4.50. I leave it to the readers to make their own assumptions about how many hours we can sell per year per GPU, and if those rental prices will go up or down in the near future - I think everyone is aware of the unprecedented levels of demand for this specific hardware at the moment. 

In addition, we also generate revenue from our existing NVIDIA A100 and A6000 GPUs in operation and of course, our Peak Mining Bitcoin mining division. 

I am very optimistic and excited for the future of Northern Data Group and I am convinced that Northern Data’s current valuation level offers a very compelling investment opportunity. I am actually so convinced that I recently increased my own shareholding in Northern Data with an investment of EUR 37 million into a convertible bond, which can be converted at EUR 18.35 per share. 

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.