AI: A Buzzword or Enabler to Hodl Mined BTC?
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AI: A Buzzword or Enabler to Hodl Mined BTC?
Why miners have an edge and might consider adding AI services
The rising popularity of ChatGPT highlighted the inevitable growth of artificial intelligence (AI). With AI compute intensity doubling every six to 10 months, there is an obvious need for supporting infrastructure to meet this growing demand. In 2023, several prominent public miners announced the integration of (generative) AI into their operations, prompting the question whether miners should seriously consider allocating rack space to AI. In this article I will look into the following topics:
The 2023 Buzzword
AI Hardware and Architecture
Miners Have an Edge
Why Miners Should Consider Adding AI Services
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The 2023 Buzzword
With the quick rise in popularity of ChatGPT it became clear that artificial intelligence (AI), including generative AI (GenAI), is going to grow in the coming years. AI compute intensity is doubling every six to 10 months. Many discussions focus on how AI will transform companies, careers and communications. But none of this is possible without an infrastructure that facilitates the increasing demand.
During 2023 various prominent miners announced they are integrating (generative) AI into their business. Is AI just a buzzword that public miners use to show shareholders they keep on innovating and adding value? Or is there a more to it and should miners consider dedicating rack space to AI services?
AI Hardware and Architecture
AI focuses on creating systems that can simulate human intelligence processes. It involves tasks like machine learning, deep learning and natural language processing. Data centers enable this by using high-performance computing (HPC) clusters, which are made up of multiple servers connected through high-speed networks that allow for parallel processing. HPC often uses specialized processors like GPUs (Graphics Processing Units) or FPGAs (Field-Programmable Gate Arrays). AI-specific hardware like TPUs (Tensor Processing Units) and specialized AI chips are also increasingly being used.
Would you like to know how to apply underclocking or low-powermode in a strategic way to optimize mining operations? Check out this article:
Miners Have an Edge
Modern data centers, especially those built to support high-performance computing (HPC) and artificial intelligence (AI) have high power densities, ranging from 10 kW to 20 kW per rack or even higher. This compares to three to six S19’s, which is the most dominant model of Bitcoin mining machine in the industry at the moment. So miners are used to operate very high power density hardware.
Like ASICs, the HPC and AI-specific hardware generate a lot of heat which requires appropriate cooling technologies and infrastructure designs. Advanced cooling solutions that data centers use, like liquid cooling and hot/cold aisle containment, are common practices amongst miners.
This means many Bitcoin miners have an edge to conventional data centers when it comes down to designing (electrical) infrastructure and implementing sophisticated cooling systems. Next to that, there are miners that have experience in working with GPU’s. Mining ETH before Ethereum switch to Proof of Stake was very common and mining PoW altcoins is still popular in different parts of the world.
Why Miners Should Consider Adding AI Services
Integrating HPC and AI services into a Bitcoin mining company's operations can offer opportunities to diversify business and explore additional revenue streams. This allows a bitcoin miner to strengthening its position in the rapidly evolving industry.
Just like bitcoin mining hosting services, facilitating AI compute services creates a predictable and steady cashflow as revenue which is not directly impacted by the volatility of Bitcoin price or difficulty adjustments. This can improve the resilience of a business and increase the hodl power of a self-miner. This enables a miner to determine when is the best time to sell BTC instead of being forced by market conditions.
Although mining containers are mobile, moving an operation does involve costs. Transport, opportunity costs, civil & electrical engineering of new site etc.. If mining becomes unprofitable, integrating services around AI might improve the overall financial health of a business. This in turn can prevent a mining businesses being forced to move elsewhere or even a shut down.
“Like mining, HPC requires access to large data centers, cooling systems, and cheap energy to operate profitably. HPC-cloud services are far more profitable per unit of energy than Bitcoin mining.” - Adam Sharp, Digital Research Director at HIVE.
By offering HPC or AI services a company might fall into another business category. Depending on the location, this might lead to better electricity rates or more beneficial taxation. It might also facilitate the acceptance of a business in a local community and open doors to financing opportunities.
Creating additional income streams is a powerful way to make your mining business more resilient. It allows miners to hold onto their Bitcoin as much as possible to benefit from anticipated future price appreciation. Check out these 5 ways to create extra working capital:
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