Bitcoin (BTC) mining is maintaining its profitability trajectory in 2023, with production costs stabilising within a range of approximately $26,000 to $28,000 per bitcoin for the majority of leading miners, according to a research report released by Canaccord Genuity on Tuesday. At the time of the report, Bitcoin was trading around $105,000.
The report highlights the burgeoning interest among management and investors regarding the alternative utilisation of the substantial power supplies that these mining operations possess, particularly in relation to artificial intelligence (AI) data centre hosting. This shift in focus reflects a growing trend within the industry as companies seek to diversify their revenue streams.
A notable example of this trend is the 12-year contract signed by Bitcoin miner Core Scientific (CORZ) with AI hyperscaler CoreWeave in June of the previous year. This partnership has been deemed a pivotal development for the sector, as it indicates a strong move towards AI applications alongside traditional cryptocurrency mining. Analysts at Canaccord Genuity, led by Joseph Vafi, noted that "early demand forecasts point toward AI dwarfing the traditional cloud hosting market over time." This prediction aligns with the ongoing adjustments within the industry as it adapts to shifts in market demands.
Moreover, the report anticipates that further co-hosting agreements will emerge early in the year, with companies like Galaxy Digital (GLXY) and Applied Digital (APLD) expected to make announcements soon. Such developments signify an evolving landscape in Bitcoin mining as firms explore synergistic partnerships with AI providers.
In addition to these exploratory measures, larger publicly traded miners are utilising their access to capital to upgrade their operational fleets. The strategic enhancements follow last April's reward halving event, a significant occurrence that adjusts the rewards given for successfully mining Bitcoin blocks. According to Canaccord, these upgrades are bolstering their competitive standing and increasing their share of the network’s hashrate, which acts as a measure of total computational power dedicated to mining activities and is an indirect indicator of industry competition and mining difficulty levels.
Overall, the combination of consistent mining profitability and the pivot towards AI-related applications reflects a dynamic shift in the Bitcoin mining sector, revealing strategies that may shape its future direction.
Source: Noah Wire Services