BARCELONA, SPAIN. September 5th, 2024 - As the digital landscape continues to evolve, Bitcoin miners are now exploring new opportunities by integrating artificial intelligence (AI) and high-performance computing (HPC) into their operations. This strategic shift could unlock significant revenue potential, presenting a unique arbitrage opportunity in the market.
Bitcoin miners, traditionally focused on the computational power needed to process transactions on the blockchain, are beginning to recognize the synergies between their operations and the demands of AI and HPC.
Antonio Velardo, an experienced analyst and trader said: “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.”
Currently, Bitcoin miners trade at a significantly lower valuation per megawatt (MW) of installed capacity compared to AI-focused data centres. This discrepancy creates a lucrative arbitrage opportunity. The average Bitcoin mining site is valued at approximately $4.5 million per MW, whereas some AI data centres command valuations exceeding $30 million per MW. By strategically shifting just 20% of their capacity to AI/HPC by 2027, Bitcoin miners could tap into an estimated net present value of $37.6 billion.
Antonio Velardo highlights Core Scientific (CORZ) as a prime example of a Bitcoin miner capitalising on this trend. Core Scientific recently secured a 12-year contract with AI hyperscaler CoreWeave, worth over $3.5 billion for providing 200 MW of infrastructure.
Antonio added: “This deal has not only bolstered Core Scientific’s market cap by $1.6 billion but also positioned the company as a potential leader in the U.S. data centre market.
“This is just the beginning, as more Bitcoin miners are likely to follow suit, leveraging their existing assets to meet the growing demand for AI/HPC services.”
The revenue potential for Bitcoin miners transitioning into the AI/HPC space is substantial. Antonio Velardo’s analysis suggests 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 the necessary capital investment for infrastructure conversion estimated at $7.5 million per MW.
Antonio continued: “While the upfront costs are significant, the long-term benefits of transitioning into the AI/HPC space could be transformative. AI/HPC customers are often willing to fund a substantial portion of these capital expenditures, reducing the financial burden on Bitcoin miners and providing them with a lower cost of capital. This, in turn, enhances the attractiveness of the arbitrage opportunity I have identified.”
Despite the promising outlook, challenges remain. Antonio said: “Not all Bitcoin mining sites are suitable for conversion to AI/HPC, particularly those lacking proximity to major cities or essential infrastructure like high-speed bandwidth and reliable energy sources.
“However, those miners who can overcome these hurdles and achieve the necessary standards for AI/HPC operations could see their valuations double or even triple in the coming years.”
Antonio Velardo also highlights the complementary relationship between Bitcoin mining and energy grid operators. Miners are already playing a crucial role in stabilising energy grids, and their expansion into AI/HPC could further enhance their value as flexible, large-scale energy consumers.
Antonio said: “I believe that the integration of AI/HPC into Bitcoin mining operations represents a groundbreaking opportunity. This strategic pivot not only diversifies revenue streams for miners but also positions them at the forefront of two rapidly growing industries.
“As more miners explore this path, I predict that we could see significant market shifts, with Bitcoin miners potentially doubling their market capitalizations by 2028.”
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