jakiro
Author: Climber, Bitchain Vision
On July 5, as BTC fell below $54,000, many mining companies and mining machines had reached the shutdown price.F2Pool data shows that currently only five mining machine models can bring profits to their operators, which means that companies whose main business focuses on crypto mining urgently need to find new business profit points.
Previously, due to factors such as Bitcoin’s fourth halving, BRC20’s shutdown, and energy costs, the stocks of the top listed mining companies fell sharply before the halving, and some even declared bankruptcy.As the price of Bitcoin falls, it is more difficult to cover the cost of mining business profits.Bloomberg predicts that the loss of the entire cryptocurrency mining industry will be about $10 billion after the halving.
Faced with the crisis, mining companies have begun to take the road of self-rescue. It is a routine operation to report group heating, update mining machines, and improve computing power, but the best way to achieve the most results is to transform into the AI field.Compared with other industries, the business paths of mining companies are highly coincidental with the artificial intelligence track, and they all have a strong demand for computing power, which happens to be the strength of crypto mining companies.
Core Scientific
In January 2024, Core Scientific’s Chapter 11 reorganization plan was approved by the Bankruptcy Court.However, the company’s stock price fell by more than 30% on the day of listing, and the closing price was only US$3.75.
The financial report released by Core Scientific in March showed that total revenue in fiscal year 2023 was US$502.4 million, a decrease of 22% from the previous year.
But the company has since decided to plan for the AI field and signed a multi-year contract with CoreWeave that month, with potential revenue exceeding US$100 million.Under the terms of the contract, Core Scientific will provide up to 16 MW of capacity in its new Austin, Texas data center to host CoreWeave’s infrastructure.Core Scientific is renting a tier three data center in Austin, which was formerly home to HP to expand its hosting business to include HPC.
Soon after, Core Scientific announced a 12-year contract with CoreWeave, which is expected to generate approximately $290 million in average annual revenue for Core Scientific, with cumulative total revenue over $3.5 billion over the 12-year period.
The shift to AI also gave Core Scientific confidence and rebirth, not only rejecting CoreWeave’s proposal to acquire the mining company at $5.75 per share, but also achieving positive growth in the rise in stock prices.
As can be seen from the above figure, Core Scientific’s stock price was about US$3 before the halving, but it rose all the way after the halving, and has now reached US$10, an increase of nearly 300%.It is worth noting that Core Scientific doubled its share price after announcing a 12-year contract with CoreWeave in June.
CoreWeave
Core Weave first started with mining, but now it is known as the “AI computing power scalper”.The company was established in 2017 and is a professional cloud provider with large-scale GPU computing resources, that is, it has thousands of Nvidia’s AI “computing cards”.Its customers cover many AI giants such as OpenAI and Microsoft.
CoreWeave was originally a mining company that focuses on mining Ethereum, and their means of production were GPUs.By the end of 2018, more than 50,000 GPUs were deployed, accounting for more than 1% of the Ethereum network computing power, becoming the largest Ethereum miner in North America.
Since then, considering that the competition in the crypto mining market has gradually become fierce and the impact of power prices has been huge, since 2019, CoreWeave has begun to focus on purchasing enterprise-level GPU chipsets, building a dedicated cloud infrastructure, and adjusting its business around NVIDIA’s chips.
Currently, under the storm of AI globalization, CoreWeave has become a cloud computing service company based on Nvidia graphics cards, and has won major customers such as Microsoft and Google. It has entered the ranks of unicorns in one fell swoop, becoming one of the world’s largest independent GPU cloud providers.Customers from all walks of life, including VFX, artificial intelligence, gaming and medical care.
The transformation has brought huge business returns to CoreWeave and has also escaped the constraints of traditional mining companies being affected by the rise and fall of cryptocurrency prices.
In April 2023, CoreWeave completed a $221 million Series B financing. Just one month later, Magnetar Capital invested another $200 million, and the company’s total Series B financing reached $421 million.
In August of that year, CoreWeave completed a $2.3 billion debt financing led by Magnetar Capital and Blackstone, which also caused the company’s valuation to soar to $8 billion.
This year, CoreWeave completed another US$1.1 billion Series C financing, while another mining company, Core Scientific, announced a 12-year contract with CoreWeave, which will provide the latter with about 200 megawatts of infrastructure.In addition, in June this year, CoreWeave announced that it would invest $2.2 billion in Europe to build a data center by the end of 2025.
Currently, there are rumors that CoreWeave plans to make an IPO in 2025.
Hut 8 Corp
In the third quarter of last year, Hut 8 lost about 54 million Canadian dollars (about $40 million), with revenue down 46% year-on-year.After that, Hut 8 changed its coach. The new CEO Asher Genoot said before the halving that the current task is to “make a difficult decision to divest, invest and grow assets.”
To this end, Hut 8 began making business adjustments and transformations at the end of last year, acquiring four Canadian power plants and a new Bitcoin mine, but more critically, Hut 8 said it will actively seek more opportunities to invest in it.The huge growth potential of artificial intelligence”.
On July 4, Hut8 announced that it plans to start the commercialization of its AI business in the second half of 2024.
Hut8 Corp mentioned in its June operation update that the company managed computing power to 17.8 EH/s, managed power capacity of 762 MW, and 107 Bitcoin production in June.
At the same time, the company plans to start commercialization of its AI business in the second half of 2024 and predicts annual revenue to reach about US$20 million.CEO Asher Genoot said the company is actively optimizing existing assets and plans to upgrade the miner fleet to further improve the productivity and long-term operational efficiency of the data center.
Hut8’s transformation into AI business also allowed it to receive a strategic investment of US$150 million from Coatue in June this year, with funds used to support the construction of the next-generation AI infrastructure platform.预计在之前宣布的1100兆瓦能源项目中，将近期实现转化。
In addition, Hut8’s AI transformation has also doubled its stock price after halving.
As can be seen from the above figure, the price of Bitcoin before the halving on April 20 was about US$8, and it has been rising since the halving. It has now exceeded US$16, achieving double growth.
Marathon Digital Holdings
Marathon Digital Holdings is the largest listed Bitcoin mining company. Data from Bitcointreasuries.net shows that Marathon holds more than 17,000 Bitcoins.The company’s main business is self-operated Bitcoin mining. The strategy is to (financing) purchase mining machines and deploy mining farms, pay the cash operating costs of production and hold Bitcoin as a long-term investment.
But unlike the above Sanjia mining companies, Marathon focuses more on updating mining machines and increasing production capacity under the pressure of halving.
In the past few months, Marathon has been continuously optimizing mining machine products and expanding its computing power. It plans to achieve computing power of 50 EH/s by the end of 2024, double the increase from the beginning of the year.For example, Marathon Digital acquired Applied Digital’s Bitcoin Mining Data Center for US$87.3 million, cooperated with NiceHash to launch customized firmware for Bitcoin ASIC mining machine optimized for the NiceHash mining platform, and launched mining products MARAFW firmware and MARA UCB 2100 control board, aiming to improve the efficiency and performance of Bitcoin mining machines, etc.
In addition, Marathon is also trying other methods, including launching Bitcoin sidechain and related development platform Anduro, signing an agreement with Kenya to invest more than US$80 million to develop the African country’s energy infrastructure.
In May this year, Marathon Digital released its financial report saying that in the first quarter of 2024, the company mined a total of 2,811 bitcoins, with a value of approximately US$176 million at the current price.But this is mainly attributed to the increase in its operating computing power by 15%, and the increase in profits is also due to the rise in Bitcoin prices.
But the above efforts only kept its stock price rising slightly, and before and after the halving, its stock price rose from about $15 to $21.
Conclusion
Practical results have proved that at present, mining companies that embraced AI early have achieved generous returns, and some have even gotten rid of the shackles of coin price.Mining companies that choose to stick to their own product lines and production models still need to find a way out before the next Bitcoin halving cycle arrives.
For mining companies that choose the AI field, this may be the best choice, because mature mining infrastructure, personnel management experience, and power resources are enough to save them from the pain period of cross-fields.
