Hive Digital has proposed a strategy to address the increasing demand for AI computation while strengthening its balance sheet through green-mined Bitcoin.
In 2022, Hive Digital, a crypto miner, was required to modify its business model as Ethereum transitioned from a proof-of-work to a proof-of-stake mechanism. The new purpose of its Nvidia graphic processing units (GPUs) was evident: artificial intelligence applications.
In 2021, the company invested $66 million in GPUs currently employed to power AI duties. This represents a significant shift in the company’s technological focus.
In an exclusive interview with Cointelegraph’s editor Sam Bourgi, Hive executives Frank Holmes and Aidan Killick described how the company utilizes infrastructure to satisfy the increasing demand for AI computing power.
Hive Digital Aims For Increased revenue from AI
The revenue generated by Hive Digital AI bet is substantially greater than that of crypto mining. Killick, the company’s president and chief operating officer, has stated that the Nvidia GPUs repurposed for AI duties can generate up to $1 per hour, as opposed to $0.12 per hour in crypto mining.
The new H100 processors from Nvidia, which are specifically designed for AI applications and are scheduled to be introduced to Hive Digital data centers shortly, have the potential to generate $2.50 per hour. Holmes, the chairman of Hive, stated that institutions are significantly more interested in our AI than in Bitcoin.
To accommodate the AI duties, the organization is upgrading its data centers in Sweden and the Canadian province of New Brunswick with supplementary cooling and power redundancy. The company’s strategy also includes pursuing energy source alternatives that are both stable and cost-effective.
Hive Digital announced in July that it intends to construct its inaugural mining site in Paraguay, which is anticipated to increase its mining hashrate by over twofold.
“Paraguay is a vast frontier.” It is a vast opportunity for us. Killick stated, “It is exclusively hydroelectric energy, and we aspire to be at the forefront of grid balancing.”
Bitcoin continues to maintain its position as the leading crypto
The AI industry’s expansion does not render Bitcoin obsolete. Holmes asserts that the “long term” is Bitcoin, although the AI strategy is “really good for running the business.”
The primary objective of Hive Digital’s business strategy is to optimize the return on investment (ROI) of its mining hardware.
“We mine our machines to generate free cash flow and repay them until we reach their break-even point, at which point we upgrade,” Killick stated.
The executive stated that the company has maintained profitable gross mining margins for the past three years, leveraging cash flow from operations to finance growth without causing substantial shareholder dilution.
Many miners have encountered profitability challenges in the post-Bitcoin halving era, as hash prices have plummeted to a record low of $40 per peta hash per day. Nevertheless, the expenses for Killick were more akin to a “soft landing.”
“The reason why is because in this halving cycle, we have a brand new machine, the Bitmain S21, and that machine currently produces revenue of about $0,10 a kilowatt hour.”
The Bitcoin mining industry is also a factor in expanding facilities in Latin America. The executives have stated that Hive’s objective with Paraguay is to secure 2-3% of the global Bitcoin network.
Holmes stated, “We are committed to Bitcoin and are interested in including green and clean coins in our balance sheet, as we anticipate they will increase in value.”
