The 'This Business' That Mining Companies Turned to with Frowns During the Coin Halving... Income Is Quite Profitable

This year, the mining industry, whose profitability has weakened due to the Bitcoin halving, is seeking breakthroughs by converting mining machines into artificial intelligence (AI) servers.

According to US economic broadcaster CNBC on the 3rd (local time), US mining company Core Scientific announced a 12-year partnership contract with AI startup CoreWeave to provide infrastructure necessary for machine learning and other applications. CoreWeave, known as a company supported by NVIDIA, builds cloud infrastructure using graphics processing units (GPUs).

Core Scientific plans to provide CoreWeave with infrastructure at the level of 200 MW (megawatts), and expects revenue exceeding $3.5 billion over the contract period.

Adam Sullivan, CEO of Core Scientific, emphasized, “The essence of Bitcoin mining facilities lies in being a powerful shell for the data center industry.”

The mining industry has been struggling due to the fourth-ever Bitcoin halving applied in April. The halving results in the total daily Bitcoin mining capacity being cut in half. This means mining difficulty increases while rewards are halved.

Meanwhile, not only big tech companies but also startups have entered the generative AI development competition, increasing demand for AI computing and infrastructure capable of processing large-scale data. Moreover, AI is diversifying beyond text into images and videos, with an emphasis on sophistication that enables human-like conversations.

Accordingly, the mining industry is rapidly seeking changes, such as converting infrastructure specialized for mining to suit AI businesses.

Mining company Bit Digital reported that as of the end of April, 251 AI servers were generating revenue, and the company earned approximately $4.1 million in the same month.

Another company, Iris Energy, expects to generate up to $17 million annually through AI cloud services.

According to digital asset firm CoinShares, although the capital expenditure required for AI operations in the mining industry is up to 20 times higher than that for Bitcoin mining, profitability is higher.

James Butterfill, Head of Research at CoinShares, analyzed, “The infrastructure of the Bitcoin mining industry is ideal for AI operations as well,” adding, “Their AI activities can increase gross profit margins.”