- Bitcoin miners might benefit from the AI sector’s rising energy demands, potentially transforming the mining landscape.
- Bitcoin mining stocks have a notable valuation gap compared to data center stocks, with early movers seeing gains.
- Bitcoin miners face revenue volatility, heavily reliant on block rewards, highlighting risks due to halving events.
Since the April 2024 Bitcoin halving event, miners have faced difficult times. However, according to Matthew Sigel, head of Digital Assets at VanEck, the mining industry may undergo a radical change due to the rapid advancements in artificial intelligence (AI). According to VanEck’s most recent analysis, Bitcoin miners may be able to take advantage of the growing AI sector despite recent obstacles.
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Sigel underscores the growing integration of BTC miners into the AI and high-performance computing (HPC) sectors. Although the mining industry faced setbacks due to the halving, many investors overlook the sector’s substantial exposure to AI. AI companies demand energy resources, and Bitcoin miners with adequate power can step in as major suppliers.
Valuation and Investment Opportunities
The increasing energy needs from AI and data centers have extended grid connection wait times in North America to over four years. However, Bitcoin miners are swiftly addressing immediate energy needs for AI and HPC.
By utilizing their power resources and participating in grid balancing, miners can energize GPUs for AI within a year. This is notably faster compared to the four years required for new AI data centers to become operational.
Sigel points out a notable valuation gap between Bitcoin mining stocks and data center stocks. Early movers like Core Scientific (NASDAQ: CORZ) have capitalized on this opportunity, securing a 12-year contract with AI hyperscaler CoreWeave.
This deal promises 200 MW of infrastructure and is expected to generate $3.5 billion in revenue. Core Scientific’s stock has surged by 202% year-to-date, showcasing the potential of the AI sector for miners.
Revenue Volatility and Market Challenges
In contrast, leading players like Marathon Digital and Riot Platforms have experienced a decline of 30-50% in stock prices this year. Sigel suggests that other major miners could adopt strategies similar to Core Scientific to capitalize on the AI boom and enhance their financial stability. Companies like Hive Digital, Hut8, and Bit Digital are expanding their HPC capacities, while Marathon Digital and others have not announced similar plans.
Glassnode’s recent analysis reveals fluctuations in miner revenue throughout 2024. After surging by over 70% in late April and early May, revenue peaked again in June, reaching around 40%. Subsequently, there was a sharp drop to near zero.
Block rewards are frequently halved every four years, which shows the risks connected to Bitcoin miners’ relying on them. As of writing, the price of Bitcoin (BTC) is $60,030, up 3.23% from the previous day.
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