JPMorgan says bitcoin miners are diversifying ahead of halving

Bitcoin miners are exploring new enterprise avenues forward of the upcoming halving occasion that can scale back their rewards and amid elevated competitors from the rising hash fee, in line with JPMorgan.

Crypto miners at the moment are offering high-performance computing providers to the quickly evolving synthetic intelligence market, which might flip worthwhile for them, JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report on Thursday. Their diversification into the AI market has no less than partly been funded by promoting newly or beforehand minted bitcoins in latest quarters, they added.

Each crypto mining and AI growth, together with coaching giant language fashions, require superior laptop chips.

Utilized Digital not too long ago launched an AI cloud service and signed a $460 million deal to host AI cloud computing in its knowledge heart. Iris Power, in the meantime, not too long ago revived its technique round internet hosting HPC providers amid rising curiosity in AI.

Crypto miners increasing to AI

Former Ethereum miners have additionally began providing HPC providers, the JPMorgan analysts famous. After Ethereum’s transition from proof-of-work to a proof-of-stake consensus mannequin, there was a excessive provide of graphics processing items within the secondary marketplace for sale, as GPUs used for Ethereum mining misplaced their utility.

“With the fast development of AI, the elevated demand for HPC is now opening a brand new and maybe extra worthwhile avenue for using GPUs beforehand used for Ethereum mining,” the analysts stated.

A number of Bitcoin miners and former Ethereum miners have carried out beta assessments on providing HPC providers utilizing a small subset of their complete GPU fleet, the analysts stated.

“In these beta assessments, miners are reporting excessive profitability per unit of energy consumption, a lot above the profitability from bitcoin mining. With bitcoin miners having already secured greater than 100MW of long-term contracts with their energy grids, if the profitability reported in beta assessments is ready to be repeated in giant scale it might overshadow sooner or later the revenues coming from bitcoin mining in the meanwhile,” they added.

Bitcoin miners are additionally diversifying throughout geographies, with Russia rising as a high vacation spot, in line with the analysts.

“Energy producers in Russia have been struggling as a result of [Ukraine] warfare and because of the financial slowdown, there’s a giant vitality surplus in Russia. Coupled with a colder local weather, Russia is thus in a position to supply considerably cheaper vitality sources to bitcoin miners,” they stated.

Final month, JPMorgan analysts stated the upcoming Bitcoin halving might put miners to the take a look at with decrease rewards and better prices. Miners with decrease electrical energy prices will fare higher after the halving, whereas these with larger prices could wrestle.

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