- Digital asset miners are turning to other business ventures like offering high-powered technology services to artificial intelligence (AI) companies to increase their earnings.
- It should be noted that most miners exited the sector, but others retained their equipment for mining other Proof-of-Work (POW) assets.
- Many mining companies changed their names; while Riot Blockchain changed its name to Riot Platforms, Hive
Blockchain Technologies is now known as Hive Digital Technologies.
In a recent report, JPMorgan states that Bitcoin miners and other miners are decreasing their commitment to cryptocurrencies.
JPMorgan’s Report on Miners Released
Digital asset miners are turning to other business ventures like offering high-powered technology services to artificial intelligence (AI) companies to increase their earnings. A new report from JP Morgan shows that crypto-based mining companies are expanding their operations to include high-performance computing services and reducing their reliance on core operations in cryptocurrencies.
The bank notes that Bitcoin (BTC) miners are leading the transition to AI, but other asset miners like Ethereum (ETH) are also contributing to the increasing numbers.
Following Ethereum’s transition to the Proof-of-Stake blockchain with the Ethereum Merge, miners selling their high-value hardware on the secondary market due to users staking assets to secure the network led to oversupply and a slight price drop.
It should be noted that most miners exited the sector, but others retained their equipment for mining other Proof-of-Work (POW) assets, although it was not as profitable as Ethereum mining.
JP Morgan analyst Nikoloas Panigirtzoglou stated that the rapid growth of AI and the increasing demand for high-performance computing opened up a new phase for former Ethereum miners:
“The rapid growth of AI and the increasing demand for high-performance computing feed into a new and perhaps more profitable way of using GPUs previously used for Ether mining.”
Many mining companies changed their names to reflect the growing diversification trend; while Riot Blockchain changed its name to Riot Platforms, Hive Blockchain Technologies is now known as Hive Digital Technologies.
A New Economy for Blockchain Companies
One reason for digital asset mining companies transitioning to AI is increased profitability. According to the research report, several mining companies conducted beta tests by offering HPC services using a portion of their equipment.
The results from these tests show that offering HPC services to AI companies appeared more profitable than Bitcoin mining due to its energy intensity. The report states:
“If the profitability reported in beta testing can be repeated on a large scale, it could overshadow revenues from Bitcoin mining in the future.”
It should be noted that the feared crypto winter of 2022 was another factor. Last year, many assets like BTC and ETH reached their lowest levels in years, losing over 55% of their value.
As a result, most miners sold their BTC reserves and turned to new sources to survive, a situation colloquially referred to as ‘forest miners’ by many observers.
The market’s revival this year has given miners a new lifeline, and strong signs that the US Securities and Exchange Commission (SEC) might approve a potential spot Bitcoin ETF will positively affect asset prices.
Last month, JP Morgan wrote that the next Bitcoin halving in 2024 will be a stress test for the industry, reducing miners’ earnings and increasing Bitcoin’s production cost from 6.25 BTC to 3.125 BTC.
