Some miners, like Core Scientific, have seen an increase in stock price after shifting to AI
Six months after Bitcoin’s halving event, which reduced mining rewards by 50%, the crypto-mining industry has split into two distinct strategies.
According to insight from Bloomberg, major miners, including MARA Holdings, Riot Platforms, and CleanSpark, have chosen to hold their mined Bitcoin with hopes for a price surge soon.
They are trying to avoid losses by not selling too soon, so they instead borrow money or issue shares to stay afloat.
Moreover, these companies have experienced significant drops in their share, despite Bitcoin rising over 60% this year. For instance, MARA and Riot, two of the largest publicly traded Bitcoin miners, have seen their stocks drop 20% and 36%, respectively, as confirmed by Yahoo.
This shows that many miners have struggled to remain profitable since the halving, which has cut their earnings. Major miners like MARA are still making some profit, but their long-term success depends heavily on Bitcoin’s future price surge.
At the same time, the reports indicate that other miners are turning to artificial intelligence (AI) as a new way to generate revenue.
Core Scientific, which got out of bankruptcy in January, has shifted some of its focus to AI by upgrading its data centers to handle high-performance computing. This shift boosted its stock nearly four times after signing deals with CoreWeave, an AI company.
Another mining company, TeraWulf has also seen its stock more than double this year by investing in AI data centers. Similarly, shares of other AI-focused miners, such as Iris Energy and Bit Digital, have also outperformed their peers.
However, questions remain on whether Bitcoin miners can fully commit to AI. Setting up AI data center is expensive, and while the use of AI is seen as a haven now, there are concerns that interest in AI might soon cool down.
But, for miners holding Bitcoin, past market crashes have taught them to better time the ups and downs of the cryptocurrency market. Many miners are borrowing funds and selling shares to buy more Bitcoin as it climbs back after the market crashed in 2022
According to Ethan Vera, COO of Luxor Technology “In a rising Bitcoin price environment, it is going to be an extremely successful strategy, but it’ll be a disaster if Bitcoin prices plummet”
However, analysts like Paul Golding, a senior analyst at Macquarie Capital USA still believe there’s hope. In a statement, he said “Bitcoin mining has a place in the market currently with the respect to generating economic value from growing capacity to mine Bitcoin”
While the future of Bitcoin is still uncertain, mining companies are betting on different strategies. Each path carries risks, but both help them stay profitable as they wait for Bitcoin’s bullish trend.