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Crypto

Bitcoin Miner Core Shifts 500MW to AI Amid Revenue Dip

Core Scientific pivots to AI, converting 500MW of Bitcoin mining infrastructure amid a $10 billion revenue loss from halving.

By Max Weldon

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5/8, 19:03 EDT
Bitcoin / U.S. dollar
Apple Inc.
Carrier Global Corporation
Caterpillar, Inc.
Cummins Inc.
Alphabet Inc.
Intel Corporation
Johnson Controls International plc
Trane Technologies plc
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Key Takeaway

  • Core Scientific Inc. is diversifying from Bitcoin mining to AI, converting 16-megawatt capacity for AI startup 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 Miners Pivot to AI

Bitcoin miner Core Scientific Inc. is diversifying its operations by converting part of its infrastructure to support high-performance computing for artificial intelligence (AI) companies. Amid a significant downturn in Bitcoin mining revenue, exacerbated by the recent halving event that cut miners' Bitcoin rewards by 50%, Core Scientific has deployed a 16-megawatt data-center capacity for AI startup CoreWeave Inc. This strategic pivot reflects a broader industry trend where miners seek alternative revenue streams in the face of diminishing returns from cryptocurrency mining.

Halving Hits Revenue, AI Offers Respite

The latest Bitcoin halving event has severely impacted miners' earnings, slashing daily Bitcoin production from 900 to 450 tokens and resulting in an estimated $10 billion annual revenue loss. However, the growing demand for AI applications presents a lucrative opportunity. Core Scientific CEO Adam Sullivan highlighted the company's intention to become a market leader in providing digital infrastructure for high-performance computing, with plans to convert 500 megawatts of Bitcoin mining infrastructure for this purpose over the next three to four years.

Cooling Tech Stocks Heat Up

The AI revolution is not only transforming the Bitcoin mining landscape but also fueling demand for data center cooling technologies. Companies like Carrier Global, Trane Technologies, and Johnson Controls have seen their stocks surge by 18-20% year to date, driven by the need to keep AI chips cool. This demand extends to backup power solutions and smart grid technologies, with industrial giants such as Caterpillar and Cummins experiencing increased sales to data center owners. Caterpillar's power generator sales, for instance, rose by 9% in the first quarter, with an estimated 25% of demand coming from data centers.

Apple's Strategic AI Chip Development

In a significant industry development, Apple Inc. is reportedly working on a homegrown AI chip for data centers, dubbed Project ACDC. This move signifies a strategic shift towards enhancing Apple's tech infrastructure and reducing dependency on external chipmakers. It positions Apple alongside other tech giants like Amazon AWS and Google, who have ventured into developing their own data center semiconductors. This trend towards self-reliance in semiconductor production challenges the traditional dominance of companies like Intel Corp.

Management Quotes

  • Adam Sullivan, CEO of Core Scientific:

    "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."