The AI Boom: How Bitcoin Miners Are Cashing In

The world of artificial intelligence is hungry for power – and bitcoin miners are feeding the beast. With their advanced equipment and low-cost energy, these miners are uniquely positioned to profit from the AI boom.

As the demand for computational power soars, companies like Core Scientific are emerging as the new “picks and shovels” play for AI. Having access to cheap power in states like Texas and North Dakota, and agreements to tap more energy from elsewhere, these miners are capitalizing on the premium put on companies that can provide high-performance computing (HPC) data centers.

The demand for power is insatiable

CoreWeave, a cloud computing provider, inked a $3.5 billion deal with Core Scientific earlier this month, involving a $290 million annual payment over 12 years for the Austin-based bitcoin miner’s data centers to host AI-related computing hardware. This agreement is just the tip of the iceberg, with CoreWeave announcing a second contract projected to bring Core Scientific $1.2 billion in revenue in the coming years.

“The demand is insatiable,” says Adam Sullivan, Core Scientific’s CEO. “If we just execute on what is within our current contracted power today, we’d be a top 10 data center company in the United States hosting a very significant portion of AI that’s done in the United States over the coming years.”

The rush for AI-related computing power is driven by applications like ChatGPT, which require 10 times the electricity of traditional Google searches. As a result, companies like CoreWeave are willing to pay top dollar for access to high-performance computing capacity.

The new frontier of AI computing

In this gold rush, bitcoin miners are emerging as the winners. Since Core Scientific’s announcement of the first CoreWeave contract on June 3, the aggregate market value of 14 U.S.-listed bitcoin miners surged by 22%, according to research by JPMorgan. This stark contrast to the 12% decline in bitcoin and a 4% rise in the S&P 500 is a testament to the growing value of these miners’ power assets.

As the AI boom continues to drive demand for high-performance computing, the lines between bitcoin mining and AI data centers are blurring. With their excess electric capacity, fiber-optic cabling, and experience in delivering high-service levels, bitcoin miners are poised to become a crucial part of the AI ecosystem.

The intersection of AI and bitcoin

The question is, can these miners adapt to the changing landscape and capitalize on the AI boom? The answer, it seems, is yes. As Kevin Dede, an analyst at H.C. Wainwright, notes, “Smaller AI players that may not have an appetite for quite the same computing and power provided by hyperscalers could better integrate with the level of service range bitcoin miners are accustomed to delivering.” This could ultimately lead to a bitcoin mining/HPC data center hybrid, revolutionizing the way we think about AI computing.

In this brave new world, the savvy investor would do well to keep a close eye on the bitcoin miners turned AI powerhouses.