Cryptomining company Sphere 3D is moving to establish a significant data center presence in Hopkinsville, Kentucky, with plans for a new 50 MW facility and the potential repurposing of an existing 15 MW Bitcoin mining operation for artificial intelligence and high-performance computing workloads.

Two-Track Development in Hopkinsville

The proposals were put forward by Sphere 3D's North Campbell Land Co. subsidiary during a July 27 public hearing convened to examine potential data center zoning regulations in the city.

The planned 50 MW facility would be built at a separate site that has not yet been publicly identified, while the conversion project centers on Sphere 3D's existing mining operation at Hopkinsville Electric System's Holland Substation.

The existing mining site has been operational for approximately three years and consists of around 22 modular computing units. It currently participates in a flexible-load program that allows Hopkinsville Electric System to reduce or stop the site's electricity consumption during periods of high demand on the local grid. North Campbell has offered to fund a new 65MW substation for Hopkinsville Electric System at an estimated cost of between USD 8 million and USD 10 million.

Under that arrangement, approximately 50 MW would be allocated to the data center, with the remaining 15MW made available to other customers of the utility.

HES general manager Jeff Hurd told city council members this month that the Tennessee Valley Authority could supply the additional generation capacity required without affecting service to the utility's approximately 13,000 existing customers.

Hurd said the new substation could be ready within six to 12 months, though no confirmed development schedule for the broader project has been established. Neither the new data center nor the conversion of the existing mining facility has received formal approval. No prospective AI or HPC customers for either site have been disclosed.

Zoning Framework Still Being Written

Hopkinsville does not currently have a separate land use classification for data centers, and officials are in the process of drafting the city's first sector-specific zoning rules.

A working draft circulated in July would draw a distinction between large-scale and hyperscale facilities.

Under that draft, facilities consuming less than 75 MW and occupying less than 50,000 square feet would be classified as large-scale data centers and subject to a 1,000-foot setback from neighboring residential, public, and quasi-public properties.

Facilities using at least 75 MW or occupying 50,000 square feet or more would be designated hyperscale and prohibited outright.

The physical footprint of Sphere 3D's proposed 50MW facility has not been disclosed. Community and Development Services is expected to hold a second public hearing before bringing a formal recommendation to Hopkinsville City Council.

North Campbell and the Cathedra Acquisition

North Campbell became a wholly owned subsidiary of Sphere 3D following the company's acquisition of Cathedra Bitcoin in June. The combined business now operates approximately 53 MW across sites in Iowa, Kentucky, and Tennessee and claims a development pipeline exceeding 100 MW.

The development in Hopkinsville would be completed in phases, with the conversion of the existing Bitcoin mining operation serving as the starting point before the new 50MW facility moves forward.

Weak Finances as Company Pursues Transition

Sphere 3D confirmed the Hopkinsville plans as part of its second-quarter financial results.

The company reported revenue of USD 2.5 million for the quarter, a net loss of USD 13.8 million, and cash and cash equivalents of USD 2.8 million as of June 30.

The figures underscore the financial pressures facing the company as it attempts to pivot away from Bitcoin mining and toward AI and HPC infrastructure.