Bitcoin Miners: A Boon for AI Data Centers
Bitcoin miners are becoming sought-after partners for the establishment of artificial intelligence (AI) data centers due to their access to power supplies and operational expertise.
Bitcoin Miners’ Power Access
Bitcoin miners currently have control over a substantial amount of power, estimated at around 6 gigawatts (GW), with a projected pipeline that could reach up to 12 GW by 2027.
- Control over 6 GW of power
- Projected pipeline up to 12 GW by 2027
This power capacity allows miners to have an advantageous position in securing energy supplies quickly, thanks to their presence in the “large load power interconnect queue.”
- Beneficial position in the power interconnect queue
- Fast energy supply acquisition
Analysts from Bernstein highlight the suitability of Bitcoin data centers for retrofitting due to their high power density racks, strong cooling infrastructure, and overall operational capabilities.
- Bitcoin data centers ideal for retrofitting
- High power density racks and robust cooling infrastructure
By the end of 2027, Bernstein anticipates that approximately 20% of Bitcoin miners’ power capacity will shift towards supporting AI endeavors.
- Shift of 20% power capacity towards AI by 2027
Moreover, the five largest Bitcoin miners in the United States are expected to continue consolidating their operations, potentially accounting for a quarter of the global Bitcoin hashrate and positioning themselves well to explore AI opportunities in the near future.
- Consolidation of the top US Bitcoin miners
- Potential exploration of AI opportunities
Bitcoin Miners’ Challenge: ‘Capitulation’
Bitcoin miners are currently undergoing a challenging phase known as “capitulation,” where dwindling profits coincide with a recent market sell-off in the Bitcoin space.
- Struggling with declining profits
- Market sell-off complicating the situation
Miner capitulation involves miners scaling back their operations or liquidating a portion of their mined Bitcoin and reserves to sustain their activities, generate returns, or manage their Bitcoin exposure.
- Scaling back operations to sustain activities
- Liquidating Bitcoin reserves for returns
An important indicator of this phase is the decrease in Bitcoin’s hashrate, which symbolizes the total computational power supporting the Bitcoin network. The hashrate has recently dropped by 7.7%, hitting a four-month low of 576 EH/s following a record high on April 27.
- Decrease in Bitcoin’s hashrate
- Four-month low of 576 EH/s
Comparisons between this decline and post-FTX collapse conditions in December 2022 suggest a potential market bottom in sight.
- Possible indication of a market bottom
- Similarities with past market conditions
In addition, miners have faced significant revenue declines during this period, with daily revenues plummeting by 63% since the halving event. Daily revenues dropped from $79 million on March 6 to $29 million currently, with transaction fee revenue contributing a mere 3.2% of total daily revenues, marking the lowest share since April 8.
- Revenue decline of 63% since halving
- Transaction fee revenue at 3.2% of total daily revenues
Hot Take: Adapting to the Evolving Landscape
As the crypto industry continues to evolve, Bitcoin miners are exploring new avenues of collaboration, with AI data centers emerging as promising partners. While facing challenges such as “capitulation,” miners are strategically positioning themselves to capitalize on emerging opportunities in both the Bitcoin mining and AI sectors.
Sources:
1. CoinDesk
2. Bernstein Report
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