Last Updated on: 6th September 2024, 11:47 am
As the digital landscape rapidly evolves, Bitcoin miners are now exploring the integration of artificial intelligence (AI) and high-performance computing (HPC) to expand their revenue streams. This strategic move could unlock significant opportunities and create an attractive arbitrage scenario.
Historically focused on blockchain transaction processing, Bitcoin miners are beginning to recognise the synergies between their infrastructure and the rising demand for AI and HPC services.
Antonio Velardo, an experienced analyst and trader, explained: “This convergence is driven by the growing energy needs of AI companies, which align closely with the capabilities of Bitcoin miners. By repurposing a portion of their infrastructure to support AI/HPC, Bitcoin miners can capitalise on the booming AI market.”
At present, Bitcoin miners trade at a much lower valuation per megawatt (MW) of installed capacity than AI-focused data centres. This gap presents a promising arbitrage opportunity. While the average Bitcoin mining site is valued at approximately $4.5 million per MW, AI data centres can exceed valuations of $30 million per MW. By shifting 20% of their capacity towards AI/HPC by 2027, Bitcoin miners could unlock a net present value of $37.6 billion.
Velardo cited Core Scientific (CORZ) as a prime example of a Bitcoin miner leveraging this trend. The company recently secured a 12-year, $3.5 billion contract with AI hyperscaler CoreWeave, providing 200 MW of infrastructure.
“This deal boosted Core Scientific’s market cap by $1.6 billion and positioned it as a major player in the U.S. data centre market,” Velardo said.
“This is just the beginning, as more Bitcoin miners are likely to follow suit, using their infrastructure to support AI/HPC.”
The revenue potential is significant. Velardo’s analysis shows that if publicly traded Bitcoin miners allocate 20% of their energy capacity to AI/HPC, they could generate an additional $13.9 billion in annual profits over the next 13 years. This projection assumes an average revenue of $9.11 million per MW, with capital investment for conversion estimated at $7.5 million per MW.
“While the initial investment is substantial, the long-term benefits of moving into the AI/HPC space could be transformative,” Velardo continued. “AI/HPC customers often cover a large portion of the capital costs, reducing the financial burden on Bitcoin miners and providing them with lower cost capital. This makes the arbitrage opportunity even more attractive.”
Challenges do exist. Velardo pointed out: “Not every Bitcoin mining site is suitable for conversion to AI/HPC, particularly those without access to key infrastructure like high-speed bandwidth and stable energy sources.”
“However, those miners able to overcome these challenges could see their valuations double or even triple in the years to come,” Velardo concluded.
He also highlighted the important role Bitcoin miners already play in stabilising energy grids, noting that expanding into AI/HPC could further enhance their value as energy consumers.
“I believe that the integration of AI/HPC into Bitcoin mining represents a groundbreaking opportunity,” Velardo said. “This strategic shift not only diversifies revenue streams but positions miners at the forefront of two fast-growing industries.”
