According to Cointelegraph: Bitcoin miners may have the potential to significantly boost their profitability by redirecting a portion of their energy resources towards the artificial intelligence (AI) and high-performance computing (HPC) sectors, according to a recent report from investment firm VanEck. The firm estimates that if Bitcoin miners allocate 20% of their energy capacity to these sectors by 2027, they could collectively generate an additional $13.9 billion in annual revenue.
VanEck's report, published on August 16, highlights the challenges faced by Bitcoin miners due to volatile operating costs and the fluctuating price of Bitcoin. The firm suggests that miners, who often struggle with poor financial positions due to excessive debt, share issuance, and high executive compensation, could improve their balance sheets by tapping into the growing demand for energy in the AI and HPC industries.
“AI companies need energy, and Bitcoin miners have it,” VanEck stated, emphasizing the strategic opportunity for miners to diversify their revenue streams. The firm argues that this shift could help Bitcoin miners stabilize their financial performance and reduce their reliance on the unpredictable cryptocurrency market.
The report comes amid increasing criticism of the Bitcoin mining industry. Investment firm Kerrisdale Capital recently described the sector as an "industry of snake oil salesmen," questioning the long-term viability of Bitcoin mining firms due to their lack of sustainable returns. Kerrisdale's Chief Investment Officer, Sahm Adrangi, pointed out that many mining companies engage in share dilution without delivering meaningful returns on investment.
Despite these criticisms, VanEck believes that the AI and HPC sectors present a viable path forward for Bitcoin miners. The report notes that AI companies are often willing to provide the necessary financial resources for capital expenditures, making these contracts particularly attractive for miners.
One example of this trend is Core Scientific, the fourth-largest Bitcoin miner by hash rate, which recently secured a 12-year contract with AI hyperscaler CoreWeave. This deal is expected to generate over $3.5 billion in revenue by supplying 200 megawatts (MW) of infrastructure. Similarly, Canadian miner Hive Digital Technologies has been expanding its facilities to offer HPC services to companies in the gaming, AI, and graphics rendering industries.
The potential shift towards AI and HPC comes at a critical time for Bitcoin miners, who are facing a challenging year following the April Bitcoin halving. This event reduced mining rewards from 6.25 BTC to 3.125 BTC per block, squeezing profitability across the industry.
In light of these developments, VanEck’s report suggests that diversifying into AI and HPC could be a key strategy for Bitcoin miners looking to secure long-term growth and profitability.