Bitcoin Network Reaches New Power High as Miners Turn to AI Amid Profit Decline
Bitcoin miners are facing challenges from the financial world. Marathon Digital has seen a drop of almost 30% in 2024, while Riot Platforms has experienced a 53% decline. On the other hand, the price of bitcoin has risen by approximately 44% this year.
According to Jefferies, North American publicly traded mining companies generated a smaller proportion of new bitcoin in August compared to July, accounting for 19.9% of the total network. Despite this, they continue to invest in equipment upgrades, leading to enhanced efficiency but deteriorating economics.
Marathon CEO Fred Thiel mentioned to CNBC that due to the upgrade cycle, machines can now hash twice the amount compared to previous models while consuming the same amount of energy. Thiel emphasized that there is no necessity to expand sites or power; rather, the focus is on upgrading systems.
Riot CEO Jason Les remains optimistic about the future of bitcoin despite the challenging economic landscape. Les highlighted that “bitcoin is the most sound money in the world” and stated that “low-cost mining is an efficient way to get exposure to it.”
However, not all miners are facing the same difficulties. Companies like Core Scientific, which emerged from bankruptcy in January, are leveraging their extensive infrastructure for artificial intelligence and high-performance computing (HPC).
Core recently announced a significant expansion deal worth $6.7 billion with CoreWeave, a Nvidia-backed startup providing graphics processing units (GPUs) for AI models. Bernstein identified Core Scientific as the top-performing publicly traded bitcoin miner, noting its diversification into AI and HPC, with a substantial co-location contract with a major GPU Cloud provider.
Since returning to the stock market, Core’s value has more than doubled, reaching a market cap close to $3 billion. Core CEO Adam Sullivan highlighted the company’s facilities’ multi-use design for both bitcoin mining and the current transition to high-performance computing.
Bernstein projected that if Core fully utilizes its 700-megawatt capacity allocated to AI and HPC, it could become the third-largest data center company listed in the U.S. Sullivan emphasized the significant opportunities in the next three years within the data center market, with bitcoin miners targeting the largest niche ever discovered in the industry.
In conclusion, the future of bitcoin mining faces challenges and opportunities, with companies like Core Scientific leading the way in diversification and innovation.
— CNBC’s Talia Kaplan and Jordan Smith contributed to this report.
