According to a report from The Block, Core Scientific, a mining company, will provide GPU hosting services to artificial intelligence service provider CoreWeave. This has led to a significant increase in the overall market value of 14 Bitcoin mining companies in the past month.
AI GPU hosting attracts mining investors’ interest
Taking over HPC projects, promoting business diversification for mining companies
Optimistic about IREN, puzzled by RIOT
According to analysts from JPMorgan, Reginald Smith and Charles Pearce, Core Scientific, one of the largest publicly traded cryptocurrency mining companies in the United States, announced earlier this month that it would provide GPU hosting services to CoreWeave, resulting in an increase in the market value of 14 Bitcoin mining companies.
Specifically, the overall market value increased by about $4 billion, a growth of 22%, indicating the current market investors’ high interest and affirmation in Bitcoin miners expanding their business to data centers for computing purposes.
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Adam Sullivan, CEO of Core Scientific, stated at the time:
“The new agreement we signed with CoreWeave allows us to transform our primary business and profitability, seize the growth opportunities in the most dynamic technological areas such as AI computing, while maintaining our strong Bitcoin mining business.”
Previously, Core Scientific implemented a restructuring plan earlier this year and relisted on NASDAQ.
(Shaking off bankruptcy shadows! Mining company Core Scientific’s restructuring plan approved, relisted on NASDAQ at the end of January)
Analysts also emphasized that due to mining companies’ well-established computing infrastructure, many mining companies are considered potential hosts for AI GPUs and data centers, which undoubtedly increases the attractiveness to investors.
At the same time, this also drives mining companies to gradually shift towards the HPC field to meet the growing market demand, which can be seen as a positive cycle.
As mentioned in Core Scientific’s announcement in June:
“With the ongoing demand for HPC projects exceeding supply, our expanding partnership with CoreWeave has created a path for Core Scientific to diversify our business model and balance our investment portfolio, including Bitcoin mining and cloud computing services.”
They added, “Therefore, we can maximize cash flow while reducing risks and continue to participate in the potential upside of Bitcoin.”
Analysts indicated that mining companies can seize emerging market opportunities by expanding their business to HPC projects, but there are still other challenges:
With the growth of AI and other HPC demands, companies with cheap electricity and complete infrastructure will be in a favorable position in future competition.
Finally, analysts also expressed optimism about mining company Iris Energy (IREN), stating that the company’s facilities, based on renewable energy, are in an advantageous market position for Bitcoin mining and AI cloud computing, as they are well-equipped to meet the surging HPC and AI demands:
“We believe IREN is best positioned to meet the recent surge in HPC and AI demands because the company has abundant power capacity, not solely focused on Bitcoin mining.”
On the other hand, they criticized another mining company, Riot Platforms (RIOT), for not being proactive enough in response to the growing HPC demands and opportunities, despite having ample power capacity:
“Although RIOT has abundant power capacity, it remains fully committed to Bitcoin mining and seems less interested in HPC.”
Earlier, these two mining companies were mentioned by JPMorgan in their research report in April as being optimistic and rated as “buy” for the two mining companies.
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Further reading
Miners catch their breath! Report: Bitcoin hash rate and mining difficulty may decrease in the summer, competition will slow down
Mining company acquisition frenzy! Riot strikes back at Bitfarms, continues to increase stake to 14%: No communication between the two sides