Sphere 3D shareholders have given the green light on the company’s merger with Cathedra Bitcoin, clearing one of the final hurdles before the deal officially closes on June 1. The combined entity will control 53 MW of power capacity and 1.2 EH/s of hash rate spread across five data centers in Iowa, Kentucky, and Tennessee.

The deal structure

The merger, first announced on March 5, is structured as an all-stock arrangement under British Columbia law. Cathedra shareholders will end up owning approximately 49% of the combined company on a partially diluted basis.

Sphere 3D, which trades on NASDAQ under the ticker ANY, will retain both its listing and its corporate identity. The transaction still needs a final court order and the usual routine closing conditions, but no significant regulatory hurdles have materialized.

Sphere 3D gets access to Cathedra’s established power infrastructure and site development expertise. Cathedra gets a NASDAQ-listed parent company with broader capital market access.

The AI pivot, explained

Sphere 3D wants to take data centers built to run Bitcoin mining rigs and convert them into facilities capable of running high-density computing that AI model training and inference demand. Companies like Core Scientific, Hut 8, and others have pivoted portions of their capacity toward AI hosting deals, often at significantly higher revenue per megawatt than mining alone can deliver.

Sphere 3D will initially focus on Bitcoin mining using its combined hash rate, but the five-site footprint across three states gives it geographic diversity and options for converting capacity as AI hosting contracts become available.

In early May, a new hosting agreement was announced that utilizes approximately 80% of capacity at Cathedra’s 15 MW Shire site in Kentucky.

What this means for investors

Sphere 3D’s combined 53 MW of capacity is meaningful but modest by industry standards. The 49% equity stake going to Cathedra shareholders also means significant dilution for existing Sphere 3D holders.

Retaining the NASDAQ listing gives the merged entity a capital markets advantage when it comes to raising future funds, whether for facility upgrades or additional site acquisitions.

Investors should keep an eye on two things post-close: the pace of new hosting agreements beyond the Shire site deal, and any concrete announcements about facility retrofitting timelines and capital expenditure requirements.