Keel Infrastructure executives said demand for AI and high-performance computing infrastructure remains centered on speed to power, while developers face a more expensive financing environment and heightened political scrutiny around data center construction.
Speaking at the KBW AI Infrastructure Summit, CEO Ben Gagnon said concerns around data centers’ water use, electricity rates and local impacts are often disconnected from the facts of individual projects. He said developers that engage communities early and make long-term commitments can address many of those concerns before submitting permit applications.
Gagnon said political discussion, including attention on the upcoming midterm elections, has contributed to investor uncertainty. However, he argued that Keel’s approach to development has positioned it well as regulatory standards evolve, particularly in Pennsylvania.
Capital Costs Rise as Leasing Demand Prioritizes Speed
CFO Jonathan Mir said a concentrated group of issuers, higher interest rates and concerns about the companies driving AI demand have pushed up both debt and equity costs. While financing remains available, it is more expensive than it was six months earlier, he said.
“Investors are applying higher discount rates both to the debt and the equity as they value companies,” Mir said. He added that debt investors are increasingly focused on the quality of project structures and lease counterparties.
Despite those conditions, Gagnon said the key consideration for potential tenants remains “timeline to power.” Customers are increasingly willing to consider smaller sites, including those below 50 megawatts, if they can obtain power and begin deploying compute capacity more quickly.
Gagnon said tenants that have already invested heavily in GPUs and other computing equipment have a strong economic incentive to secure infrastructure quickly rather than allow those assets to sit unused and depreciate. He said this dynamic can support pricing for developers able to offer greater certainty and faster deployment.
Mir said Keel had nearly $825 million in liquidity as of its last reported quarter and remained near that level. He said the company’s liquidity supports discussions with potential customers and construction partners by demonstrating its ability to meet commitments.
Permitting Progress at Pennsylvania and Washington Sites
Gagnon said permitting work at Panther Creek, Sharon and Moses Lake has continued to advance since Keel’s second-quarter call. Moses Lake is already under development and has broken ground, while the remaining permits at Sharon and Panther Creek are largely related to engineering matters such as wastewater runoff and sewage connections, he said.
Panther Creek experienced a delay of several months, according to Gagnon, though he said the issue is being resolved and the project is moving back on schedule. He characterized the remaining permits as nonpolitical engineering reviews rather than approvals likely to attract protests.
Keel’s Pennsylvania developments were already structured to meet standards emphasized in a recent state executive order, Gagnon said. The order focuses in part on ensuring that local ratepayers do not bear the costs of new transmission infrastructure or generating capacity needed for data centers.
Gagnon said Keel had already committed to funding infrastructure for its projects and had obtained relevant community approvals. He said the new framework could make it harder for newer entrants to pursue projects in the state, potentially increasing the scarcity of Keel’s sites.
Mir said project-finance markets remain “functional and reasonably constructive,” although more costly than in the second quarter. He said the company is comfortable with its ability to finance debt for projects such as Sharon and Panther Creek and remains funded for corporate expenses through at least 2028.
Design, Quebec and Longer-Term Development Plans
Gagnon said equipment standards for NVIDIA’s Vera Rubin architecture are still developing, creating uncertainty around electrical distribution, cooling and other design requirements. Keel has its own reference designs, but customers may have different specifications, he said, and the final design will need to be a workable solution for both the developer and tenant.
At Sherbrooke in Quebec, Keel is awaiting a provincial minister’s approval to consolidate three existing power agreements into a single 96-megawatt high-performance-computing agreement. Gagnon said the approval timing remains uncertain, but construction permitting in Quebec should be relatively quick once power authorization is received.
He said power availability is the primary obstacle in Quebec, citing rejected power requests from Amazon and Microsoft. Keel expects its Quebec opportunity could offer higher rates, improved power-usage effectiveness and potentially stronger project yields than comparable U.S. sites because of the region’s cooler climate and constrained supply.
For Scrubgrass, Keel expects to provide an update around year-end or January on a detailed 750-megawatt utility load study and engineering related to potential on-site generation. Gagnon said the company sees potential for a campus exceeding 1 gigawatt but is not yet discussing leasing because it is still securing power.
Looking beyond project stabilization, Gagnon and Mir said Keel intends to operate as a long-term infrastructure owner and portfolio manager. They said the company may recycle capital from stabilized assets into future projects when doing so offers the best long-term risk-adjusted returns for shareholders.
About Bitfarms (NASDAQ:BITF)
Bitfarms Ltd. is a vertically integrated Bitcoin mining company that develops and operates data centers designed to support cryptocurrency mining. Its operations include the acquisition and management of mining hardware, electrical infrastructure and computing facilities, with a focus on using low-cost energy to power its operations.
Founded in 2017 and headquartered in Toronto, Canada, Bitfarms has operated mining facilities across North and South America, including in Canada, the United States, Paraguay and Argentina.
