Bitcoin Miners Face ‘Identity Crisis’ As Some Turn Their Eyes to AI and Takeovers

Bitcoin mining companies sized up each other at the Bitcoin 2024 conference held late last week in Nashville, and the post-halving period continues to put pressure on the companies’ established business models.

While some publicly traded players are viewing industry-wide headwinds as an opportunity to expand their businesses or pursue hostile takeover bids, others are betting on more diversified revenues through innovations like AI-based computing and chip manufacturing to thrive.

At the annual conference, one corner was crowded with companies that make money using fleets of power-hungry machines that constantly crunch complex calculations in a race to verify Bitcoin transactions. In April, the reward for that endeavor was halved during a halving, a four-year event that slows the pace of the gradually growing Bitcoin supply.

“Bitcoin miners are going through an identity crisis in the first few months after the halving,” said Ryan Rasmussen, head of research at Bitwise Asset Management. Decipher“You have the headwinds of block rewards being cut in half.”

Consolidation in the Bitcoin mining industry is expected over the next 18 months, Rasmussen explained, as some well-capitalized miners look to consume competitors. For example, Colorado-based Riot Platforms, announced On Tuesday, the company announced that it had acquired Block Mining following a hostile takeover of another company, Bitfarms, last month.

Broker Benchmark has identified bitcoin mining tech firm Bitdeer as a potential takeover target research report this week. The benchmark noted that among its competitors, Bitdeer has “ample existing and planned capacity” that makes it particularly attractive.

Bitdeer Chief Strategy Officer Haris Basit said: Decipher that a hostile takeover is very unlikely, citing a capital structure that would make it difficult for a competitor to take control. Still, he recognized that acquisitions are one way that management teams try to add value to their existing businesses, which ultimately comes down to just a few metrics.

“A lot of this happens when management isn’t adding value in any other way,” Basit said of acquisitions. “If you think about a bitcoin mining company, there’s a limit to what management can do: You have to get operational excellence, cheap capital, and that’s about it.”

Bitdeer’s global energy capacity is Currently According to estimates, 2.5 gigawatts is enough to power 250 million LED bulbs U.S. Office of Energy Efficiency and Renewable Energy. At the same time, Bitdeer is currently using 36% of its capacity. And some of that capacity could be directed to artificial intelligence (AI) and high-performance computing (HPC) companies to generate revenue, Basit said.

“We’re still in the evaluation phase,” he said. “We’ve hired expert consultants who have built multiple data centers … and they’re reviewing and evaluating each of our sites for use as AI or HPC data centers.”

Bitdeers’ AI plans to some extent mirror those of Core Scientific, which it has unveiled 12-year HPC hosting agreement in late June with CoreWeave, a cloud infrastructure company. Core Scientific’s share price, meanwhile, more than tripled from about $3 in May to more than $10 by Friday’s close.

Bitdeer is also entering the ASIC industry, producing integrated circuits specialized for Bitcoin mining. Not only is this a way for Bitdeer to further diversify its revenue, but Basit said the space in the Bitcoin mining industry is dominated by Bitmain Antminers.

While some Bitcoin miners are interested in buying out the competition, Marathon Digital is interested in acquiring the resource it mines. The company he said On Thursday, the company announced it would no longer sell bitcoin, while also announcing it had purchased $100 million worth of BTC and added it to its balance sheet.

Jayson Browder, Senior Vice President of Government Affairs at Marathon, said: Decipher in an interview that the company is currently looking inward and focusing on its own operations rather than evaluating competitors. The company’s Bitcoin inventory stands at 20,000 Bitcoins, which is worth over $1.3 billion.

“We are the second-largest holder of the coin of any publicly traded company in the world,” he said. “I just think it shows our commitment to the asset and our belief in its long-term growth.”

Edited by Andrew Hayward