Bitcoin miners increasingly face a new enemy to face before this week’s event reduce by half: the AI boom.
Analysts at investment firm AllianceBernstein, Gautam Chhugani and Mahika Sapra, said miners are now competing with AI data centers in places like Texas.
Bitcoin miners are largely centralized operations that mint new digital coins. To do this, explains a report on Monday, they must use a lot of computers and therefore energy. Meanwhile, the booming AI industry is also power hungry. Both industries are looking to places like Texas, which has cheap energy and plenty of land to build data centers.
Today’s report says growing competition with the AI industry “has made acquiring land with power contracts relatively competitive for miners.”
The report also adds that the hype around AI could also help miners who have spare liquidity.
“Bitcoin ASIC chips have had to compete with strong demand for AI chips this cycle, and thus manufacturers have been keen on bulk purchase contracts/options with miners that are flush with liquidity” from capital raises.
Analysts added that miners have a “relative advantage” with the upcoming halving.
Miners are rewarded with Bitcoin for minting new coins, but this week’s event, which occurs every four years, will cut those rewards in half, from 6.25 BTC to 3.125 BTC. This means that miners are preparing to work more efficiently to stay in the race.
Bernstein analysts also said that mining company CEOs have claimed that their companies were in a relatively comfortable financial position before the halving, despite the current drop in Bitcoin prices.
“CEOs also point to relatively low debt on the balance sheet and a lack of financing for promising mining rigs,” the report adds.
The price of Bitcoin fell well below its March all-time high of nearly $74,000 per coin. The asset is now trading at $63,145, according to CoinGecko, below its previous all-time high of $69,044 that it reached in 2021.
Edited by Ryan Ozawa.
