Facing the pressure of Bitcoin halving, mining companies have taken different paths: whether to continue holding Bitcoin or to transition to artificial intelligence. Let’s take a look at how these companies are facing the challenges and seeking survival.
Since the fourth Bitcoin halving six months ago, mining companies have been facing survival challenges and have taken two different paths: one is to continue mining and hoarding BTC, hoping for price increases; the other is to turn to artificial intelligence and seek new growth opportunities. This crossroad stems from the reward halving in April this year, when the Bitcoin reward decreased from 12.5 BTC to 6.25 BTC, weakening the main source of income for miners. To face this challenge, miners can only rely on the appreciation of Bitcoin or explore new business directions.
Sustaining the mining business is not favored by the market?
According to Bloomberg, for some mining companies, continuing to mine BTC is still an attractive path. Companies such as MARA, Riot, and CleanSpark have chosen to hold Bitcoin long-term (known as “hodl”). They believe that the price of Bitcoin will eventually rise again and hope to achieve huge returns in the future through this strategy. Analyst Wolfie Zhao pointed out that although Bitcoin has risen by more than 60% this year, the stock prices of MARA and Riot have fallen by 20% and 36% respectively, indicating that the market still doubts this strategy. Although these companies are facing difficulties, Macquarie Capital USA analyst Paul Golding believes that pure Bitcoin mining still has economic value. He pointed out that the improvement of hardware efficiency and the potential appreciation of Bitcoin are reasons why miners can maintain gross profit margins after halving. MARA and CleanSpark still maintain positive gross profit margins, which means that mining is still feasible even with reduced rewards.
Mining companies transitioning to artificial intelligence:
According to Bloomberg analysts, another group of mining companies, such as Core Scientific, Iris Energy, and Bit Digital, have chosen to invest resources in artificial intelligence technology. The focus of their transformation is to use existing data centers to support artificial intelligence applications, especially in the field of high-performance computing. After signing a multi-billion dollar contract with CoreWeave, Core Scientific’s stock price has nearly quadrupled. The company has transformed its data center by installing graphics processing units (GPUs) specifically for artificial intelligence computing. Similarly, the stock prices of TeraWulf and Iris Energy have also seen significant growth this year.
However, despite the current popularity of artificial intelligence, the investment fever in this field seems to have cooled down. Entering this market requires a large amount of capital, and some Bitcoin mining companies may not be able to cope with such financial pressure. Nevertheless, transitioning to artificial intelligence is still considered one of the methods for mining companies to have a second chance.
Mining companies transitioning to artificial intelligence outperform hodlers.
Related Reports
Bitcoin “Exchange Reserve” hits a new low, is the market’s bullish signal reliable?
Fed officials hint at “interest rate cut of more than 1 digit”: Market plunge data and US bond reactions analyzed at once.
Arthur Hayes explains: Why does an interest rate cut by the Fed not help Bitcoin?