Cryptocurrency miners are now tapping AI as a new source of income due to the current problems they are facing in their usual activities. According to a recent report by the Financial Times, miners are using their complex computing facilities to advance AI in an attempt to address the high energy costs and decreased returns that have characterized this sector.
Also Read: IMF report reveals mixed AI preparedness across African nations
Core Scientific, the biggest Bitcoin miner with a hash rate of 2.4 EH/s, is currently leading this change. The CEO, Adam Sullivan, said that AI deals are crucial for the company, highlighting a recent agreement with AI cloud provider CoreWeave. The partnership is expected to produce revenues of $4.7bn over 12 years, which shows the profitability of such partnerships.
CoreWeave demonstrates success in the Crypto-to-AI transition
CoreWeave, which transitioned from crypto mining to AI, has done well financially. This is evidenced by the company’s valuation of $19 billion in May after raising $7.5 billion in debt financing.
Additionally, the FT report further states that AI companies require a lot of energy and computing, both of which are available to crypto miners. Thus, crypto miners are a more favorable option than AI firms building out their own high-performance computing (HPC) data centers.
According to J. P. Morgan analysts, the construction of HPC data centers can take several years, and the time required has increased due to the growing use of AI.
“It [normally] takes 3-5 years to build an HPC-grade data center from scratch.”
J. P. Morgan analysts
The mining rigs that crypto miners have already set up are much more advantageous for AI companies as they would have to build their own data centers. However, Google and Microsoft are pouring billions of dollars into their AI data centers and chips, which shows that the strategies in the industry are not the same.
Energy consumption raises concerns as AI and crypto expand
The use of energy in massive mining activities related to cryptocurrencies has emerged as a major issue. According to the Energy Information Agency (EIA), such processes in the U.S. use more than 2% of the total electricity, which is the equivalent of a new state on the grid. Similarly, the International Energy Agency (IEA) estimated that the energy consumption of data centers, crypto, and AI will double by 2026 to match the energy use of Japan.
Additionally, more Bitcoin miners are increasingly branching out into AI. TeraWulf Inc., a Bitcoin mining company, has also ventured into the AI business and is in the process of designing a new high-performance computing project in the Lake Mariner facility in New York. Recently, Hut 8 Corp, an AI infrastructure company, got an investment of $150 million from Coatue Management for AI infrastructure development.
