Bitcoin Mining Companies Pivot to AI and High-Performance Computing Amid Declining Crypto Profits
Several leading Bitcoin mining companies, including IREN, Riot, TeraWulf, and Cipher Mining, are shifting their focus from traditional cryptocurrency mining to artificial intelligence (AI) and high-performance computing workloads. This strategic move is driven by declining mining profitability and the surging demand for AI computing power.
**Declining Bitcoin Mining Profitability**
Bitcoin mining profitability has fallen by more than 7% in September, largely due to bitcoin price volatility and the cryptocurrency’s built-in halving schedule—which reduces mining rewards by half every four years. As a result, traditional bitcoin mining is becoming less sustainable for many operators.
Daniel Keller, CEO of InFlux Technologies, summed up the situation: “Bitcoin mining just doesn’t cut it anymore. Due to halving schedules, mining is less profitable in the long run than AI computing.”
**Leveraging Existing Infrastructure for AI**
Bitcoin miners already possess valuable assets that are critical for AI workloads, such as land, energy infrastructure, and data centers connected to power grids. These resources are in increasingly short supply as major tech companies rush to expand their AI capacity.
Cloud providers like Google, Microsoft, and Amazon face years-long delays in obtaining permits and grid access to build new data centers. In contrast, bitcoin miners can reduce AI data center deployment timelines by up to 75%, according to Bernstein analysts, because their facilities are already grid-connected and often powered by renewable energy.
“The access to ready and cheap renewable power combined with data center capabilities positions Bitcoin miners as attractive partners,” Bernstein analyst Gautam Chhugani noted.
**Major Deals and Facility Conversions**
Several mining firms have formalized their AI ambitions through long-term deals and facility conversions:
– **TeraWulf** and **Cipher Mining** have signed decade-long agreements with Fluidstack, a Google-backed AI cloud company.
– **Galaxy Digital** plans to convert its 1,500-acre Texas facility into an AI hub in partnership with CoreWeave.
– **Riot** is repurposing additional acreage at its Texas site for mixed bitcoin and AI usage, aiming for operational readiness by 2026.
– **CleanSpark** recently announced entry into AI data centers utilizing its existing land and computing infrastructure.
– **IREN** (formerly Iris Energy) paused bitcoin mining expansion in April to prioritize AI cloud services and purchased 4,200 Nvidia Blackwell AI chips in August.
**Stock Market Reaction and Institutional Investment**
The shift towards AI workloads is resonating with investors:
– IREN’s stock has soared over 500% year-to-date since its AI pivot.
– TeraWulf has gained approximately 150% this year.
– Riot’s shares are up 104% since January.
– Cipher Mining’s stock jumped 13% following public disclosure of new investments.
Institutional confidence is also growing. Jane Street Group disclosed passive stakes of around 5% in Bitfarms, Cipher Mining, and Hut 8 in late October. This move brought renewed attention and double-digit gains to mining stocks. Jane Street’s filings indicate passive investment rather than activist involvement, reflecting a strategic bet on the evolving market rather than push for immediate changes.
Jane Street, known for its active role in digital asset trading and collaboration with spot bitcoin ETF issuers, reported approximately $110 billion in crypto trading volume in 2023. Analysts view the firm’s presence in mining stocks as a strong signal of institutional interest in the combined crypto-AI computing space.
**A Permanent Industry Shift**
Analysts from Compass Point, including Michael Donovan and Ed Engel, highlighted that the multi-year agreements and investment-grade backing indicate this pivot towards AI is a lasting transition rather than a temporary experiment.
As traditional bitcoin mining profits face structural headwinds, these companies are leveraging their existing assets to tap into the booming AI market, potentially redefining their roles in the tech infrastructure landscape.
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*By embracing AI workloads and leveraging established infrastructure, bitcoin mining firms are positioning themselves at the forefront of the next wave of computing demand.*
https://coincentral.com/bitcoin-miners-ditch-crypto-for-ai-as-stocks-soar-over-500/
