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Bitcoin miners that shift their focus to AI and high-performance computing (HPC) could boost their profits by up to $13.9 billion annually.
That’s according to an Aug. 16 report by fund management titan VanEck, which says that if listed miners convert only 20% of their existing and targeted power capacity to AI and HPC by 2027, they can add annual profits exceeding $13.9 billion over 13 years.
”The synergy is simple: AI companies need energy, and bitcoin miners have it,” wrote head of digital assets research Matthew Sigel. ”Bitcoin miners generally have bad balance sheets, either because of too much debt, too much share issuance, too much executive compensation, or some combination of all three.”
Bitcoin Miners are Shifting to AI & HPC, Unlocking New Revenue Through Strategic Arbitrage
We Estimate a $38B Net Present Value Opportunity by Converting 20% of their Collective Capacity by 2027.
(For context, the combined market cap of the stocks we looked at is $19B.)
— matthew sigel, recovering CFA (@matthew_sigel) August 16, 2024
AI and HPC customers are willing to fund capital expenditure, potentially providing a lower cost of capital for the bitcoin miners to strike their next energy deal, Sigel added.
In a foretaste of what might be coming, Core Scientific, the fourth largest Bitcoin miner by hash rate, signed a 12-year contract with AI company CoreWeave on June 3.
The deal is estimated to generate over $3.5 billion in revenue per year for Core Scientific by providing an additional 200 MegaWatts (MW) to their mining infrastructure.
The VanEck analysis comes at a time when it’s never been less profitable to mine Bitcoin. The hashprice, a key metric of mining profitability, is estimated by some analysts to be 40% lower than pre-halving figures.
IMF Pushback
In the meantime, the International Monetary Fund (IMF) is gunning for crypto miners.
Crypto mining and data centers accounted for 2% of the world electricity demand in 2022, and the demand is only likely to expand in the next 3 years, it said in an Aug. 15 blog.
It thus called for higher electricity taxes for AI and crypto projects to curb the growing trend.
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