Bitcoin 'just doesn’t cut it anymore': Miners' pivot to AI sends stocks soaring
Bitcoin miners are using their computing power to service a thirsty AI boom, and investors are taking notice.
Companies once focused solely on mining digital tokens are signing long-term contracts using their land, energy, and data centers for AI workloads.
Miners like IREN (IREN), Riot (RIOT), TeraWulf (WULF), and Cipher Miner (CIFR) are just a handful of players shifting their resources toward high-performance computing (HPC) infrastructure and artificial intelligence.
Industry insiders point to the promise of better returns from AI than crypto mining.
"Bitcoin mining just doesn’t cut it anymore," Daniel Keller, CEO and co-founder of cloud infrastructure firm InFlux Technologies, told Yahoo Finance.
A crowded mining field and bitcoin’s price swings have squeezed margins. Jefferies analysts hly competitive mining environment and price volatility can impact bottom lines. Jefferies analysts estimate miner profits declined more than 7% in September as bitcoin prices declined.
Read more: What is bitcoin, and how does it work?
Every four years, bitcoin’s “halving” event cuts mining rewards in half, further eroding revenue over time.
"Due to halving schedules, mining is less profitable in the long run than AI computing," said Keller.
"Additionally, demand for AI workloads is through the roof right now, and BTC miners have what AI data centers require: affordable and consistent power housed in temperate environments," he added.
The pivot comes as AI demand booms and heavyweights such as ChatGPT maker OpenAI (OPAI.PVT) and chipmakers like Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO) are striking new deals in the space.
Cloud hyperscalers like Google (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN) are facing multiyear grid and permitting delays for more AI data center capacity, creating an opportunity for smaller, power-ready operators to help meet demand.
"The access to ready and cheap renewable power combined with data center capabilities positions Bitcoin miners as attractive partners for AI cloud providers looking to accelerate time-to-market and build resilient high-performance computing clusters," Bernstein's Gautam Chhugani said in a note earlier this month.
Bernstein analysts estimate that bitcoin miners’ grid-connected power can cut data center deployment timelines by up to 75%. Additionally, their existing infrastructure is "closer to AI data centers" versus traditional ones.
"This allows Bitcoin miners to retrofit existing BTC mining facilities for AI/HPC at low incremental capex," Chhugani wrote.
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