AI & HPC: The New Gold Rush for Bitcoin Miners

Artificial Intelligence (AI) and High-Performance Compute (HPC) have emerged as significant trends among public bitcoin miners, with leading companies exploring these areas. Core Scientific, Bit Digital, Hut 8, Hive, and IREN have already established revenue-generating AI/HPC business lines, while others like Crusoe Energy, Lancium, Cipher, Terawulf, Riot, and Bitfarms are in the development or exploratory phase.

The Stargate Project, announced in January, has pledged up to $500 billion to accelerate AI developments in the United States. This has raised questions about the future of pure-play bitcoin miners. However, Kevin Dede, a managing director of equity research at H.C. Wainwright, believes there is room for both AI/HPC-focused miners and traditional bitcoin miners. He suggests that the conversation on AI pivots for bitcoin miners changed when Core Scientific announced the CoreWeave deal six to eight months ago.

Riot recently paused its 600-megawatt Corsicana Phase 2 to evaluate it for AI/HPC. Dede attributes this to activist investors buying stock and the growing demand for HPC. He believes that the real market for HPC is the enterprise market, where companies use AI to optimize production.

When comparing Bit Digital and Core Scientific's strategies, Dede sees potential in both. BitDigital has secured sites in Iceland and Europe, with plans to scale up to 35 megawatts in HPC capacity this year. However, there are risks associated with construction and operation of new facilities. Core Scientific, on the other hand, has attracted impressive talent and is using powerful B200 chips, but there may be delays due to the complexity of these chips.

Dede does not believe that AI/HPC will push bitcoin mining to the fringes. He suggests that a hybrid AI-bitcoin mining data center is possible, with bitcoin miners running when HPC power is not needed. This optionality offers investors a steady HPC stream and the potential upside of a rising bitcoin price.