Bitcoin
AI-hungry tech giants can’t build fast enough. They will need help from Bitcoin miners – DL News
- Bitcoin miners are starting to build their own AI fleets.
- Soon, they may start leasing their services to tech giants like Google.
- The strategy opens up a new revenue stream for miners that does not depend on the price of Bitcoin.
Artificial intelligence – and the business behind it – is presenting new opportunities for Bitcoin miners.
While miners have traditionally relied on Bitcoin rewards as their main source of income, some companies have recently allocated resources to building their own AI fleets.
By renting their computing power to technology companies that are developing AI tools, these miners can earn considerable and, most importantly, predictable returns. The strategy therefore opens up a new revenue stream for miners – one that does not depend on Bitcoin’s volatile price.
“Miners will have a huge opportunity to advance AI computing,” said Brian Dixon, CEO of crypto hedge fund Off The Chain Capital. DL News.
“Most of these miners can repurpose a substantial amount of their computers to serve basically Google, Microsoft, Amazon and all these big companies,” Dixon said. “We will see some of these big tech companies make big partnerships with Bitcoin miners.”
Hybrid approach: Hive and Hut 8
At least two large companies from Minas Gerais have started this process: Hut 8 and Hive Digital Technologies.
Hive CEO Aydin Kilic said DL News that the company’s AI fleet is now operational. Of the company’s 38,000 graphics processing units, or GPUs — computers that can perform high-speed calculations — a little more than 10% have been repurposed for AI computing tasks.
And Hive is actively looking for more opportunities. “Our ambitious goal is to expand our AI business to achieve annual revenue in excess of $100 million by 2025,” Kilic said. Hive had US$121 million in total revenue in 2023.
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Kilic emphasized the resilience that AI computing would bring to the company’s balance sheet – especially in an industry as cutthroat as Bitcoin mining.
Meanwhile, Hut 8 chief strategy officer Mike Ho said DL News that AI computing also has potentially higher returns than Bitcoin mining.
While Hut 8’s fleet is not yet operational, the company hopes to diversify “soon,” Ho said, pointing to the company’s $40 million purchase of GPUs in October 2023.
Hut 8 also said it would not repurpose any of its existing Bitcoin fleet for AI – instead preferring to “deploy next-generation technology” for this purpose.
Competing industries
The mining industry has been rubbing shoulders with the AI industry for some time now.
The reason: miners and AI makers need a large number of high-performance processing chips. Miners need high computing power to maintain the Bitcoin blockchain, while AI models are trained on colossal amounts of data.
“Bitcoin ASIC chips have had to compete with strong demand for AI chips this cycle and therefore manufacturers have been interested in bulk purchase contracts/options with miners who are flush with cash,” analysts at the research firm wrote. Bernstein in a recent report. ASIC refers to application-specific integrated circuits, which are chips that can be customized for a specific use.
AI miners and data centers are not just competing for chips, they are also looking to acquire similar land – locations with low electricity prices in friendly jurisdictions that preferentially utilize renewable energy, like Texas.
Miners have also expressed concerns that AI data centers may be willing to pay higher energy costs than miners. This has led major mining companies to secure long-term power contracts, Bernstein said.
Acquisitions
Ultimately, Bitcoin miners’ foray into AI could lead to big tech companies like Google and Amazon making bids to acquire miners’ AI clusters, according to Dixon.
“If you’re one of these big tech companies, you basically have two options: find someone like a Bitcoin miner that you can hire to do the AI computing, or buy data centers,” Dixon said. “You can’t build them fast enough.”
“It is possible that some of them will immediately start buying mining companies,” Dixon added. “Amazon, Google, these big giants in the tech space need this AI computing. There’s really no way around it.”
When asked if they would be open to a potential acquisition, Hut 8 and Hive said no.
Tom Carreras is a market correspondent for DL News. Have any tips on Bitcoin mining and AI? Contact tcarreras@dlnews.com