Venturing into Artificial Intelligence Market
As the anticipated Bitcoin halving event nears—a mechanism that will reduce miners’ rewards—miners are exploring alternative business opportunities, says a report by JPMorgan. This shift includes an increasing number of crypto miners providing high-performance computing (HPC) services for the burgeoning artificial intelligence (AI) market, a move JPMorgan analysts, led by Nikolaos Panigirtzoglou, believe could be lucrative.
This diversification strategy, the report suggests, has been enabled in part by selling new or previously minted Bitcoins.
The Common Ground between Crypto and AI
Both the world of crypto mining and AI—including the training of expansive language models—have a high demand for sophisticated computer chips. Companies like Applied Digital are recognizing this potential synergy; they recently introduced an AI cloud service and inked a $460 million deal to host AI cloud computing in their data center.
Another significant player, Iris Energy, has revisited its strategy to focus on HPC services due to the surging interest in AI technologies.
Ethereum Miners Join the HPC Bandwagon
JPMorgan’s analysts have noted that former Ethereum miners are now offering HPC services. As Ethereum shifts from a proof-of-work to a proof-of-stake consensus model, GPUs, which were central to Ethereum mining, are becoming available in the secondary market.
The analysts mention, “*With AI’s rapid evolution, the increasing demand for HPC services is revealing a potentially more profitable path for these GPUs that were earlier used for Ethereum mining.*”
Promising Results from Preliminary Tests
According to the report, some Bitcoin and former Ethereum miners have engaged in beta tests, using a fraction of their GPU fleets to offer HPC services. The early results are promising—miners report high profitability per unit of power consumption, substantially surpassing the returns from Bitcoin mining. If these results scale, JPMorgan analysts believe this could redefine the revenue landscape for Bitcoin miners.
Geographical Diversification, with Russia in Focus
In addition to branching into new industries, Bitcoin miners are also expanding geographically. JPMorgan analysts indicate that Russia is becoming a major hub for Bitcoin mining. Due to the ongoing economic slump and effects of the Ukraine conflict, power producers in Russia are faced with surplus energy, which, coupled with its colder climate, allows the country to offer significantly cheaper energy resources to Bitcoin miners.
A Testing Time for Bitcoin Miners
JPMorgan’s recent analysis also warns that the upcoming Bitcoin halving could be a challenging period for miners. The event, which will cut rewards for miners in half, is likely to leave those with high electricity costs in a precarious position, while miners with lower costs could navigate the changes more comfortably.
