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bitcoin miners that shift their focus to ai and high-performance computing (HPC) could see their profits increase by as much as $13.9 billion annually.
That's aAccording to a August 16th bitcoin-miners-ai-arbitrage-play-to-boost-revenue/”>report by fund management giant VanEck, which says that If publicly traded miners convert only 20% of their eIf existing ai and HPC-specific power capacity is expanded by 2027, annual revenues in excess of $13.9 billion could be added over 13 years.
“The synergy is simple: ai companies need power, and bitcoin miners have it,” wrote head of digital asset research Matthew Sigel. “bitcoin miners typically have bad balance sheets, either from too much debt, too much equity issuance, too much executive compensation, or some combination of the three.”
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bitcoin miners are moving to ai and HPC, generating new revenue through strategic arbitrage
We estimate a $38 billion net present value opportunity by converting 20% of their collective capacity by 2027.
(For context, the combined market cap of the stocks we analyzed is $19 billion.)
— matthew sigel, recovering CFA (@matthew_sigel) twitter.com/matthew_sigel/status/1824458133462212862?ref_src=twsrc%5Etfw”>August 16, 2024
ai and HPC customers are willing to fund capital expenditures, potentially providing a lower cost of capital for bitcoin miners to close their next energy deal, Sigel added.
In a preview of what could come, Core Scientific, the fourth-largest bitcoin miner by hash rate, signed a 12-year contract with artificial intelligence firm CoreWeave on June 3.
The deal is estimated to generate more than $3.5 billion in revenue per year for Core Scientific by providing an additional 200 megawatts (MW) to its mining infrastructure.
VanEck's analysis comes at a time when mining bitcoin has never been less profitable. Some analysts estimate that the hash rate, a key metric of mining profitability, is 40% lower than pre-halving figures.
The IMF's reaction
Meanwhile, the International Monetary Fund (IMF) is targeting cryptocurrency miners.
Cryptocurrency mining and data centers accounted for 2% of global electricity demand in 2022, and demand is likely to only expand over the next 3 years, it said in an Aug. 15 statement. ai-and-crypto-are-surging-and-tax-policy-can-help”>blog.
Therefore, he requested that Higher electricity taxes for ai and cryptocurrency projects to curb rising trend.
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