Bitcoin miners have to choose between crypto and AI

The three major Bitcoin mining companies in the United States, Mara Holdings, Riot Platforms and Cleanspark, are looking at each other to see who blinks first. All three have seen their share price not doing particularly well this year (the situation is very different for the Bitcoin ETFs, the price of MicroStrategy and even that of crypto platform Coinbase, of course).

The Bitcoin mining companies however will soon have to choose between AI and Bitcoin if they want their share price to go up. Allow us to explain.

Halving

Some six months have passed since the ‘halving’, the quadrennial event that cuts the rewards for validating transactions on the Bitcoin network by half. In those six months, the price of Bitcoin has remained about the same as it was then. This also means that the profit margins of crypto mining companies have not increased, but their costs (building and operating data centers, personnel costs, etc.) probably have because of inflation.

Mara, Riot and Cleanspark are currently ‘Hodling’ their mined Bitcoins for as long as possible of course, because they do not want to sell them at a loss. But their costs continue unabated. This means that they are forced to take out loans to keep their data centers running. The banks that grant the loans are becoming impatient in the meantime.

BITCOIN MINERS DITCH HODLING, GO ALL-IN ON AI

Post-halving, it’s a straight-up grind.

Some miners like MARA and Riot still think hodling BTC is the move, but their stocks tanked 20%-36%.

Meanwhile, AI-fuelled players like Core Scientific are pumping - quadrupling after… pic.twitter.com/UKY44sliXi

— Mario Nawfal’s Roundtable (@RoundtableSpace) October 20, 2024

After all, those banks know that all three are getting unexpected offers. Companies like Meta, Google and OpenAI are looking for data centers to rent in order to keep up with the growing demand for AI chips and programs to run.

This poses a dilemma for the three major Bitcoin mining companies: do they choose to enter into an agreement with a Silicon Valley company to rent out some of their data centers, or do they wait until the price of Bitcoin finally goes above $74,000, the highest quoted price to date.

Core

Another Bitcoin mining company, Core Scientific, chose early this year to rent out some of their data centers for AI use. Core shares have risen by about 270% this year as a result.

Of course, if Riot, Mara or CleanSpark ever choose to give up some of their data centers for AI, this will make room on the Bitcoin network for others to mine more Bitcoins. And of course when presenting their next quarterly report, you can be sure that Core Scientific’s share price will be mentioned.