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One afternoon in June 2024, I stood up against the fence of a sprawling industrial facility a few miles outside of Corsicana, Texas. Over a metal gate, I watched a bright yellow excavator claw at the dirt and flatbed trucks shuttle to and fro. A hangar-like structure with a gleaming white roof stretched hundreds of meters along the opposite perimeter. The company that owned the plot, Riot Platforms, was busily constructing the world\u2019s largest bitcoin mine.<\/p>\n
A year and a half later, a projected two-thirds of the facility is being repurposed to accommodate AI and high-performance computing (HPC) tasks. Less a temple to bitcoin, the facility is poised to become an AI megafactory.<\/p>\n
Across the US, an identical pattern is playing out at bitcoin mining facilities owned by a variety of operators. In the last 18 months, at least eight other publicly traded bitcoin mining companies\u2014Bitfarms, Core Scientific, Riot, IREN, TeraWulf, CleanSpark, Bit Digital, MARA Holdings, and Cipher Mining\u2014have announced plans to pivot either partly or wholly to AI.<\/p>\n
The change reflects rabid demand among AI companies for data centers equipped to handle the energy-intensive workloads required to train their models. Ironically, as the AI arms race intensifies, large-scale bitcoin mining firms\u2014which contributed to the AI boom by pouring billions of dollars into data center infrastructure\u2014are being forced to reinvent themselves.<\/p>\n
\u201cBitcoin mining created the blueprint for the AI compute boom and the modern data center,\u201d says Meltem Demirors, general partner at the VC firm Crucible Capital, which invests in companies in the crypto, compute, and energy sectors. \u201cThey have found that their cost of capital is much lower if they go into the AI narrative. They have the powered shell, they\u2019re ripping out the [mining machines], and their tenant is bringing the GPUs.\u201d<\/p>\n
To win the right to process a batch of bitcoin transactions and claim the associated reward, mining companies compete to solve a computational puzzle. The profitability of a mining operation depends largely on the going price of bitcoin, the amount of compute thrown at the puzzle, and the cost of powering the specialized mining hardware necessary to remain competitive.<\/p>\n
In the last few years, with advances in hardware, the amount of competition on the bitcoin network has increased at an exponential rate, meaning that winning a bitcoin reward has required ever more compute. In 2024, meanwhile, the size of that reward fell by half\u2014as happens roughly every four years\u2014to 3.125 bitcoin. Against that backdrop, the recent decline in the price of bitcoin to around $85,000\u2014a 30 percent drop from its 2025 peak\u2014has created a perfect storm that threatens the profitability of all but the most cost-efficient mines.<\/p>\n
\u201cThe economics are terrible today,\u201d says Charles Chong, VP of strategy at the crypto advisory firm BlockSpaceForce and former director of strategy at the bitcoin mining company Foundry. \u201cIf I buy a bitcoin mining machine today, I don\u2019t know if I can make the money back.\u201d<\/p>\n
As of mid-November, a tiny minority of the largest publicly traded bitcoin mining companies stood to remain profitable at the current bitcoin price, according to research from the crypto investment firm CoinShares.<\/p>\n
By comparison, the AI market promises superior margins and predictable revenues, codified in multiyear contracts with major tech firms. In the last few months, publicly traded bitcoin mining companies have announced more than $43 billion worth of AI and HPC contracts, CoinShares found.<\/p>\n
\u201cBitcoin mining is still profitable,\u201d claims Ben Gagnon, CEO at bitcoin mining company Bitfarms, which recently announced it would switch wholly to AI and HPC by 2027. \u201cIt\u2019s that HPC creates so much more value per unit of energy and does so predictably for years into the future that the company can't justify further investment into bitcoin mining.\u201d<\/p>\n
The public market has rewarded mining companies that pivot to AI too. \u201cThese are opportunistic guys. The reason they got into bitcoin was because they were the first to jump\u2014they are risk-takers,\u201d claims Chong. \u201cThey see the same opportunity now with AI.\u201d<\/p>\n
Still, there remain holdouts in so-called pure-play mining, including American Bitcoin, a company launched by Eric Trump. When it debuted in March, American Bitcoin was effectively spun out of Hut 8, a former bitcoin mining company now operating in the AI and HPC space, which remains a majority shareholder. Unlike other mining companies, American Bitcoin does not own any facilities, only the specialized mining hardware.<\/p>\n
American Bitcoin is currently able to mine a single unit of bitcoin at an average all-in cost of roughly $50,000, thanks to favorable power rates and comparatively low overheads, according to president Matt Prusak. \u201cEfficiency is the coin of the realm,\u201d claims Prusak. \u201cWe\u2019re starting to see this sorting of the industry. Operators that were not highly disciplined or truly built for bitcoin are starting to peel off.\u201d<\/p>\n
Speaking to WIRED in June, Fred Thiel, chief executive at MARA\u2014then operating as a pure-play miner\u2014cast doubt over the ability of bitcoin miners to shift into AI as seamlessly as they might want. \u201cA bitcoin mining data center is the simplest type there is,\u201d said Thiel. \u201cIt\u2019s very hard for bitcoin miners to pivot to be hosts for large-scale enterprises.\u201d<\/p>\n
AI clients require near perfect uptime to train their models. But many bitcoin miners have built their facilities around a system whereby they promise grid operators to switch off during periods of heightened energy demand. \u201cYou have to have power 99.99999 percent of the time,\u201d claimed Thiel. \u201cMiners are having to add generators and self-power-generation to make up the delta, which is very expensive.\u201d<\/p>\n
Nevertheless, in recent months, some former pure-play mining companies signed hosting deals worth billions of dollars with the likes of Amazon, Microsoft, and Google, which apparently do not share Thiel\u2019s concern.<\/p>\n
By November, MARA announced it had begun to deploy hardware for AI workloads at one of its facilities. The company declined an interview request.<\/p>\n
Some experts expect American Bitcoin to come under pressure to follow its peers into AI. \u201cIf you\u2019re an executive of a business, your job is to drive shareholder value. If your stock pumps a hundred percent off the back of you announcing an AI deal with a hyperscaler, you\u2019re going to fucking do it,\u201d says Demirors. \u201cLet\u2019s not kid ourselves.\u201d<\/p>\n
Prusak sees things differently. \u201cYou want to maximize shareholder returns, but you want to do so in a way that\u2019s germane to your core business,\u201d he says. \u201cAmerican Bitcoin was not built as a generic data infrastructure company.\u201d<\/p>\n
Though perhaps beneficial to shareholders in the near term, the pivot among industrial-scale miners into AI could come at a long-term cost to the soundness of the bitcoin network, analysts say.<\/p>\n
A dramatic drop in bitcoin mining activity could increase the feasibility of what\u2019s known as a 51 percent attack, whereby somebody hijacks bitcoin transactions by controlling the majority of the computing power directed at the network. For now, such an attack remains prohibitively expensive. But as the reward for bitcoin mining continues to fall every four years, the fear is that mining will no longer be economical. \u201cIt's definitely a threat\u2014and a serious one,\u201d claims Chong, the BlockSpaceForce executive. \u201cBut how soon is an open question.\u201d<\/p>\n
More likely, others predict, is that mining will retreat to corners of the globe where energy is cheapest and most plentiful. MARA, for its part, announced it would build out a facility in Paraguay. \u201cThe US market is more saturated from an energy demand perspective. You\u2019re constantly competing with the AI industry for energy here,\u201d says Thiel.<\/p>\n
Others are betting that bitcoin mining will become the sole preserve of sovereign states\u2014like Bhutan, El Salvador, and the US\u2014that cannot abide any threat to the value of the national bitcoin stockpiles they have accumulated. \u201cMaybe people will mine at a loss,\u201d says Demirors, \u201cbecause it\u2019s a matter of national security.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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