When it becomes more difficult to make a profit due to rising energy costs, bitcoin miners are giving up on the cryptocurrency grind and focusing on artificial intelligence (AI).
Mining Bitcoin used to be a cash machine, but those days are gone, and AI is becoming the only way to survive in an industry that’s getting squeezed on all sides.
Over the past week, the price of Bitcoin has increased by 12%, and the hash rate on the network has reached a record high. Mining has never been harder because there are more miners online than ever before.
The investment bank Jefferies stated that the daily revenue per exahash for miners decreased by 11.8% in August. To put it plainly, the money they are making is rapidly disappearing.
April brought another blow. Bitcoin’s halving.
This every four-year event aims to control supply by halving the amount of new Bitcoins that are mined. But it means that miners will only get paid half as much for doing the same amount of work.
Bankruptcies have resulted from this cut, which is not surprising. It is been a terrible year for industry titans like Riot Platforms and Marathon Digital. In 2024, Riot’s stock has crashed 53% while Marathon’s has dropped by almost 30%.
Even though Bitcoin has increased by 44% so far this year, these businesses have not been spared. Just 19.9% of the entire Bitcoin network was produced by publicly traded mining companies in North America in August, a decrease from July.
Yet, some remain hopeful. Newer machines are doubling the hashing power of older models without using more energy, according to Fred Thiel, CEO of Marathon. “There is no need to add power or sites,” he said to CNBC.
However, that does not imply that profits are booming.
Miners are not getting a break from Wall Street either. The publicly traded companies have made technological investments to increase productivity, but the financials do not work out.
Jason Les, the CEO of Riot, is still optimistic and refers to Bitcoin as “the most sound money in the world.” He insists that low-cost mining is the way to go.
On the other hand, some are taking their time. A mining company that emerged from bankruptcy in January, Core Scientific is one of the few businesses that has prospered despite this catastrophe.
They are now interested in AI and high-performance computing (HPC) in addition to Bitcoin. They signed a $6.7 billion agreement with Nvidia-backed startup CoreWeave last month.
The agreement enables Core to run AI models on powerful GPUs from Nvidia. Core’s stock has more than doubled since its resurgence, securing a market capitalization of nearly $3 billion.
The company’s facilities were designed for high-performance computing as well as Bitcoin mining, according to CEO Adam Sullivan.
At press time, Bitcoin was worth $59,854.