Mining companies are exploring ways to diversify their sources of income. Compass Mining analyst Anthony Power came to this conclusion, writes The Block.
The expert explained the situation with expectations of the upcoming halving in April 2024.
Companies are considering repurposing parts of their operations to manage data centers. Of great interest is the growing demand for GPUs in AI applications, Power added.
“Bitcoin mining-related companies like Hut8, Hive Digital and Iris Energy are buying graphics cards or using those that were used to mine Ethereum before the transition toPoS“, – said the expert.
According to him, there is the necessary infrastructure for this – cooling systems, security and access to cheap energy.
This reversal is due to tougher competition – as the hashrate increases, the difficulty level also increases. An additional blow to profitability provokes an increase in average energy costs.
The stock market has not ignored these factors – since the beginning of September, the Valkyrie Bitcoin Miners ETF, which provides access to the mining industry, has decreased by 23%.
According to Power, companies are increasingly resorting to hedging hashrate or the cost of energy costs. This is achieved by choosing fixed rates and applying strategies to determine where and when it is profitable to mine digital assets.
“Some North American firms have relocated to Iceland and Sweden, where hydro and geothermal energy is plentiful“, the expert explained.
Recall that Tether invested $420 million in GPUs from Nvidia. GPUs will be payment for a 20% stake in the mining company Northern Data, which will offer them for rent to AI startups.
Earlier, JPMorgan analysts lowered their estimate of the cost of mining 1 BTC from $21,000 to $18,000.
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