Bitcoin Mining Is So Back (Except It's AI Now)

Hurting for revenue and profit, bitcoin miners are looking to activities outside mining bitcoin, such as hosting AI computers, to make up the difference. It's paying off, at least in their stock prices.
Bitcoin is up 7% over the last five days. You know what that means? Bitcoin mining is so back (until bitcoin’s price falls 5% over a five-day stretch again, after which it’ll be so over again).
With bitcoin’s price surge, the stock prices of four of the five largest publicly traded miners (measured by total hashrate, or computing power spent securing the Bitcoin network) are up double-digit percentage points.
The one laggard, Iris Energy Ltd (IREN), the fifth largest in this quintet, is down 15% following a report published last week by Culper Research in which the firm disclosed a short position in IREN. The reason Culper's taking a bearish bet: the unsuitability, in the researchers' view, of Iris’ Childress, Texas site for artificial intelligence (AI) or high-performance computing (HPC).
AI and HPC might seem unrelated to bitcoin mining, but such diversification has become a way for bitcoin miners to make money, as evidenced by Core Scientific’s (CORZ) 200 megawatt (MW) AI deal with CoreWeave last month, which pumped CORZ’s share price by 40%.
(Perhaps if the price of bitcoin continues its upward creep, the unsuitability of IREN’s sites for non-bitcoin mining revenue-generating activities can fall to the wayside as the company shifts resources back to bitcoin mining.)
In any event, what “bitcoin mining is so back” really means is “bitcoin mining stocks are back,” because on a pure “are there more miners now?” basis, known pool hashrate has only increased slightly over the last five days (from 663.618 exahashes per second to 668.659 Eh/s) rather than increase by 7% as one might expect. (Note: there is no “perfect” data point for hashrate.) Of course, hashrate not reacting immediately and proportionally to a bitcoin price increase is good for the public companies.
But then if you look into the narrative around bitcoin mining and check out what the mining companies are saying, in interviews or public filings, you find that, while they’re still focused on bitcoin mining, there’s much ado about other seemingly unrelated or tangentially related things.
AI, or High-Performance Computing.
Here’s a splashy headline: Private Equity Giants Are Circling Bitcoin Miners on AI Allure
And another: Core Scientific Upgraded to Buy From Neutral to Reflect HPC Expansion: B Riley
And one more, as good things come in threes: Bitcoin Mining Sector Is Attracting Growing Investor Interest Following Core Scientific Deal: JPMorgan
Last week, I wrote about how both AI and Bitcoin use a lot of energy and, not only that, it seems that it is straightforward for Bitcoin mining facilities to be retrofitted for the next hot thing: AI (or HPC, if you want to avoid the backlash against AI hype).
Investors like this adaptability. From CoinDesk’s Will Canny and Aoyon Ashraf, “Private equity (PE) firms are finally seeing value in bitcoin (BTC) miners, thanks to the rising demand for data centers that can power artificial intelligence-related (AI) machines.”
Research from JPMorgan suggests the same thing and, funnily enough, the investment bank's research says that IREN (the company Culper deems “not ready for AI”) is best positioned to capitalize on this resource-shifting trend.
Will Foxley, co-founder of...
https://www.coindesk.com/opinion/2024/07/18/bitcoin-mining-is-so-back-except-its-ai-now/
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