Bitcoin Mining Firms Nagivate ‘Identity Crisis’ with AI Expansion and Acquisitions

Bitcoin mining firms navigate the post-halving crisis with AI expansion, chip manufacturing, and acquisitions.

Bitcoin miners sized each other in the just concluded Bitcoin 2024 held at Nashville as their established business models battle against the post-halving stretch. 

Some listed Bitcoin miners treat the industry-wide hurdle as an ideal opportunity to scale operations or unleash hostile takeover attempts. Others are diversifying revenue via the integration of AI computing and chip manufacturing. 

Navigating Post-Halving Crisis

The annual conference accommodated the firms that generate revenue via fleets of power-hungry machines. The equipment constantly crunches the complex calculations in a race to verify the BTC transactions. The battle is fierce after the April halving, when the mining reward was reduced in half in the quadrennial event to slow the Bitcoin supply.  

Bitwise Asset Management research head Ryan Rasmussen acknowledges Bitcoin miners have witnessed such an identity crisis a few months following the halving. The executive indicates that they experience headwinds from the block rewards reducing in half. 

Rasmussen predicts likely consolidation across the Bitcoin mining segment that would last for 18 months. The Bitwise researcher singles out that miners endowed with financial resources will consume competitors. Notably, Colorado-based Riot Platforms (RIOT) revealed that it was snapping Block Mining surprisingly after attempting the hostile takeover of Bitfarms last month. 

Bitcoin Mining Firm Scales to AI and HPC Computing

The broker Benchmark recently spotlighted Bitdeer – a tech-oriented Bitcoin miner – as a potential for takeover in its previous week’s report. The report indicated that among the competitors, Bitdeer has scaled power capacity and is attractive for its planned additions.

Bitdeer’s chief strategy executive, Haris, rules out a hostile takeover, indicating that the capital structure is challenging for a rival to assume control. Nonetheless, he acknowledged that takeovers are an avenue where management teams of miners are adding value to the existing entities. However, such ultimately involves addressing several metrics. 

Basit considers that takeovers are bound to occur particularly where the management fails to add value. He adds that though a Bitcoin mining company is perceived as limiting for the management in scope, one could pursue operational excellence and low-cost capital.

Recent data by the US Office of Energy Efficiency and Renewable Energy (EERE) shows that 250 million LED bulbs could power from the Bitdeer cumulative power capacity, which is estimated at 2.5 gigawatts. 

However, Bitdeer only utilizes 36% of the power, thereby leaving a substantial capacity that it could tap to earn additional revenue. Basit observes such is possible if it powers firms running artificial intelligence (AI) operations and high-performance computing (HPC) centers. 

Basit acknowledges the process is underway, though Bitdeer is still in the evaluation stage. Nevertheless, Bitdeer already has expert consultants involved in setting up data centers and evaluating the sites suitable for AI and HPC units. 

Bitdeer harbors similar AI plans as Core Scientific, which last month unveiled a 12-year contract with CoreWeave for HPC hosting. The news of the contract with the cloud infrastructure company has fuelled Core Scientific’s (CORZ) stock price to rally from $3 in May to above $10 per Nasdaq data. 

Bitdeer diversification is evident through entry into the ASIC industry to manufacture chips tailored for Bitcoin mining. Not only is the move diversifying Bitdeer’s revenue, but Basit considers it viable given that Bitmain dominates it via Antmines. 

Marathon Digital Adopts BTC Hodl Strategy 

Different from Bitcoin miners, whose objective is buying up competition, Marathon Digital’s (MARA) interest is scooping up the asset instead. The miner revealed on Thursday that it was adopting a hodl strategy and abandoning the sale of Bitcoin. The Nasdaq-listed miner added $100 million worth of BTC to the balance sheet.

The government affairs senior vice president, Jayson Browder, indicated that MARA seeks inward solutions in its operations and does not assess competitors. The BTC addition saw the firm’s Bitcoin stockpile hit 20,000 Bitcoin, nearly worth $1.395 billion, with the current price up 2.9% to $69,778, CoinGecko data shows.

Basit confirmed MARA reserves make it the second-largest holder of BTC, trailing MicroStrategy in the publicly traded companies. The huge stockpile affirms its commitment to Bitcoin and its belief in long-term growth.