Grid Power Is Becoming the Bottleneck for AI Data Centers

News Provided by USA News Group on behalf of Host Digital Inc.

NEW YORK, Sept. 29, 2026 (GLOBE NEWSWIRE) -- USA News Group News Commentary - The scarcest input in AI computing is shifting from chips to the power that runs them. On Sept. 2, Vertiv agreed to pay approximately $1.45 billion in cash for a microgrid and behind-the-meter power firm, saying the deal should help data center operators secure power faster. On Sept. 25, Cipher Digital said it had stretched the contracted life of a Texas data center from 10 years to 20 and lifted contracted revenue at the site to more than $9 billion. On Sept. 29, Host Digital Inc. put its own answer to the same problem in front of shareholders, in a letter from its CEO built around energized sites and long-term take-or-pay leases. Companies mentioned in this commentary include: Host Digital Inc. (NYSE American: HOST), Cipher Digital Inc. (Nasdaq: CIFR), Digital Realty Trust, Inc. (NYSE: DLR), Vertiv Holdings Co (NYSE: VRT), and Talen Energy Corporation (Nasdaq: TLN).

Key Takeaways

• Host Digital says Site I in northeast Oklahoma is an energized site with an existing industrial building and a utility-owned substation, leased on a 15-year take-or-pay basis with approximately $1.25 billion of contracted base-term rent.
• The lease covers 55 megawatts of gross capacity and 43 megawatts of critical IT capacity. The company is targeting delivery in the first quarter of 2027, and rent begins only after delivery.
• On Sept. 22, Host said it expects to acquire a second northeast Oklahoma site from its Sponsor, backed by a 12-year take-or-pay lease worth approximately $391 million, subject to definitive agreements.
• Around the sector, Vertiv is paying for onsite power capability, Talen reports a pipeline of about 4 gigawatts of powered land and data center options, Cipher has doubled a lease term to 20 years, and Digital Realty is buying into 288 megawatts of fully leased capacity.
• Open items include finalizing Site I project financing, completing the buildout, and a related-party Sponsor relationship that shapes how Site II would be priced.
  
  

Power That Is Already Flowing Is the Scarce Asset

Grid access has become the variable that decides which data center projects move. Vertiv Holdings Co (NYSE: VRT) framed its planned purchase of UtilityInnovation Group around getting AI data centers to power faster, adding microgrid controls, onsite generation orchestration and behind-the-meter power architecture for sites where the grid cannot deliver quickly enough. CEO Gio Albertazzi said the combination should create value as power becomes "an increasingly critical constraint on data center growth." The agreement includes additional consideration of up to $1.15 billion in cash tied to EBITDA targets over 12 and 24 months.

Power producers are seeing the same scarcity in prices. Talen Energy Corporation (Nasdaq: TLN) reported on Aug. 5 that it cleared more than 10 gigawatts in the 2028/2029 PJM Base Residual Auction at $325.00 per megawatt-day, and that it is progressing a pipeline of approximately 4 gigawatts of land development and data center contracting options. Talen raised its 2026 Adjusted EBITDA guidance range to $2,025 million to $2,225 million, while reporting a second quarter GAAP net loss attributable to stockholders of $92 million that it tied primarily to unrealized losses on derivative instruments and higher interest expense.

What Host Digital Told Shareholders

In the letter, CEO Harmol Samra described Host Digital as a company that develops, owns and operates data centers for customers running AI and other demanding computing workloads, supplying the buildings, power, cooling and supporting infrastructure under long-term take-or-pay leases. The company says it does not buy or finance the customer's computers or processing chips. Samra put the gap this way: "a place to plug in the chips, with power already flowing." The company, formerly Healthy Choice Wellness Corp., began trading on the NYSE American as HOST on Sept. 18.

Host is building around what it calls RightScaled data centers, starting at 20 to 100 megawatts of grid power with room to expand where a site allows. Samra offered a financing argument for that size: the capital needed for mega-campuses is becoming harder to secure as interest rates rise and lenders scrutinize power availability, construction timelines and when rent will begin. Host's plan is to lease to customers with investment-grade credit or backing and to seek project-level financing, so that the borrowing stays with each project. Samra's background includes roles at ICONIQ Capital, Starwood Capital Group and PGIM Real Estate, and he said the platform built at ICONIQ grew to 82 data centers with more than 2.2 gigawatts of leased capacity.

Site I: A Signed Lease on an Energized Site

Host's first project is in northeast Oklahoma, at an energized site with an existing industrial building and a utility-owned electrical substation. The company says it has acquired the electrical service agreements for the site. The customer lease covers 55 megawatts of gross capacity, which the company describes as the total power available at the site, and after cooling and other systems the customer's design provides 43 megawatts of critical IT capacity. Host's pitch is that it is not starting from the ground up, in a market where the letter says the wait for a grid connection at a new site is measured in years.

The lease, signed in August, runs 15 years with approximately $1.25 billion of contracted base-term rent, including 3% annual increases from approximately $67 million in the first year. It is take-or-pay, meaning the customer pays for the capacity it has reserved even if it does not use all of it. Renewal options, if all were exercised, would bring total rent to approximately $3.2 billion over 30 years. Under the lease, the customer also pays the facility's operating expenses, including electricity, on top of rent.

Rent does not start until Host delivers the facility as the lease requires. The company is targeting delivery in the first quarter of 2027, with its focus on finalizing financing, completing the design and buildout, and testing the systems. It is pursuing a loan secured by the site and its lease to fund the remaining buildout, with repayment coming from rental income, and it says it expects an investment-grade lease backstop to support the payments. Samra wrote that bringing Site I to this stage has taken approximately $40 million in cash investment, and that the company's recent offering raised an additional $17.5 million before fees and expenses.

Site II and the Sponsor Pipeline

On Sept. 22, Host said it expects to acquire a second northeast Oklahoma facility, Site II, from its Sponsor, Host Infrastructure Holdings, under a Preferential Rights Agreement. The Sponsor has signed a 12-year take-or-pay lease at Site II with a publicly traded AI cloud provider for approximately 20 megawatts gross, or 16 megawatts of critical IT load, representing approximately $391 million of base-term contracted revenue. The company says any contribution of Site II remains subject to negotiation and definitive agreements, and that no assurance can be given that it will occur.

The agreement gives Host a 24-month period in which it can make the first offer on qualifying Sponsor projects and match outside offers, and Host can also decide to pass. According to the letter, the Sponsor already has four additional sites in its pipeline with more than 450 megawatts of potential gross power capacity that could be delivered to tenants by the end of 2027, with larger projects being worked for 2028.

The letter is direct about the relationship. The Sponsor is owned and controlled by Host's founders, including Samra, and the company expects the Sponsor to receive most of its payment for contributed projects in Host shares. Samra wrote that independent directors review proposed acquisitions and that Host's full board reviews and approves transactions under the agreement on behalf of all shareholders.

How Contracted Rent Gets Tested

Cipher Digital Inc. (Nasdaq: CIFR) offers a current look at how long leases work in practice. Its Sept. 25 announcement amended an existing lease with Fluidstack and added a binding commitment from an AI lab for a further 10-year term, lifting total contracted revenue at Barber Lake from $3.8 billion to more than $9 billion. The same announcement set a phased delivery schedule, with data halls expected from the fourth quarter of 2026 through the first quarter of 2027 and rent starting for each hall once it is delivered. Cipher agreed to absorb the first $359.3 million of costs above the original budget, with the tenant reimbursing 50% of costs above that level over the 20-year term. CEO Tyler Page said the extension "reflects the enduring value of the infrastructure we're building." For any developer holding a signed lease, the lesson is that delivery timing and cost allocation are written into the contract, and they are the same variables Samra says will decide when Host's rent starts.

Digital Realty Trust, Inc. (NYSE: DLR) agreed on June 29 to purchase Blackstone's 80% interest in two 96-megawatt data centers in Manassas, Virginia and its 50% interest in a 96-megawatt data center on the Digital Dulles campus in Sterling, at a gross value of $7.8 billion including assumed debt and remaining capital expenditures. The three facilities total 288 megawatts and are 100% leased to three distinct investment-grade hyperscale customers, with an expected initial stabilized capitalization rate of over 6.5%. Two are expected to stabilize in the first half of 2027 and the third in the first half of 2028. Individual buildings of 96 megawatts sit inside the 20 to 100 megawatt range Host describes, which makes the transaction a useful marker for how fully leased capacity at that scale is being valued.

What to Watch Next

Samra says future updates will follow five questions: what Host owns or expects to acquire in a project, what it must pay to get it, what it must spend to deliver it, when rent starts, and what cash is expected to reach Host after project costs. For Site I, the open items are finalizing project financing, completing the buildout and testing, and delivering in the first quarter of 2027 as targeted. For Site II, they are negotiating contribution terms and signing definitive agreements. The company also points investors to its investor presentation for a closer look at the business and growth plans.

Investors should weigh what is not yet settled. Rent at Site I begins only after Host delivers the facility as required, and payments remain subject to the lease's terms and Host's performance obligations. The project financing Host is pursuing had not been finalized at the time of the letter, the investment-grade lease backstop is an expectation rather than a completed arrangement, and the buildout still has to be completed and tested. The letter does not name the Site I customer. Site II depends on definitive agreements with a Sponsor owned and controlled by the company's own founders. Host's own forward-looking statements also point to risks around satisfying applicable listing requirements, integrating the businesses, obtaining required financing and delivering capacity on schedule, and refer readers to the risk factors in Exhibit 99.2 to the Form 8-K filed with the SEC on Sept. 17, 2026. The letter is also available as Exhibit 99.1 to a Form 8-K on SEC.gov.

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Article Source: Host Digital Letter to Shareholders, Host Digital Inc., GlobeNewswire, Sept. 29, 2026.

Contact Information: USA News Group

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Cautionary Note Regarding Contracted Revenue and Project Delivery. References in this article to contracted revenue, base-term rent, renewal options, lease terms, delivery dates and financing are statements made by Host Digital Inc. in its own releases and letter to shareholders and have not been independently verified by us. Contracted rent is not guaranteed revenue. Under the Site I lease, rent begins only after the facility is delivered as required and remains subject to the lease's terms and the company's performance obligations. Project financing had not been finalized at the time of the letter, and the expected investment-grade lease backstop is not a completed arrangement. Site II remains subject to negotiation and definitive agreements, and no assurance can be given that it will be acquired. The Sponsor is owned and controlled by the company's founders, which creates a related-party relationship. Contracted revenue figures cited for other companies are those companies' own statements.

Cautionary Note Regarding Forward-Looking Statements. This article contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements about delivery timing, financing, lease payments, acquisitions and growth plans. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Host Digital Inc. has identified risks that include its ability to satisfy applicable listing requirements, to integrate the businesses and realize anticipated benefits, to obtain required financing, and to complete development and deliver capacity on schedule, among other factors described in its filings with the SEC, including the risk factors in Exhibit 99.2 to the Current Report on Form 8-K filed on September 17, 2026. We undertake no obligation to update these statements except as required by law.

Referenced Companies. References to Cipher Digital Inc. (Nasdaq: CIFR), Digital Realty Trust, Inc. (NYSE: DLR), Vertiv Holdings Co (NYSE: VRT) and Talen Energy Corporation (Nasdaq: TLN) are provided solely as market and sector context. Those companies are not peers, competitors, or financial comparables of Host Digital Inc., are not involved in the preparation of this article, and their results are not indicative of Host Digital Inc.'s prospects. No partnership, affiliation, or endorsement is implied.

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