Detailed narrative
Transition to AI Compute and First AI Revenue
Digi Power X is actively transitioning from legacy operations to AI compute and colocation, evidenced by the planned wind-down of legacy activities and the recognition of its first GPU bare-metal rental revenue of $1.1 million in Q2 FY26. This initial revenue was generated from B200 and B300 GPUs deployed at the Columbiana, Alabama facility over approximately five weeks, marking a substantial turning point for the company.
Columbiana AI Campus Development Progress
The company is progressing with its Columbiana, Alabama AI campus, targeting Phase 1 readiness by December 2026 (15 MW) and Phase 2 by the end of Q1 2027 (25 MW). Equipment purchases for both phases are largely complete, with long-term equipment for Phase 1 already being received and Phase 2 equipment secured for November/December delivery, indicating the project is ahead of schedule.
Strategic Financing and Dilution Mitigation Efforts
Digi Power X has significantly strengthened its balance sheet, increasing cash and cash equivalents to $142.4 million and total assets to $279 million as of June 30, 2026, with no long-term debt. To fund future growth and mitigate shareholder dilution, the company is in advanced debt financing discussions, engaging Goldman Sachs to syndicate financing for the Alabama data center and potentially recouping some of the $110 million CapEx already deployed.
GPU-as-a-Service Expansion and Financing Outlook
The company aims to exit 2027 with 10 MW in GPU-as-a-Service capacity. Recent developments, including NVIDIA and major banks creating funds for GPU residual value, are expected to facilitate easier debt or asset-based financing for GPUs, accelerating the bare-metal program. Additional GPU orders, such as the Vera Rubin, are expected to land in early Q1 next year to boost income.
Long-Term Site Development and Power Strategy
Digi Power X is planning its growth through 2030-2031 across multiple sites. This includes converting existing grandfathered power capacity in North Tonawanda (60 MW) and Buffalo (18 MW) for colocation (40-50 MW) and GPU-as-a-Service (8-10 MW) by 2027, despite a New York moratorium on new data center power expansion. The company also holds 40 acres in North Carolina, targeting an additional 150-200 MW of power by 2029-2030, and is exploring access to 1.3 GW of utility power in West Virginia.
U.S. Data Center Inc. Strategic Separation
Digi Power X has reduced its ownership in U.S. Data Center Inc. to 48% (from 55%) to avoid diverting cash from its core business. U.S. Data Center, which designs and manufactures modular data center systems, is raising separate funds, having secured $125 million pre-revenue valuation, with plans to deliver modular systems to different sites in 2027, operating as a distinct business purpose.