Northern Data is betting on crypto to fund its cloud ambitions

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From the first gold rush, savvy traders recognized that the surest way to make a fortune was to sell picks and shovels. If you provide the tools to those hoping to make money, you will make money whether or not they hit the jackpot – it’s low risk, high reward.

Germany’s Northern Data is one company that fully applies this principle in a modern setting – and it’s aiming for a bigger price tag. Today, the company is best known as one of Europe’s leading providers of high-performance computing infrastructure needed for cryptocurrency mining, the gold rush of the 21st century. In the future, it looks forward to a gradual pivot – the quality of this infrastructure gives it the opportunity to compete against Amazon, Microsoft and Google in the cloud computing market, the company believes. Think of it as providing the picks and shovels needed for the cloud-based economy.

“Northern Data will become Europe’s leading cloud computing group,” predicts Northern Data Chairman Christopher Yoshida, who joined the company last July after a long career in corporate finance and advisory roles in a number of fast-growing technology companies. “That’s what got me excited about the company.”

Yoshida attributes the market opportunity now open to Northern Data to the long-term vision of Aroosh Thillainathan, who founded the company three years ago and is now its CEO. “It’s easy to forget this now that we have global supply shortages, but in March 2020, at the start of the pandemic, there was a real surplus in the semiconductor market,” Yoshida says, reminding how customers of semiconductor manufacturers feared the worst. in the midst of the crisis and withdrew their orders. “Anoosh had the vision to seize this opportunity to secure the hardware that transformed our business.”

Two years later, with countless industries jostling each other for the chips they need, Northern Data finds itself in a strong position. “We have the newest kit,” Yoshida says. “We have more computing power and we produce it at a lower cost.”

The company has also made another strategic bet. “Strong durability will become an increasingly important competitive advantage,” Yoshida says. In a world where there are growing concerns about the carbon footprint of powerful computers tasked with cryptocurrency mining – and the wider environmental impact of massive data centers and tech infrastructure – the world’s biggest tech companies have become among the biggest buyers of carbon offsets, he points out.

Northern Data, on the other hand, has invested heavily in sustainable infrastructure. In particular, its Hydro66 facility in Sweden powers cloud computing entirely from renewable energy. The company’s latest business update reveals that its ether cryptocurrency mining efforts are now powered almost exclusively by renewable energy. “That’s a huge plus,” Yoshida says.

Christopher Yoshida, President of Northern Data

Heidi Sigler, City Headshots

All of this puts Northern Data in an enviable position. Its cryptocurrency mining work continues to generate cash; this provides the business with all the revenue it needs to continue investing in a long-term future that resides in a larger market.

“It’s like the tortoise and the hare,” Yoshida says of the company’s dual ambitions in cloud computing and cryptocurrency. The latter may be winning the race right now, but the former will win all the prizes in the end. The scale of the demand for cloud computing capacity – in Europe and beyond – is an incredible prospect for those in a position to supply it. And Northern Data expects to be one of the cheapest and greenest providers.

The cloud market today is dominated by Amazon’s Web Services division, Microsoft’s Azure and Google’s Cloud Platform. Yoshida doesn’t expect Northern Data to take on these giants, but he sees a huge opportunity as businesses around the world look to add additional capacity or source cloud power for specific on-demand purposes. . “It’s a market that’s going to grow 30% a year for the foreseeable future,” he says. And without any of the legacy technologies that incumbent cloud providers are now struggling with, Northern Data can grab a good chunk.

As Northern Data capitalizes on this growth, it will naturally evolve over time – the tortoise will eventually overtake the hare. Amazon, after all, started as a simple online retailer, before evolving to a stage where the cloud is now almost on the verge of being its main source of income. Northern Data could get there faster, Yoshida believes, though he adds, “Our core business, mining, is definitely not going away.”

Such progress will raise questions about the status of the company. Northern Data is already publicly listed in Germany, but for a company aspiring to become a global technology leader, a Nasdaq listing might make more sense. “It’s a good North Star to think about, but we’re focused on building the business step by step,” Yoshida says.

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