After the Bitcoin Halving, Mining Companies Turn to AI: Who Will Be the Next Winner?

After the Bitcoin Halving, Mining Companies Turn to AI: Who Will Be the Next Winner?As the Bitcoin halving led to a reduction in mining rewards, more and more mining companies are seeking new ways to survive. Six months after the halving, AI has become the new target that mining companies are vying for

After the Bitcoin Halving, Mining Companies Turn to AI: Who Will Be the Next Winner?

As the Bitcoin halving led to a reduction in mining rewards, more and more mining companies are seeking new ways to survive. Six months after the halving, AI has become the new target that mining companies are vying for. Those companies that stick with Bitcoin, however, are facing declining stock prices.

From Mining to AI: The Path to Transformation

In April 2024, the Bitcoin mining reward was halved again, dropping to 3.125 BTC per block. This is undoubtedly a huge challenge for mining companies that rely on mining rewards. To cope with this situation, many mining companies have begun to turn their attention to AI.

CoreScientific, a US Bitcoin miner, is a typical example. Since announcing a series of multi-billion dollar contracts with AI startup CoreWeave, its stock has risen almost 300% in total. They will be remodeling part of their data centers to host over 200 megawatts of GPUs for CoreWeave, providing computing power for AI training.

TeraWulf is another mining company developing AI data centers, and its stock price has doubled this year. Other Bitcoin mining companies embracing AI, such as IrisEnergy and BitDigital, have generally outperformed those that focus their resources on holding Bitcoin.

AI Training: A More Stable Source of Income

Why are mining companies turning their attention to AI? The main reason is that AI training provides more stable and secure income than the volatile cryptocurrency market. Mining companies have vast data centers and computing power, and these infrastructures can be easily transformed for use in AI training.

At the same time, the rapid development of the AI field has also provided new profit opportunities for mining companies. As AI technology becomes more widely used, the demand for computing power is also growing. Mining companies can provide AI training services to tech giants, research institutions, and businesses, providing computing power support and securing stable income streams.

Sticking to Bitcoin: Risks and Opportunities

While many mining companies are actively turning to AI, some are still focusing on mining and holding Bitcoin. Companies like MARAHoldings, RiotPlatforms, and CleanSpark are staunch Bitcoin "hodlers," keeping the Bitcoin they mine and expecting this asset to continue to appreciate in value in the future.

However, the stock performance of these companies has been dismal. The two listed Bitcoin mining companies MARA and Riot have seen their stock prices fall by 17% and 36%, respectively, this year.

Who Will Be the Next Winner?

Against the backdrop of the Bitcoin halving, mining companies face a transformational choice. Turning to AI means embracing a more stable source of income, but it also means abandoning the commitment to Bitcoin. Continuing to insist on mining means confronting the risks of market fluctuations and finding new profit models.

For mining companies, the future will be a time full of challenges and opportunities. Those that can quickly adapt to market changes and find new profit models will be the next winners.

Financial Institution Perspectives

Paul Golding, an analyst at MacquarieCapitalUSA, believes that pure Bitcoin mining still has a place in the current market, especially in terms of expanding mining capacity to create economic value. He has given "outperform" ratings to MARA, Riot, CoreScientific, IrisEnergy, CleanSpark, and CipherMining.

JPMorgan believes that Bitcoin miners are no longer limited to traditional mining operations, but can also flexibly transform into managed centers for high-performance computing (HPC) and AI computing by leveraging their existing power and computing resources, thereby opening up new sources of income.

Technology Giant Strategies

Technology giants, by collaborating with or directly acquiring these mining companies, can obtain valuable power resources to expand their computing power, driving further development of their AI business.

Summary

The Bitcoin halving has forced mining companies to confront the choice of transformation. AI has become the new target, but it also means abandoning the commitment to Bitcoin. In the future, who will be the next winner depends on whether they can seize opportunities and find new profit models. Whether turning to AI or sticking to Bitcoin, mining companies need to actively adapt to market changes in order to stand undefeated in future competition.