On July 5, as Bitcoin (BTC) fell below $54,000, many mining companies’ mining machines have reached shutdown prices. According to F2Pool data, only five mining machine models can currently bring profits to operators. This means that companies whose main business is crypto mining urgently need to find new profit points.
Previously, due to factors such as the fourth Bitcoin halving, the shutdown of BRC20, and energy costs, the stocks of leading listed mining companies have plummeted, and some have even declared bankruptcy. As the price of Bitcoin falls, it is more difficult for mining profits to cover costs. Bloomberg predicts that the entire cryptocurrency mining industry will lose about $10 billion after the halving.
Faced with the crisis, mining companies began to save themselves. Joining forces, updating mining machines, and improving computing power are common practices, but the most effective way at present is to transform into the field of AI. Compared with companies in other industries, the business paths of mining companies are highly overlapped with the track of artificial intelligence, and both have a strong demand for computing power, which happens to be the strength of crypto mining companies.
Core Scientific
In January 2024, Core Scientific's Chapter 11 reorganization plan was approved by the bankruptcy court, but the company's stock price fell more than 30% on the day of listing, closing at only $3.75. Total revenue for fiscal 2023 was $502.4 million, a 22% decrease from the previous year. Since then, the company has decided to expand into the AI field and signed a multi-year contract with CoreWeave in March with potential revenue of more than $100 million. Core Scientific will provide up to 16 MW of capacity in its new data center in Austin, Texas to host CoreWeave's infrastructure.
Subsequently, Core Scientific announced that it had signed a 12-year contract with CoreWeave, which is expected to generate annual revenue of approximately $290 million for the company, with total revenue exceeding $3.5 billion in 12 years. The shift to the AI field not only allowed Core Scientific to reject CoreWeave's acquisition proposal of $5.75 per share, but also promoted the company's market value to achieve positive growth. The stock price was about $3 before the halving, and it has reached $10 after the halving, an increase of nearly 300%.
CoreWeave
CoreWeave was originally a mining company founded in 2017, with large-scale GPU computing resources. Its customers include many AI giants such as OpenAI and Microsoft. CoreWeave initially focused on mining Ethereum, with more than 50,000 GPUs, accounting for more than 1% of the Ethereum network's computing power. Since 2019, the company has begun to focus on purchasing enterprise-level GPU chipsets, building dedicated cloud infrastructure, and adjusting its business around Nvidia's chips.
The transformation has made CoreWeave a cloud computing service company, and it has won major customers such as Microsoft and Google, becoming one of the world's largest independent GPU cloud providers. In April 2023, CoreWeave completed a $221 million Series B financing, and a month later Magnetar Capital invested another $200 million, totaling $421 million. In August of the same year, CoreWeave completed a $2.3 billion debt financing led by Magnetar Capital and Blackstone, and its valuation soared to $8 billion.
In 2024, CoreWeave completed a $1.1 billion Series C financing and signed a 12-year contract with Core Scientific. In addition, the company plans to invest $2.2 billion in data center construction in Europe by the end of 2025. It is currently rumored that CoreWeave plans to IPO in 2025.
Hut 8 Corp
In the third quarter of last year, Hut 8 suffered a net loss of approximately 54 million Canadian dollars (approximately 40 million U.S. dollars), and its revenue fell 46% year-on-year. Subsequently, Hut 8 changed its leadership, and the new CEO Asher Genoot said before the halving that the current task is to "make difficult decisions to divest, invest and grow assets." Hut 8 began to adjust and transform its business at the end of last year, acquiring four Canadian power plants and a new Bitcoin mine, and actively looking for more opportunities to invest in the growth potential of artificial intelligence.
On July 4, Hut 8 announced plans to commercialize its AI business in the second half of 2024. The company manages 17.8 EH/s of computing power, 762 megawatts of power capacity, and produced 107 bitcoins in June. Hut 8 expects annual revenue from its AI business to reach approximately $20 million. In June this year, the company received a $150 million strategic investment from Coatue to support the construction of its AI infrastructure platform. The stock price was about $8 before the halving on April 20, and is now over $16, doubling.
Marathon Digital Holdings
Marathon Digital Holdings is the largest publicly traded Bitcoin mining company, holding more than 17,000 Bitcoins. The company's main business is self-operated Bitcoin mining, and its strategy is to purchase mining machines through financing and deploy mining farms. In the past few months, Marathon has continuously optimized its mining machine products and expanded its computing power, and plans to increase its computing power to 50 EH/s by the end of 2024.
Marathon Digital acquired Applied Digital's Bitcoin mining data center and worked with NiceHash to launch customized firmware for Bitcoin ASIC miners optimized for the NiceHash mining platform. In May of this year, the company mined 2,811 bitcoins in the first quarter, worth about $176 million. Although these efforts have led to a slight increase in the stock price, from about $15 to $21 before and after the halving, the growth is relatively slow compared to mining companies that have transformed into AI.
Conclusion
Practice has proved that mining companies that embraced AI early have achieved rich returns, and some have even broken free from the constraints of the currency price. Mining companies that choose to stick to traditional mining business need to find a way out again before the next Bitcoin halving cycle arrives. For mining companies that choose the AI field, this is the best choice. Mature mining infrastructure, personnel management experience and power resources are enough to exempt them from the pain period of cross-field transformation.
