Miners Turn to AI: A New Opportunity After Bitcoin Halving?
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Miners Turn to AI: A New Opportunity After Bitcoin Halving?
By entering the AI赛道, mining companies can not only diversify their businesses but also enhance their resilience against the cyclicality of the cryptocurrency market.
Navigating Web3 tides with focused insightsBy Nandin Wu, Leslie, TaxDAO
In January 2024, digital asset management firm CoinShares noted that with the upcoming Bitcoin halving, more miners are expected to shift toward artificial intelligence (AI) in energy-secure regions to pursue higher revenues. Companies such as BitDigital (BTBT), Hive (HIVE), and Hut 8 (HUT) have already begun monetizing AI initiatives. Meanwhile, TeraWulf (WULF) and Core Scientific (CORZ) are either planning or already executing expansions into the AI space. This article provides a brief overview of mining companies’ strategic shifts toward artificial intelligence and cloud services.
1. Specific Strategic Moves by Different Mining Companies
1.1 BitDigital
On October 23, 2023, Bit Digital announced the launch of Bit Digital AI, a new business line designed to provide specialized infrastructure supporting generative AI workflows.
Currently, Bit Digital AI operations have been initiated. Under agreements with clients, Bit Digital will offer GPU leasing services ranging from a minimum of 1,024 to a maximum of 4,096 GPUs.
Bit Digital also purchased 132 units of FusionOne HPC systems from xFusion Digital Technologies Co., Ltd. (xFusion) for approximately $35 million. The FusionOne HPC solution is an integrated high-performance computing (HPC) platform; each configuration ordered by Bit Digital includes NVIDIA HGX H100 systems with 8 GPUs, totaling 1,056 GPUs. These GPUs were delivered by the end of 2023 and will be deployed in Tier-3 data centers.
1.2 Hive
According to detailed reports, HPC HIVE’s AI team is currently collaborating with strategic partners across North America to advance open-source AI large language models (LLMs).
Additionally, HIVE has acquired two new Nvidia GH200 Grace Hopper Superchips, designed specifically to “handle the world’s most complex generative AI workloads, including large language models, recommendation systems, and vector databases.”
HIVE stated: “In short, we’ve been building HIVE’s GPU and AI division to become the ultimate AI infrastructure choice—the ‘ace in the hole.’ As leaders in technology, we believe our company, which combines efficient Bitcoin mining operations with a rapidly growing GPU computing business, remains undervalued.”
1.3 Hut 8
Hut 8 claims it currently operates over 36,000 square feet of geographically diversified data center space and cloud capacity, connected to power grids supplied by abundant renewable and zero-emission energy sources. The company is transforming traditional assets to create the first hybrid data center model, serving both conventional high-performance computing and emerging industries such as gaming, artificial intelligence, and machine learning.
1.4 Core Scientific
Core Scientific, which has operated in the mining sector since 2017, began diversifying its business in 2019. The company owns and hosts Nvidia DGX systems and GPUs for AI computing, and has constructed and deployed dedicated facilities for high-value computing applications within its data center campus in Dalton, Georgia. At the same time, Core Scientific has partnered with cloud service provider CoreWeave to deliver infrastructure for use cases such as machine learning.
These combined capabilities support AI and high-performance computing workloads, with projected revenue reaching $100 million—though the company notes that total addressable revenue potential is significantly higher due to its extensive infrastructure capable of hosting the most advanced GPU computing solutions on the market.
1.5 Bitdeer
On November 10, 2023, Bitdeer entered into a partnership with U.S. semiconductor giant NVIDIA, becoming the first Cloud Service Provider (CSP) partner in the Asia-Pacific region to offer DGX H100 SuperPOD cloud services. With priority supply access from NVIDIA, Bitdeer will provide GPU cloud services for AI model development and training. The announcement was made at a press event held at NVIDIA’s Singapore office, highlighting Bitdeer’s emphasis on the “NVIDIA Partner” designation.
Founded in 2018, Bitdeer is one of the world’s largest operators of self-owned mining data centers. As of October 31, 2023, it manages six large-scale data centers with a total computing power of 21.2 EH/s.
Bitdeer’s AI development roadmap includes infrastructure development, cloud platforms, software support, and application programming interfaces (APIs). Through its collaboration with NVIDIA, Bitdeer will continue investing in GPU, DGX, and SuperPod infrastructure while launching cloud computing platforms, AI training and inference platforms, AI software tools, and APIs to provide comprehensive support for AI development.
2. Impact of the Bitcoin Halving on Mining Companies’ Strategic Adjustments
At 8:09 AM Beijing time on April 20, 2024, Bitcoin successfully completed its fourth halving. This event presents new challenges for mining companies. First, the halving means miners receive fewer Bitcoins as block rewards, directly impacting mining profitability. Miners must now invest more resources and computational power to earn the same amount of Bitcoin, potentially reducing profitability—especially for higher-cost operators—who may even exit the market.
On the other hand, the halving also affects Bitcoin’s market supply and price. With reduced block rewards, Bitcoin’s issuance rate declines. Many believe this scarcity could drive up Bitcoin’s price.
Overall, the halving impacts not only miner profitability and competitive dynamics but also influences Bitcoin’s supply, price, market volatility, and investment strategies.
In summary, redirecting mining computational power toward AI and cloud computing affects mining companies in multiple ways, primarily including the following aspects:
(1) Diversification of Revenue Streams and Risk Mitigation
Deploying computational resources in AI helps companies diversify their income. By providing computing power to AI service providers, firms can generate stable revenue from the AI sector, reducing dependence on Bitcoin price volatility.
Moreover, operating across multiple sectors enables risk diversification. Currently, most mining companies’ profits are highly correlated with crypto market fluctuations. Shifting toward AI and cloud computing allows miners to secure more stable earnings, helping them withstand business and cash flow volatility during bear markets.
(2) Capturing Market Share in the AI Sector
Demand in the AI sector is broad and rapidly growing. By offering AI computing services, companies can attract a wider customer base, expand market share, and further enhance profitability. Meanwhile, as mining revenues suddenly drop post-halving, each miner’s strategic response—and how quickly they adapt—will likely determine who leads and who lags behind.
(3) Cost Considerations
The cryptocurrency landscape today differs significantly from several years ago. While mining was once widely distributed globally, recent years have seen a concentration of operations in the United States, intensifying competition for local power resources. The burgeoning AI industry is attracting massive capital inflows, giving mining companies transitioning into AI a better chance to negotiate favorable electricity rates with utility providers.
(4) Enhancing Technical Capabilities and Talent Development
Entering the AI domain requires greater technical expertise and skilled personnel. Investments in AI not only strengthen a company’s technological capabilities and competitiveness but also drive organizational transformation, fostering team growth and long-term business development.
However, the transition to AI is not without obstacles. The ASIC chips used in mainstream mining hardware are specifically optimized for mining algorithms and cannot be seamlessly repurposed for AI or cloud computing workloads. This means mining companies cannot directly redeploy existing mining equipment into AI applications and must instead undertake long-term strategic planning. Additionally, because mining relies heavily on economies of scale through massive computational power, the increased mining difficulty after the halving further amplifies this effect—leading to greater centralization among top-tier players. Consequently, smaller and mid-sized miners will face stronger incentives to pivot into the AI space.
Overall, entering the AI sector allows mining companies to diversify operations and strengthen resilience against the cyclical nature of cryptocurrency markets. However, this transition remains a long-term endeavor.
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