Hyperscale Data has signed a major AI data center agreement with a California based neocloud provider that could generate more than $3 billion in revenue if fully expanded.

The agreement was signed through Alliance Cloud Services, an indirect subsidiary of Hyperscale Data, and covers colocation and related infrastructure services at the company’s Michigan campus.

The initial deployment will provide 20 megawatts of critical AI compute capacity and is expected to become operational during the fourth quarter of 2026.

Hyperscale Data said services could begin generating revenue as early as late September.

The agreement has an initial term of 10 years and includes two additional five year extension options controlled by the customer.

If the initial 20 MW deployment remains active through the full 20 year term, Hyperscale Data expects the contract to generate more than $1.2 billion in revenue.

The customer also has the option to expand the deployment by another 32 MW, bringing total capacity to 52 MW.

If that option is exercised within the first two years and remains active through the two extension periods, total contract revenue could exceed $3 billion.

The expanded deployment would use about 17% of the Michigan campus’s potential 300 MW power capacity.

Hyperscale Data has begun purchasing electrical and infrastructure equipment and is retrofitting roughly 60,000 square feet of the site for the initial deployment.

The company expects the first 20 MW phase to cost between $100 million and $120 million.

As the AI capacity comes online, Hyperscale Data plans to redirect power currently used for Bitcoin mining at the Michigan campus toward AI and high performance computing workloads.

The company currently operates about 28 MW of Bitcoin mining capacity at the facility.

Hyperscale Data expects to continue mining Bitcoin at its Montana site and may keep some mining operations active in Michigan during the transition.

The agreement represents a major step in the company’s effort to transform the Michigan campus from a Bitcoin mining facility into a larger AI infrastructure center.

Hyperscale Data said the campus could eventually support more than 300 MW of total capacity, though further expansion will depend on financing, regulatory approvals, utility agreements and infrastructure availability.

The company did not disclose the identity of the customer.

Hyperscale Data shares initially jumped as much as 20% after the announcement before reversing course. The stock was trading near $0.19 and down about 27% at press time.