Sphere 3D Plans 50 MW Kentucky Data Center as City Weighs Zoning Rules

Sphere 3D’s subsidiary is proposing a 50-megawatt data center in Hopkinsville, Kentucky, as city officials consider zoning rules on large computing facilities.

The subsidiary, dubbed North Campbell LandCo LLC, also wants to convert its existing 15-megawatt bitcoin mining operation at the Hopkinsville Electric System’s Holland Substation to other computing uses, according to a Hoptown Chronicle report on a July 27 public hearing.

The second facility would be built at another, so far undisclosed, Hopkinsville site. Company representatives said North Campbell would pay an estimated $8 million to $10 million for a new 65-megawatt electrical substation, leaving about 15 megawatts of additional capacity for other utility customers.

Neither proposal has been approved. The hearing was convened to collect comments on citywide zoning standards, rather than to consider a development application. The reports did not disclose the new facility’s location, construction schedule, prospective computing customers or total development cost.

North Campbell became an indirect, wholly owned Sphere 3D subsidiary when the Nasdaq-listed company completed its acquisition of Cathedra Bitcoin Inc. on June 1.

The ownership link makes the Hopkinsville proposal part of Sphere’s effort to expand beyond bitcoin mining into power-backed infrastructure for artificial intelligence and high-performance computing. Still, the company has not identified an AI customer or workload for either Hopkinsville facility.

Sphere said when it announced the Cathedra transaction that the combined company would initially operate 53 megawatts across five data centers in Iowa, Kentucky and Tennessee. North Campbell’s proposed 50-megawatt project would represent a substantial addition to that operating base if built.

Hopkinsville currently does not classify data centers as a separate land use. A July 17 working draft would divide facilities by electricity demand and physical footprint, with projects using less than 75 megawatts and occupying less than 50,000 square feet classified as large-scale. Such facilities would face a 1,000-foot setback from residential, public and quasi-public properties.

The draft would prohibit “hyper-scale” facilities, defined as those using at least 75 megawatts or occupying at least 50,000 square feet. North Campbell’s proposed facility would fall within the large-scale category based on its stated power demand, although its planned footprint has not been disclosed.

The existing 15-megawatt operation, which has run for about three years and consists of roughly 22 modular computing units, would probably receive legal nonconforming, or grandfathered, status if the draft rules take effect. Hopkinsville Electric System has submitted an alternative proposal that would provide more flexibility for equipment replacements and reconfiguration within existing data-center sites.

Utility General Manager Jeff Hurd told the hearing that revenue from North Campbell helps offset costs for Hopkinsville Electric’s roughly 13,000 customers. The mining operation also participates in a flexible-load program that allows its electricity use to be curtailed when the Tennessee Valley Authority’s system is under heavy demand.

Residents who spoke at the hearing sought protections addressing noise, water consumption, backup generators and other environmental effects. North Campbell’s lawyer said the proposed new facility would use closed-loop cooling, which recirculates water.

Community and Development Services will revise the zoning amendment before sending it to the Hopkinsville City Council, which has final authority. The outcome could determine whether the expansion proceeds as proposed or requires substantial changes to its design and location.

Financing will also be an issue. Sphere reported $3.1 million of cash and equivalents as of March 31, before the Cathedra acquisition, while using $3.7 million of cash in operations during the first quarter. Revenue declined to $1.9 million from $2.8 million a year earlier, according to its quarterly SEC filing.

Sphere shares closed Thursday at $2.35, up 14%, giving the company a market value of about $15.6 million.