Key Takeaways:
- Nasdaq-listed Bitcoin mining firm Riot Platforms is exploring ways to expand its operations to incorporate AI and high-performance computing (HPC).
- The move comes amid a growing trend of Bitcoin mining companies diversifying their asset portfolios as they face increased financial strains due to a massive reduction in revenue.
- On February 10, the mining difficulty on the Bitcoin network hit an ATH of 114.7 terahashes. Mining revenue also dropped significantly over the past year following the halving event in April 2024.
- As part of its diversification efforts, Riot has announced three new board members with expertise in overseeing the conversion of Bitcoin mining assets for potential AI and HPC use.
Riot Platforms announced on Wednesday that it is exploring partnerships in the artificial intelligence (AI) and high-performance computing (HPC) industry as the leading US-based Bitcoin mining company aims to diversify its business and generate sustainable revenue streams.
Riot Platforms Is Exploring Ways To Include Bitcoin Mining, AI, And HPC Into Its Operations
This is reflective of a growing trend among Bitcoin miners exploring AI computing capabilities by leveraging their substantial energy infrastructure and data center expertise for additional revenue opportunities beyond mining BTC.
In a press release, the Nasdaq-listed firm stated that it would evaluate the potential for utilizing AI and HPC at its Corsicana Facility in Navarro County, Texas. The Bitcoin mining facility sitting on 265 acres has a total capacity of 1 gigawatt (GW). Once fully developed, it could become the world’s largest crypto mining, AI, and HPC operations.
Currently, the Corsicana site has a 400-megawatt (MW) substation, delivering a Bitcoin mining hash rate capacity of 31 exahashes per second (EH/s). Riot also has Bitcoin mining facilities in Rockdale, Kentucky, and Colorado, where it operates electrical switchgear engineering.
Bitcoin Mining Difficulty Hits ATH As Miner Revenue Falls Over The Past Year
The move come amid mining difficulty on the Bitcoin network reaching an all-time high of 114.7 terahashes as it reached the block height of 883,502 on February 10. Speaking with crypto news outlet Decrypt, Jaehyun Ha, a research analyst at Presto Research, suggested that miners are experiencing more financial strain than before, which is pushing them towards exploring new revenue sources.
According to data from the Hashrate Index, revenue from mining Bitcoin has significantly dropped over the course of the year, hitting as low as $10.4 a day over an operating margin of 60% for an average ASIC mining rig.
The reward from mining a single block on the Bitcoin network was halved last April, going from 6.25 BTC to 3.125 BTC. Freshly minted Bitcoins enter the supply as blocks are mined and the process is integral to its sustainability. The reward halving is designed to take place after every 210,000 blocks or roughly every four years.
Riot Appoints New Board Members To Amp Up AI And HPC Plans
Riot has appointed three new members to its board to go along with its AI and HPC explorations, and they are former Hut 8 Mining CEO Jaime Leverton, former Meta senior engineer Doug Mouton, and real estate investor Michael Turner. The company said all three have experience overseeing the conversion of Bitcoin mining assets for potential AI and HPC use.
Leverton was heading Canadian Bitcoin miner Hut 8 Mining Corp. when it expanded into the high-power computing (HPC) space by acquiring the data center business of TeraGo. Mouton is a member of the advisory board for Fidelis New Energy, a company that specializes in developing zero-carbon facilities, and previously worked as a senior engineering lead for data center design and construction at social media giant Meta. Meanwhile, Turner is the former president of global real estate developer Oxford Properties Group and brings experience in real estate investment and capital allocation to Riot.
The drastic reduction in mining rewards and the rising difficulty of adding blocks to the network are making Bitcoin mining less profitable to stakeholders, which explains the trend of mining companies diversifying their income stream to include AI and HPC.
In a report from August 2024, asset manager VanEck estimated that if Bitcoin mining companies were to allocate 20% of their energy capacity to AI and HPC by 2027, they could generate additional yearly profits of $13.9 billion over 13 years.
Riot CEO Jason Les stated that the company is working on advancing its AI and HPC evaluation process to seek maximum value for its entire portfolio of assets. Despite adding new board members, the Bitcoin miner said there is no guarantee that its existing assets are suitable for AI/HPC conversion and the change can only be achieved on “financially advantageous terms”.
Last month, investment firm D.E. Shaw purchased an unknown-sized stake in Riot. Sources familiar with the matter said the miner could be raising fresh capital to push ahead with plans to diversify its operations.
These diversification efforts are mainly aimed at reducing the company’s dependence on Bitcoin’s price fluctuations while capitalizing on the growing demand for AI computing resources. According to JPMorgan analysts, Bitcoin and crypto mining firms have expanded their overall market cap by 14% to bring their valuation to $108 billion.
At the time of writing, Bitcoin (BTC) is trading at $96,222 – up 0.07% over the last 24 hours.
