Is Bitcoin mining no longer profitable? Mining companies are leveraging power and computing infrastructure parks to pivot towards large-scale investments in AI data centers and high-performance computing clusters.
Zhitong Finance APP has learned that the world’s largest Bitcoin mining enterprises are leveraging their vast computing infrastructure to serve in the “AI spending spree” led by tech giants such as Google, Microsoft, and Meta. This is primarily due to the booming development of generative AI applications and AI agents, which are expected to significantly enhance societal productivity, driving an explosive expansion in demand for AI computing power. This has compelled tech giants to undertake large-scale construction and expansion of AI data centers. Investors have evidently taken notice, pouring substantial funds into Bitcoin mining companies (referred to as “mining enterprises”) transitioning into AI data centers.
It is understood that mining companies, once focused on mining cryptocurrencies like Bitcoin, are now signing long-term contracts to handle massive AI workloads from tech giants through their land, power resources, and data center computing infrastructure. For these mining enterprises, their computing infrastructure originally designed for mining proves perfectly suited to the computing needs of AI training and inference. Moreover, these companies already possess grid connection points, substations, land resources, and other supporting infrastructure such as power distribution, enabling them to adapt to massive AI workloads within a very short period.
Bitcoin mining companies such as IREN (IREN.US), Riot (RIOT.US), TeraWulf (WULF.US), and Cipher Miner (CIFR.US) are generally upgrading their mining computing infrastructure on a large scale to swiftly pivot towards high-performance computing (HPC) and AI computing infrastructure within a very short timeframe.
Some industry experts focusing on mining enterprise management have pointed out that compared to cryptocurrency mining operations, transforming into AI data centers to provide robust computing resources for AI training and inference workloads can deliver stronger revenue generation and profit margins.
Mining Bitcoin “no longer works,” prompting mining enterprises to accelerate their shift towards AI data centers.
“Focusing on Bitcoin mining no longer works for these mining enterprises; they urgently need new business pathways with stronger profitability,” said Daniel Keller, CEO and co-founder of cloud infrastructure company InFlux Technologies, during a media interview.
The overly crowded mining business sector and the extreme volatility of Bitcoin prices have severely squeezed profit margins. Analysts from Wall Street financial giant Jefferies stated that the highly competitive Bitcoin mining environment and ongoing price volatility will significantly impact corporate profitability. The analysts at Jefferies estimate that with the decline in Bitcoin prices, mining enterprises’ profits may drop by more than 7% in September.
The quadrennial Bitcoin “halving” event effectively cuts the mining rewards in half, further eroding the actual earnings of these mining enterprises over time. “Considering the timeline of Bitcoin halving, from a long-term perspective, the profitability of mining is far less attractive than providing computing resources for AI,” Keller noted.
He added in the interview, “Moreover, the current demand for computing resources for AI workloads is skyrocketing. Bitcoin mining companies possess all the necessary elements to rapidly build large-scale AI data centers, such as affordable and stable electricity in temperate climates.”
This massive shift is occurring amid a sustained surge in AI computing demand. Heavyweight AI computing consumers—such as OpenAI, the developer of ChatGPT, xAI founded by Musk, who has long been at odds with OpenAI’s leader Altman, and Anthropic, known as ‘OpenAI’s rival’—are entering into multi-billion-dollar AI infrastructure cooperation agreements with leading AI chip companies like NVIDIA (NVDA.US), Google (GOOGL.US), AMD (AMD.US), and Broadcom (AVGO.US). This underscores the continuously fervent demand for AI computing power.
Cloud computing giants such as Google (GOOGL.US), Microsoft (MSFT.US), and Amazon (AMZN.US) are facing multi-year delays in grid access and construction permits to obtain more AI data center capacity. This creates significant opportunities for smaller bitcoin mining companies that already have the necessary power infrastructure to help meet the AI computing demand.
Gautam Chhugani, a well-known analyst at Bernstein, stated in a report earlier this month: “Access to ready and inexpensive renewable energy, combined with robust data center computing capabilities, makes bitcoin mining companies the ideal partners for AI cloud service providers. This will help accelerate the deployment of AI computing clusters to the market and build larger, resilient high-performance…