Bitcoin Miner Core Moves 500MW To AI Despite Declining Revenue

Core Scientific switches to artificial intelligence and converts 500 MW of Bitcoin mining hardware in the midst of a $10 billion revenue halving.

TakeAway Points:

  • Core Scientific Inc. is shifting from Bitcoin mining to AI, switching 16-megawatt capacity for AI company CoreWeave Inc.
  • Amid a Bitcoin revenue slump due to the halving event, the company plans a full conversion of 500 megawatts for high-performance computing over 3-4 years.
  • This strategic pivot aims to capitalize on the AI boom and offset losses from reduced Bitcoin mining revenue, with $179.3 million in Q1 revenue marking an increase from last year.

Bitcoin Miner Switches to AI

Core Scientific Inc., a bitcoin miner, is expanding its business by transforming a portion of its infrastructure to enable high-performance computing for businesses involved in artificial intelligence (AI). 

In the midst of a sharp decline in Bitcoin mining profits, made worse by the recent 50% reduction in miners’ incentives, Core Scientific has provided AI company CoreWeave Inc. with a 16 megawatt data centre capacity.

This calculated change in direction is indicative of a larger trend in the business, as miners are looking for other sources of income as their profits from mining cryptocurrencies decline.

Revenue Drops; AI Provides Relief

The most recent Bitcoin halving event reduced daily Bitcoin production from 900 to 450 coins, resulting in an estimated $10 billion in revenue loss. This had a significant negative impact on miners’ revenues. However, there is a big opportunity due to the increased need for AI applications. 

Adam Sullivan, CEO of Core Scientific, emphasised that over the next three to four years, 500 megawatts of Bitcoin mining infrastructure will be converted for this use, positioning the company to become a market leader in the provision of digital infrastructure for high-performance computing.

“We are in regular discussion with our customer in this space and expect to build out this part of our business further over the course of the year… We aim to become a market leader and provide the digital infrastructure for high-performance computing. The complete conversion of 500 megawatts of Bitcoin mining infrastructure to host high-performance computing will likely take three to four years and the company expects to begin generating revenue as it adds clients.” Sullivan said.

Reducing Tech Stocks’ Temperature

In addition to changing the face of Bitcoin mining, the AI revolution is driving up demand for data centre cooling technologies. The requirement to keep AI processors cool has caused companies like Johnson Controls, Trane Technologies, and Carrier Global to enjoy an 18–20% increase in their stock price year to date. 

Data centre owners are increasingly purchasing backup power solutions and smart grid technology from industry titans like Caterpillar and Cummins. For example, Caterpillar’s power generator sales increased by 9% in the first quarter, with data centres accounting for an estimated 25% of demand.

Apple’s AI Chip Development Strategy

Apple Inc. is purportedly developing Project ACDC, a domestic artificial intelligence processor for data centres, which is a noteworthy industry advance. 

This action is a tactical change aimed at strengthening Apple’s IT foundation and lowering reliance on outside chip manufacturers. It places Apple in the same league as other internet behemoths who have dabbled in creating their own data centre semiconductors, such as Google and Amazon AWS.

The established dominance of corporations such as Intel Corp. is being challenged by this trend in semiconductor fabrication towards self-sufficiency.

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