Will artificial intelligence become the new El Dorado for miners? This is what the financial market analysis firm Bernstein thinks, which looked into the issue and this new trend which aims to guarantee financial stability to Bitcoin (BTC) miners.
To ensure their profitability, miners are turning to artificial intelligence
According to a report by Bernstein, more and more Bitcoin mining companies would turn to artificial intelligence (AI) following the 4th halving which occurred last April, contributing to the reduction in their income.
For their cryptocurrency mining activities, these companies rely on high-performance computer components and a large amount of electrical energy. These 2 characteristics are highly sought after by companies specializing in AI who seek to train their language models and chatbots of all kinds.
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Until now, these companies have turned towards traditional data centers who rented these components and this electrical energy to them. Cryptocurrency miners then understood that they too could offer their infrastructures and launched themselves into the market.
In his study, Bernstein explains how the AI ​​training market was invested by crypto miners :
Bitcoin miners are in a unique position, due to their disproportionate “access to power” in a world where that power is limited. This access to “ready” and cheap energy positions Bitcoin miners as attractive partners for cloud computing and AI companies who seek to accelerate the implementation of their tools on the market.
According to Bernstein, by 2027, 1/5 of the electrical power and infrastructure owned by Bitcoin miners will be exploited by companies seeking to train their AI models. For companies specializing in mining, this is a way to secure income in the event that the price of BTC falls or if the price of energy skyrockets.
AI companies negotiate with miners at discounted prices compared to data centers
According to analysts, the most recent data centers can wait up to 4 years before being connected to the electricity grid. This long wait can be explained in part because new Bitcoin mines added to the queue.
Currently, existing data centers are being evaluated between $30 and $50 million per megawatt while Bitcoin miners are valued at a value between 2 and 4 million dollars per megawatt. A valuation biased by the volatility of Bitcoin, the good financial health of miners being too dependent on this cryptocurrency in the eyes of the market :
We believe that for the moment, the market underestimates this value of “access to energy” and penalizes miners for the cyclical volatility of Bitcoin. Thus, the diversification of AI data centers would allow miners to trade as close as possible to their potential as “energy” assets.
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A concrete example reflecting the accuracy of Bernstein's analysis is that of Core Scientificone of the largest Bitcoin miners in the world. From 2019, the group gradually turned towards artificial intelligenceseeing its shares increase by 300% just this year thanks to its foray into the sector, allowing it to emerge from bankruptcy.
A sign of its desire to interfere a little more in the world of AI, Core Scientific recently announced a major partnership with CoreWeavea cloud computing company. This collaboration aims to expand CoreWeave's artificial intelligence capabilities, notably thanks to the construction of an infrastructure of 500 megawatts estimated at 5 billion dollars.
For Core Scientific, this agreement should enable it to generate the sum of $8.6 billion in revenue over 12 years thanks to the rental of this future infrastructure and its Bitcoin mining activities.
Source: Bernstein Blackbook, Press Release
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Surprised by the rise of crypto-assets at the end of the 2010s, I began to closely follow this sector which fascinates me to the greatest extent. When I'm not in football stadiums, rugby stadiums or handball halls, I work on writing relevant articles around cryptocurrencies and more broadly, Web3.
Zacharie Tazrout
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