Bitcoin Mining Firms Are Betting Big on AI for Massive Returns

Key Takeaways:

• Bitcoin mining firm Core Scientific is teaming up with Nvidia-backed cloud AI company CoreWeave to grow its AI business substantially.
• Core Scientific will provide 200 megawatts (MW) of infrastructure to host CoreWeave’s high-performance computing (HPC) operations. 
• This partnership is projected to bring in revenue exceeding $3.5 billion within 12 years.

One of the leading Bitcoin mining companies in the industry is Core Scientific, which provides services related to blockchain and artificial intelligence (AI) technology. It also offers infrastructure for blockchain and AI, digital asset self-mining, managed hosting, and technology support services. 

Since the fourth Bitcoin halving event in April 2024, miner rewards have been slashed in half. Bitcoin miners went from earning 6.25 BTC to 3.125 BTC. 

As a result, bitcoin mining firms have been forced to adapt and diversify operations. Since then, miners have been diversifying into new fields, such as artificial intelligence, to create additional revenue streams and stay profitable.

Core Scientific made headlines on June 3 through the announcement of a 12-year partnership with CoreWeave, a Nvidia-backed cloud provider, to bolster infrastructure for AI applications, particularly in machine learning. 

Tonight, we announced that Core Scientific will be providing an additional ~200 MW of infrastructure to host @CoreWeave #HPC services.

– ~200 MW of infrastructure for HPC compute
– Estimated to generate total cumulative revenue for Core Scientific of over $3.5 billion during the… pic.twitter.com/GWRaJuJdZs

— Core Scientific (@Core_Scientific) June 4, 2024

Under the agreements, Core Scientific will provide around 200 megawatts of infrastructure to support CoreWeave's high-performance computing (HPC) operations. 

The Bitcoin mining firm will adapt several of its current sites to accommodate CoreWeave's NVIDIA GPUs. The modifications are scheduled to begin towards the end of 2024. At the same time, operations are expected to kick off in the first half of 2025. 

This collaboration builds upon the existing relationship between Core Scientific and CoreWeave and is projected to accrue revenue exceeding $3.5 billion over the contract's duration. 

You might be interested in: US Senator Ted Cruz Starts Bitcoin Mining in Texas with Three New ASIC Machines.

Bitcoin mining firms are companies that pool resources individually or collectively to participate in the proof-of-work (PoW) consensus mechanism. The PoW consensus involves using powerful computers to verify Bitcoin transactions and add them to the Blockchain. This process is a key component of monetary policy and the security of the BTC network.

Mining and AI: What Does This Mean for the Industries?

The recent collaboration between Core Scientific and CoreWeave is poised to drive the current wave of huge investments in AI businesses. 

Core Scientific is not the only Bitcoin mining firm investing in AI. Other companies, such as Bit Digital, Hive, Hut 8, and TeraWulf, are diversifying in search of additional revenue streams following the recent Bitcoin halving event. 

In April, James Butterfill, head of research at CoinShares, published a report that Bitcoin miners' facilities, known for their energy-secure data centers, are a good fit for AI operations. Notably, some Bitcoin mining firms are already capitalizing on this opportunity.

According to CoinShares, Bit Digital derives 27% of its revenue from AI. Other mining companies like Hut 8 and Hive generate 6% and 4%, respectively, from AI services. 

Our latest report on Bitcoin mining costs post halvinghttps://t.co/8tSQKDY5lk pic.twitter.com/MKsXQTn6Jw

— James Butterfill (@jbutterfill) April 19, 2024

Due to this convergence, competition between Bitcoin mining and AI activities is growing. Butterfill explained that AI operations are more profitable even though they require 20 times more capital than mining. 

The spate of investments from Bitcoin mining firms like Core Science, Bit Digital, Hive, Hut 8, and TeraWulf are indeed changing the mining industry by creating new revenue sources and increasing competition for space.