Advizex Teams With HPE On $40M Blockbuster Hut 8 AI Deal

'Advizex was a really good partner because they helped us figure out and think through the financing portion of how we could commit to the order,’ says Hut 8 CEO Asher Genoot. 'They were able to help finance the order before those chips were delivered.'

Hut 8 CEO Asher Genoot was determined to drive the bitcoin miner and next-generation energy infrastructure platform provider into the AI era with a breakthrough $40 million purchase of Hewlett Packard Enterprise Cray supercomputer systems with Nvidia GPUs.

The business challenge was Hut 8 and US Bitcoin Corp. were in the midst of a complex merger last year that threatened to stall the deal. Enter Advizex, No. 115 on the CRN SP500, a Fulcrum IT Partners company and a top HPE partner, who was working the deal with HPE.

“It was a very difficult process to figure out what was the right way to do it,” said Genoot (pictured above), who expects the new AI-powered systems to nearly double sales in Hut 8’s high-performance computing business. “Advizex was a really good partner because they helped us figure out and think through the financing portion of how we could commit to the order. They were able to help finance the order before those chips were delivered. That really helped and was pretty instrumental in us being able to move forward on the AI business even as we were going through a complex public merger.”

The Advizex financing vehicle came at pivotal moment, pushing the blockbuster deal with 125 Hewlett Packard Enterprise Cray XD670 supercomputer nodes with 1,000 Nvidia H100 GPUs over the goal line with HPE cluster management software, Aruba networking and Nvidia and Red Hat software.

The Cray servers with HPE “white glove” managed services were delivered in mid-August. “It's been really, really exciting having the team bring this cluster online and being able to have our customers start using the compute and start driving their businesses forward,” said Genoot. “That's the most exciting thing for us, providing the right infrastructure for our customers to be successful. We're happy to do that.”

The deal – which was announced Thursday – marks the formal launch of Hut 8’s GPU-as-a-service offering through a Hut 8 subsidiary, Highrise AI Inc. In fact, Hut 8 said it has already begun generating revenue with the “inaugural GPU cluster” for an AI cloud developer coming fully online this week.

Hut 8 said its five-year agreement with the AI cloud developer provides for “fixed infrastructure payments plus revenue-sharing.”

The long journey to the AI deal, which was more than a year in the making, is a testament to the tight partnership between HPE and Advizex. The deal came together with both HPE and Advizex stepping up time and time again in the midst of many twists and turns to craft and deliver a game changing AI solution for Hut 8.

Genoot, who has spearheaded the drive to diversify the Hut 8 business with AI and traditional cloud services, credited Advizex with being a “strong” partner that was “nimble and creative” in bringing the right financing structure rather than a “cookie cutter” approach. What’s more, he said, Advizex also played a key role in “pushing and making sure the cluster was delivered and we got the services we needed.” Key to the deal was a partner that understood the “nuance” and “evolution” of Hut 8, said Genoot.

“We have a lot of value and knowledge we can bring into the industry working with partners that understand the evolution of our company and are excited by that evolution and want to be a part of it and grow with us,” he said.

The Advizex Key To Winning The Deal With HPE

Advizex CEO C.R. Howdyshell (pictured above) said the key to winning the intensely competitive deal side-by-side with HPE was Advizex’s business-focused AI expertise, its Advizex Financial Services capabilities – a critical factor in a number of Advizex AI deals - and the leadership and all-out “tenacious” drive of Advizex Vice President and General Manager of High Performance Compute and AI Steve Kucker to get the deal done.

“This deal would not have happened without Steve Kucker,” said Howdyshell. “In all my years, I have never seen our team work harder on one deal, starting with Steve Kucker. We went through so many ups and downs, ebbs and flows. To get these AI deals done you have to be tenacious. You have to get it over the goal line! There were several opportunities to walk away from this, from all parties. Everybody remained committed and tenacious.”

In fact, Howdyshell said Advizex and HPE working together to win the deal in an intensely competitive AI market is a classic example of the power of the OEM-solution provider model versus a direct sales model. “HPE knew what we could bring to the table and they brought us in as a partner,” he said. “This was a case of one plus one equals four. We earned the trust and confidence of Hut 8”

The HPE-Advizex team also received strong support from the Nvidia sales team, said Howdyshell. In fact, Howdyshell said, the close relationship between Advizex and Nvidia was also a factor in the deal. “You have to over-communicate with the OEM and the customer on these deals,” he said. “It’s very complex and there are supply chain challenges that you have to coach the customer through with shipment of the systems and the GPUs. It’s a lot of due diligence and work behind the scenes.”

A Trusted Business Advisor For Customers

The indefatigable Kucker, the point person on the deal for Advizex, said the key to winning any big deal, including the Hut 8 AI opportunity, is developing a strong bond as a trusted business advisor for the customer. “Thaphe reason customers rely on us is we know their business, they trust us and they know we are accountable,” he said. “If you work both the business plan and the financial plan while supplying the technology solution that is a relationship. You have to speak the same language as the customer whether it is on the finance side, the technology side or the business side. If you can’t speak that language you are out the door!”

Kucker credited a full court press by the HPE team involved in the deal especially HPE Vice President Enterprise Sales and Global Accounts Monica Gille, who was instrumental in crafting the deal with Hut 8 and Advizex.

Kucker also singled out HPE Vice President and General Manager of High Performance Compute and AI for North America Jerome Boucher, HPE Vice President and CFO for High Performance Compute and AI Stanley Palmer and HPE North America Managing Director Paul Hunter.

Recalling that the deal began with an Advizex team working the July 4 weekend last year on the configuration specifications for the Cray servers and Nvidia GPUs, Kucker pointed to the “army of people” from Advizex, HPE and Hut 8 that worked to get the deal done from presales to services specialists and financing team members.

The complex deal required hundreds and hundreds of man hours with over 75 different configurations of the AI solution based on changing availability and supply chain issues. All of the configurations had to undergo rigorous certification and validation by HPE and Nvidia.

“You have to have dedicated, committed and a talented team to get a deal like this done, and you have to be creative with supply chain and financing,” said Kucker, who was handpicked by Howdyshell to head up the new Advizex High Performance Compute and AI business unit earlier this year.

Moving Hut 8 Into The AI Era

Hut 8, which operates five data centers and has had a high-performance compute business for the last two years, is moving full force into the AI era with the Cray supercomputers with Nvidia H100s.

“We’re extremely excited to have our business aligned with where we believe compute is going,” said Genoot. “We're going from a CPU-powered economy to a GPU-powered economy, and AI is the leading factor in pushing that forward. So we're big believers in what the technology can do…For us it’s a big evolution of the business, growing and being at the forefront of where the world is heading, being an innovator. This is about being a part of the growth and scale that comes with AI in everything from the compute layer to the digital infrastructure/data center layer to the power layer.”

The dramatic gains in energy and efficiency from the new AI era Nvidia powered solutions has changed the economics of the traditional high-performance compute data centers, said Genoot. “That has created an opportunity to convert some of our sites to more AI-style data centers rather than just bitcoin mining,” he said. “We’re continuing to expand and grow with AI both on the chip side and also with the underlying infrastructure because there is such a need (for power and energy efficient systems) and lack of power in the data center market today.”

As for the AI road ahead, Genoot said he could not be more excited about the future for Hut 8 and its customers. “We’re extremely excited about what the future holds,” he said. “We’ve done a great job with building a very large power footprint and now we see the intersection between AI and power and how to actually go fuel this next-generation compute. What we’re doing is bringing together our understanding of power, data center infrastructure, and the chips to fuel this AI technology revolution.”

Hut 8’s aim is to be an “infrastructure enabler” of the AI era, building an underlying “energy infrastructure platform” that will “empower engineers” to integrate AI into existing applications or build net new AI applications, said Genoot.

“We’re very focused on the areas that we can grow the business and be strong partners and strong innovators in this space,” said Genoot. “This is one step in the direction of where we are heading as a company. We believe AI is a transformational technology that will only continue to grow and scale. So for us to be a part of that development and value chain on energy, data center and the compute layer is very important to us.”

Advizex’s Early AI Market Success

Advizex’s ability to craft and validate AI solutions in a fast-moving market has been critical to its early success in the market, said Howdyshell. “These customers are moving fast, so having a partner like Advizex that has experience getting these deals done is a difference maker,” he said. “This isn’t a fulfillment game. There are stringent validation and certification for these deals. It takes a lot of work and commitment to the customer to make it happen. You must earn it.”

Earning it means investing hundreds of thousands of dollars in building out the AI business, said Howdyshell. “That is the price you pay to get into the game,” he said. “It is worth it because our vision is to be a hybrid AI-as-a-service market leader. You have to establish credibility with both the OEM and the customer.”

So far, Advizex – which will celebrate its 50th anniversary next year- has won four AI deals and has a significant AI sales pipeline, said Howdyshell. He said the Advizex “customer for life” philosophy with a focus on technical excellence has been a critical factor in the company’s success in the AI market. “Our brand remains technical excellence,” he said. “Eighty percent of our team members are technical either consultant, delivery or support and we demonstrate it every day with customers.”

Howdyshell said he sees the Hut 8 deal as a coming of age for Advizex’s AI ambitions, crossing the chasm into the AI supercomputer category. “This was a very significant undertaking,” he said. “We learned a lot from the HPE experts about supercomputing, data-center cooling, and networking. HPE obviously knows these Cray high-performance computing systems better than anybody in the world and has fantastic networking experts.”

Howdyshell said he is looking forward to continuing to leverage that HPE and Advizex technical talent to help Hut 8 continue to push the AI high-performance compute envelope. “I’m really excited about the future working with Hut 8,” he said. “We want to help them be successful in every aspect of their business. They have high-growth aspirations and we are committed to helping them achieve their long-term business and financial goals. We want to ensure that we take them down that journey of customer for life with Advizex.”