The United States Department of Commerce has pledged $389 million to four companies that manufacture the power semiconductors needed to develop commercial fusion and AI data centers. The investment could ultimately flow through to Bitcoin miners that are switching to AI hosting in search of cheaper electricity.

The connection is not direct, but it is real. Over the past two years, several miners have been acquiring data center space and electricity supply for AI clients, and Cryptopolitan has previously reported that miners are looking at high-performance computing as part of their revenue diversification strategy. Should the government-backed fusion projects eventually deliver competitively priced power, those same miners would be natural customers.

Washington takes equity stakes in four chip firms

The Commerce Department issued letters of intent to the four companies — Helion, Commonwealth Fusion Systems, Vertical Semiconductor, and Sibelco — on October 22, providing research and development funding through the CHIPS and Science Act, a 2022 law backed by Congress that created a $10 billion fund for semiconductor research in the United States. Letters of intent are a preliminary step rather than finalized funding: the amounts and equity terms are settled only once each award is converted into a definitive agreement.

According to a statement from the National Institute of Standards and Technology (NIST), the grants are expected to fund semiconductor and material technologies for power regulation, conversion, and distribution across power grid, defense, and data center applications.

Each grant comes with a condition attached. The federal government will take an equity interest in each recipient that is both non-controlling and non-voting, the department said. Reuters, which first reported the grants, added that the Commerce Department has issued 19 similar R&D grants in recent months.

“The Trump Administration is accelerating American semiconductor innovation to enhance our domestic energy and power resources,” Commerce Secretary Howard Lutnick said.

Helion and Commonwealth capture the largest fusion awards

Two fusion ventures took the biggest slices. Helion, based in Everett, Washington, will receive up to $175 million for high-voltage power semiconductors and energy modules that generate the magnetic field for its fusion reactors. According to the company’s statement, the definitive award will be accompanied by $50 million in additional private funding, bringing the total to $225 million.

“Deploying fusion power plants at scale will require that we accelerate the development of certain technologies, such as semiconductors,” Helion CEO David Kirtley said in the statement announcing the award. Helion also indicated that Commerce would hold a non-voting $175 million interest priced off its Series G round, which valued the company at $15.5 billion — roughly a 1% stake, according to TechCrunch.

Commonwealth Fusion Systems, based in Massachusetts, will receive up to $85 million for radio frequency plasma heating semiconductors, power electronics, fusion diagnostics, and radiation hardening technology. “These innovations will be an important part of our efforts to build out global deployment of fusion,” said Bob Mumgaard, CEO of Commonwealth Fusion Systems.

The AI data-center grants that miners should watch

The final two grants are more closely tied to computing. Vertical Semiconductor, a company spun out of MIT, will receive up to $73 million to develop vertical gallium nitride power chips for AI server racks, including NIST’s reported development of the first 2.5-megawatt data center rack. Gallium nitride is a semiconductor material suited to high-voltage power conversion, losing less energy as heat than conventional silicon — a property that grows in importance as rack-level power draws reach the megawatt scale. Sibelco will receive up to $56 million for the high-purity quartz needed for chip production.

Rack-level power efficiency is where the story connects to crypto. Bitcoin miners compete on their ability to lower cost per hashrate, and companies running AI workloads now face the same pressures around power efficiency and cooling. Improved conversion chips — and, over the long run, power from fusion reactors — could reduce one of the highest costs common to both businesses.

Equity strings and a signal to private capital

The awards are modest relative to what these companies have already raised. Commonwealth has secured around $4 billion and Helion roughly $3.2 billion in committed capital, while TechCrunch writes that investors have bet more than $14 billion on the fusion sector as a whole. The Fusion Industry Association has asked Washington to inject $10 billion into the industry as one-time funding, with $5.4 billion going to startups.

The government stake stands apart from previous federal funding practice. Historically, such grants were non-dilutive, and nothing touched the recipients’ cap tables. The same equity structure has appeared in deals with MP Materials, USA Rare Earth, and Intel. The big question for venture capitalists is whether the dilution is worthwhile, given that the message from Washington is clear: fusion power is a strategically important technology for the country. The next milestone to watch is the conversion of these letters of intent into definitive agreements, the point at which the funding and equity terms move from proposal to final commitment. The message from the miners is where the grid economics will go next.

Source: Cryptopolitan