Bitcoin miners are increasingly turning to artificial intelligence to mitigate the impact of the recent halving event.
What Happened: The event, which occurred late on Friday, automatically halved the new issuance of Bitcoin, a process that happens roughly every four years. Halving, which is designed to counter inflation, has historically preceded a significant surge in Bitcoin’s price, reported CNBC.
However, the halving also directly impacts miners by reducing their rewards. This has prompted miners, including publicly traded companies, to explore AI as a potential revenue stream.
According to Adam Sullivan, CEO of Core Scientific, the company has been investing in new data centers and increasing vertical integration through research and development. This has led to new innovations and revenue pathways, such as the company’s recently announced 4nm mining rigs and AI Cloud offerings.
Analysts at Cantor Fitzgerald have named Bitdeer as one of the industry’s lowest “all-in” cost-per-coin. Sullivan believes that few operators will be able to make the transition to AI, as Bitcoin mining sites can only be repurposed if they meet the attributes required for high-performance computing (HPC).
Over the past year, there’s been a notable increase in the need for AI computing power and infrastructure capable of handling the extensive workloads necessary for innovative machine learning applications. According to a recent report from digital asset fund manager CoinShares, there’s anticipation of a trend where more miners will transition towards artificial intelligence in locations with secure energy sources, foreseeing potential for increased profits.
Currently, mining companies such as BitDigital, Hive, Hut 8, Terawulf, and Core Scientific either have existing AI operations or are actively planning for AI expansion.
“This trend suggests that bitcoin mining may increasingly move to stranded energy sites while investment in AI grows at more stable locations,” write analysts at CoinShares.
Meanwhile, Greg Beard, the CEO and Chairman of Stronghold Digital Mining, said, “Miners who own their low-cost power are better positioned. Operational costs will be lower, allowing them to be more flexible with their capital.”
Why It Matters: The recent halving has had a significant impact on the Bitcoin mining industry. Despite a modest impact on miners’ estimated EBITDA margins, the 50% reduction in revenue has prompted miners to seek alternative revenue streams, such as AI.
However, the halving has also had a positive impact on Bitcoin’s transaction fees, which have decreased to a five-year low. This drop comes after increased fees following the halving event and the launch of the Runes token standard, which initially caused a surge in transaction costs.
Despite the drop in fees, the latest halving could cost miners billions of dollars in revenue. The reduction from 900 to 450 Bitcoin per day is critical to prevent inflation and maintain Bitcoin’s cap at 21 million tokens.
However, the Bitcoin MVRV ratio has recently fallen below its 90-day average, indicating a potential buying opportunity with a potential 67% gain. This trend has been observed since November 2022, with an average gain of 67% each time.
Despite the potential for increased revenue, renowned crypto skeptic Peter Schiff has mocked “Bitcoiners” after the recent halving event, suggesting that the “hodlers” will soon experience a halving of their net worth.
Price Action: According to data from Benzinga Pro, Bitcoin is currently trading at $65,718, marking a 1.18% increase in the last 24 hours and a substantial 48.78% rise year-to-date.
Read Next: ‘Dogecoin Killer’ Shiba Inu Whale Transactions Spike 55%: ‘$100B By 2025,’ Predicts Crypto Investor
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Wanda Parisien is a computing expert who navigates the vast landscape of hardware and software. With a focus on computer technology, software development, and industry trends, Wanda delivers informative content, tutorials, and analyses to keep readers updated on the latest in the world of computing.
