Facing the pressure of Bitcoin halving, mining companies are taking two completely different paths: whether to continue holding Bitcoin or transition to artificial intelligence. Let’s take a look at how these companies are dealing with the challenges and finding a way to survive.
Since the fourth Bitcoin halving six months ago, mining companies have been facing survival challenges and have taken two different paths. One is to continue mining and accumulate BTC, hoping for a price increase. The other is to turn to artificial intelligence and seek new growth opportunities. This crossroad originated from the halving of rewards in April this year, where the Bitcoin reward was reduced from 12.5 BTC to 6.25 BTC, weakening the main source of income for miners. To face this challenge, miners can only rely on the appreciation of Bitcoin or explore new business directions.
Is maintaining the mining business not favored by the market?
According to Bloomberg’s report, for some mining companies, continuing to mine BTC is still an attractive path. Companies such as MARA, Riot, and CleanSpark have chosen to hold Bitcoin for the long term (known as “hodl”). They believe that the price of Bitcoin will eventually rise again and hope to achieve huge returns in the future through this strategy. Analyst Wolfie Zhao pointed out that although Bitcoin has risen by more than 60% this year, the stock prices of MARA and Riot have fallen by 20% and 36% respectively, indicating that the market still holds a skeptical attitude towards this strategy. Although these companies are facing difficulties, Paul Golding, an analyst at Macquarie Capital USA, believes that pure Bitcoin mining still has economic value. He pointed out that the improvement in hardware efficiency and the potential appreciation of Bitcoin are among the reasons why miners can maintain their gross profit margin after the halving. MARA and CleanSpark still maintain positive gross profit margins, which means that mining is still feasible even with reduced rewards.
Mining companies transitioning to artificial intelligence:
According to Bloomberg, another part of mining companies, such as Core Scientific, Iris Energy, and Bit Digital, have chosen to invest their resources in artificial intelligence technology. The focus of these companies’ transformation is to use existing data centers to support artificial intelligence applications, especially in the field of high-performance computing. After signing a multi-billion dollar contract with CoreWeave, Core Scientific’s stock price has almost quadrupled. The company has transformed its data centers by installing graphic processing units (GPUs) specifically for artificial intelligence computing. Similarly, the stock prices of TeraWulf and Iris Energy have also seen significant growth this year.
However, despite artificial intelligence being a hot topic in the market, the investment frenzy in this field seems to have cooled down. Entering this market requires a large amount of capital, and some Bitcoin mining companies may not be able to cope with such financial pressure. Nevertheless, companies transitioning to artificial intelligence are still considered one of the ways for mining companies to have a second spring.
Mining companies transitioning to artificial intelligence perform better than holders.
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