$WYFI +15% on $865M Colocation Deal with Nscale

WhiteFiber announced a $865M 10-year colocation deal with Nscale for its North Carolina data center.

Let's analyse the deal:

- Nscale has a 200,000 GPU $23B long-term Bare Metal agreement with $Microsoft(MSFT)$ . It could be that they plan to use the WhiteFiber capacity to serve Microsoft. This would be great for WhiteFiber. If they perform well, this would increase their standing in the industry, helping attract more bidders for future capacity, including maybe Microsoft itself.

- The contract is for 40MW IT load, which could handle about 24K GPUs, which could cost about $1B, and as WhiteFiber doesn't have that kind of capital, they prefer the colocation model.

- $86.5M per year is $2.16M per MW of IT capacity, good.

- They target a PUE of 1.3, so the 100MW gross full capacity of this data center is about 77MW of IT capacity.

- If we assume the same price per MW, at full capacity, the North Caroline data center has revenue potential of $166M per year.

- This will have 80%+ EBITDA Margins. Because the press release said that Nscale pays PUE cooling overhead, direct GPU electricity, and real estate taxes.

- At an 80% margin, EBITDA will be $133M per year.

- WhiteFiber has previously estimated that a colocation data center costs them $9M per gross MW, implying this data center will cost $900M to build.

- $133M EBITDA and $900M construction cost give us a payback period of around 7 years.

- A 7-year payback period is good for an asset with a 15-20 year useful life.

- Most importantly, the project only began in June 2025. 40MW will be online by April 2026, and 100 MW will be fully completed by early 2027. So in less than 1 year, WhiteFiber built an $69M EBITDA data center, and in less than 2 years, $133M EBITDA.

- This illustrates the advantage of its retrofit model.

- The company plans to repeat this playbook over and over again. 1) Acquire an existing manufacturing site with access to energy. 2) Convert it to a data center, using debt, customer pre-payments, and equity. 3) Get a large anchor tenant.

- We are entering a time where energy access is a huge bottleneck for greenfield data centers. WhiteFiber's model of retrofitting locations with existing energy access could prove to be valuable.

- At $547M market cap, WhiteFiber could be trading for 3-4x 2027 EBITDA.

For SG users only, Welcome to open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with unlimited trading on SG, HK, and US stocks, as well as ETFs.

🎉Cash Boost Account Now Supports 35,000+ Stocks & ETFs – Greater Flexibility Now

Find out more here.

Complete your first Cash Boost Account trade with a trade amount of ≥ SGD1000* to get SGD 688 stock vouchers*! The trade can be executed using any payment type available under the Cash Boost Account: Cash, CPF, SRS, or CDP.
Click to access the activity

Other helpful links:

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

$WYFI +15% on $865M Colocation Deal with Nscale

Let's analyse the deal:

For SG users only, Welcome to open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with unlimited trading on SG, HK, and US stocks, as well as ETFs.

Find out more here.

Comments