From Bitcoin to AI: Transition of Mining Companies' Computing Power, Energy Demand Becomes Key to Cooperation

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Private Equity Funds Target Bitcoin Mining Companies, Betting on High-Performance Computing (HPC) Transformation

AI computing power and Bitcoin mining share a common need for massive energy consumption. Recognizing this, private equity funds are now shifting their focus to Bitcoin mining companies, evaluating the potential for these mining companies to transform into providers of high-performance computing (HPC) services. Despite the similar demand for computing power between the two, the actual path to transformation is not straightforward.

Transition of Mining Computing Power: Impact of the Cryptocurrency Market, Some Transition to AI Artificial Intelligence

HPC and Bitcoin Mining: Similar Computing Power Needs, Different Chip Designs

While both high-performance computing (HPC) and Bitcoin mining require significant computing power, they utilize different types of chips.

HPC chip designs are used for processing various complex computing tasks such as scientific simulations, climate modeling, financial analysis, etc. They possess higher flexibility and programmability to adapt to different application scenarios. Bitcoin mining chips (ASIC) are designed specifically for the Bitcoin mining algorithm (SHA-256). They can efficiently execute this specific type of calculation but perform poorly in other tasks.

Although some Bitcoin mining companies are beginning to explore using their ASIC mining machines for HPC tasks, this would require significant hardware and software modifications, and the efficiency may not match that of dedicated HPC chips.

AI Computing Power Demand Leads Core Weave to Sign Contract with Bitcoin Mining Companies to Ensure Energy Supply

In June of this year, CoreWeave, a cloud computing company invested in by Nvidia, signed a 12-year contract with Bitcoin mining company Core Scientific to purchase 200 megawatts (MW) of electricity. By purchasing energy to host NVIDIA GPUs through mining companies, they ensure the stability of the company's AI computing power.

On July 3rd, after Core Scientific released trading information on its official website, the stock briefly rose, but later fluctuated between 9.5 and 10.5 as Bitcoin prices plummeted.

Large-scale artificial intelligence (AI) companies are exploring different alternatives to ensure their energy needs. Bitcoin miners listed in the US have access to a large amount of electricity, making many Bitcoin mining companies potential acquisition targets for them.

Bitcoin Mining Companies Pave the Way for New Developments to Ease Market Volatility Pressure

The transformation of large Bitcoin mining companies to provide AI computing power offers a solution to the operational challenges brought about by Bitcoin price fluctuations, alleviating some of the operational cost pressures.

(Dealing with the halving dilemma, crypto miners are transitioning! JPMorgan: Providing services to the AI market)

In the past, a decrease in total Bitcoin computing power was often interpreted by the market as a bearish signal, potentially leading to a decline in Bitcoin prices. Miners may increase computing power to compete for block rewards to make up for losses, further intensifying competition. However, the emergence of AI computing power demand provides mining companies with a stable source of income, helping to mitigate the issue of miners selling off due to market downturns, thereby changing the market landscape.

While the long-term impact of Bitcoin mining companies transitioning to AI computing power on Bitcoin prices remains unclear, what is certain is that this provides a new direction for mining companies in a challenging market environment.