LAS VEGAS - Ault Alliance, Inc. (NYSE American: AULT), a diversified holding company, has announced that its subsidiary Sentinum, Inc. has entered into its inaugural colocation/hosting agreement. The contract will utilize the Tier 3 section of its approximately 100,000 square foot enterprise-class data center, operated by Alliance Cloud Services, LLC, located in southwestern Michigan.
The data center, part of a 617,000 square foot facility on a 34.5-acre campus, is positioned near power production sites and currently has a capacity of around 30 megawatts (MW). There is potential for expansion up to 300 MW, contingent upon the company receiving necessary approvals and securing adequate funding.
William B. Horne, CEO of Ault Alliance, expressed that this development is a significant milestone in the company's strategic plan to reallocate resources to support High Performance Computing (HPC) and Artificial Intelligence (AI) use cases. This shift will involve relocating a portion of their Bitcoin mining operations to their Montana locations.
The current agreement represents a small fraction of the total capacity available at the Michigan data center. However, Ault Alliance is in negotiations with other potential clients interested in a substantial portion of the additional capacity.
Ault Alliance's business model includes operating data centers for Bitcoin mining and hosting services, catering to the AI industry and other sectors. The company also deals in a variety of industries such as metaverse platforms, oil exploration, defense/aerospace, and more, through its wholly and majority-owned subsidiaries and strategic investments.
This news is based on a press release statement.
InvestingPro Insights
Ault Alliance, Inc. (NYSE American: AULT) has taken a notable step forward with its recent colocation/hosting agreement, leveraging its data center's capacity. Yet, investors should be aware of certain financial metrics and trends that could influence the company's future. According to InvestingPro data, Ault Alliance is currently operating with a market capitalization of 8.99 million USD, which is relatively small, indicating a potential higher risk for volatility. The company's Price / Book multiple, as of the last twelve months ending Q4 2023, stands at 0.2, suggesting the stock may be undervalued relative to its assets.
Despite the optimistic news about the data center's potential, Ault Alliance faces significant financial challenges. The company's operating income margin for the same period was -56.25%, indicating operational difficulties. Furthermore, the 1 Week Price Total Return as of mid-April 2024 shows a substantial gain of 23.46%, yet this is contrasted by a 1 Year Price Total Return of -99.94%, highlighting extreme price volatility over the longer term.
InvestingPro Tips suggest that Ault Alliance operates with a significant debt burden and may have trouble making interest payments on its debt. This is particularly relevant as the company looks to expand its data center operations and may require additional funding. Additionally, the company has been quickly burning through cash, which could impact its ability to sustain operations and grow in the competitive data center market.
For investors seeking a deeper dive into Ault Alliance's financial health and stock performance, more InvestingPro Tips are available, providing a comprehensive analysis. There are 17 additional tips listed on InvestingPro, which can be accessed through the following link: https://www.investing.com/pro/AULT. To enhance your investing strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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