VanEck says BTC miners could enhance their profitability and address bad balance sheets by allocating some of their energy capacity to the AI and HPC sectors.
According to VanEck, an investment firm, bitcoin miners have the potential to generate approximately $13.9 billion in additional annual revenue by partially transitioning from energy provision to the artificial intelligence and high-performance computing (HPC) sector by 2027.
VanECK Says AI companies require energy
In an Aug. 16 report, VanEck asserted that “AI companies require energy, and Bitcoin miners possess it.” The company believes that Bitcoin miners, confronted with profitability risks due to volatile operational costs and price fluctuations, may benefit from redirecting a portion of their energy capacity to the expanding sectors.
VanEck asserted that “Bitcoin miners generally have poor balance sheets, either due to an excessive amount of debt, an excessive amount of share issuance, an excessive amount of executive compensation, or a combination of the three.”
Suppose publicly traded Bitcoin mining companies transition 20% of their energy capacity to AI and HPC by 2027. In that case, VanEck predicts that “total additional yearly profits could exceed an average of $13.9 billion per year over 13 years.”
The comments are in response to recent allegations by investment firm Kerrisdale Capital, which referred to the Bitcoin mining industry as an “industry of snake oil salesmen.” The company asserted that Bitcoin mining firms are not viable business models in their present state and, as a result, are intentionally diluting the industry.
“They issue shares and subsequently invest in the business with those shares.” However, there are no returns,” stated Sahm Adrangi, the chief investment officer of Kerrisdale Capital, in a recent interview with Cointelegraph.
In the interim, VanEck observed that the advantage of Bitcoin miners entering into such contracts is that AI companies are typically willing to provide the financial resources required for capital expenditure.
Core Scientific, the fourth largest Bitcoin miner by hash rate, has recently secured a 12-year contract with AI hyper scaler CoreWeave. By supplying 200 MW of infrastructure, this agreement is anticipated to generate a revenue of more than $3.5 billion.
At the same time, Hive Digital Technologies, a Canadian miner, has continued to expand its facilities to provide HPC services to companies in the gaming, artificial intelligence, and graphics rendering industries, as indicated in its Q4 2023 report.
Following the April Bitcoin halving, which reduced mining rewards from 6.25 BTC to 3.125 BTC for adding a block to the blockchain, VanEck’s report is released amid a challenging year for Bitcoin miners.
Marathon Digital, a Bitcoin miner listed in the United States, reported revenue of $145.1 million in the second quarter, which was approximately 9% lower than the $157.9 million that analysts had anticipated, according to Cointelegraph on Aug. 2.
CryptoQuant CEO Ki Young Ju announced on April 8, just before the Bitcoin halving, that the cost of mining with Antminer S19 XPs will increase from $40,000 to $80,000 following the Bitcoin halving in mid-April. CoinMarketCap data indicates that Bitcoin is trading at $59,550 at publication.
