Microsoft Ends Oracle GPU Deal Over Older Nvidia Chips — Crypto Miners' AI Gambit at Risk - KuCoin
Microsoft has begun turning off capacity rented from Oracle after choosing not to renew a 2023 agreement due to older-generation Nvidia GPUs no longer meeting its evolving specifications.
The move, reported by Bloomberg on Nov. 6, comes as Microsoft has committed more than $80 billion to renting compute capacity from third-party providers including CoreWeave, Nscale and Nebius. The tech giant has grown frustrated with high costs and supplier delays, triggering tighter oversight of outside projects and reassessment of future agreements.
Oracle pushed back publicly, stating demand for its AI infrastructure remains strong. The company revealed that GPU capacity renewed in its fiscal Q1 was either renewed or resold on long-term contracts at roughly a 20% premium to prior pricing. Most of those GPUs, Oracle added, are at least four years old.
Crypto Miners' AI Pivot
The review of outside AI capacity coincides with Bitcoin miners and other crypto-focused infrastructure players aggressively pivoting into AI cloud builds. Miners see this as a diversification route, supplying compute and data-center capacity to large tech customers.
That creates both opportunity and risk for third-party suppliers — including crypto miners — who are investing heavily to become reliable providers of AI compute.
Market Implications
IREN, often cited in reporting, has faced delays after customer-requested network changes, pushing its target for more than $4 billion in annual recurring revenue from December into early 2027. The company reported $200 million in AI cloud revenue in its September quarter, while Bitcoin mining revenue tumbled 58% quarter-over-quarter to $28 million, causing its shares to drop nearly 17% on Nov. 5.
Financing for miner-led AI projects has varied, with BlocksBridge Consulting noting different IREN financing tranches carrying interest rates around 6% and 9%, though those packages fund different projects and aren't directly comparable.
Despite the Microsoft-Oracle split, the companies continue collaborating in other areas. In June 2024, Oracle announced a pact with Microsoft and OpenAI to provide additional capacity via Oracle Cloud Infrastructure, naming OpenAI and other AI firms as OCI customers.
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