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Crypto Miners Are Attempting to Diversify Into Other Business Areas: JPMorgan
Miners are now offering high performance computing services to the rapidly evolving artificial intelligence market, the report said.
Updated Aug 21, 2023, 10:32 a.m. Published Aug 21, 2023, 10:32 a.m.
Bitcoin (BTC) miners are moving into new business areas, including offering high performance computing (HPC) services to the fast growing artificial intelligence (AI) market, to reduce their dependence on crypto, JPMorgan (JPM) said in a research report Wednesday,
The cost of the new investments has been funded in part by miners selling coins in recent quarters, the report said.
Some bitcoin mining firms have rebranded to reflect the diversification, with Hive Blockchain Technologies (HIVE) becoming Hive Digital Technologies, and Riot Blockchain (RIOT) changing its name to Riot Platforms.
It’s not just miners of the world’s largest cryptocurrency, bitcoin, that are looking for new revenue streams. Former ether (ETH) miners have also shown a tendency to offer HPC services, the bank said, noting that since the Ethereum blockchain Merge, there has been a high supply of graphics processing units (GPUs) for sale in the secondary market because GPUs used for ether mining “lost their utility.”
Some ether miners sold their GPUs to salvage their investment, while some repurposed their machines for gaming, image and video rendering services, and mining other proof-of-work cryptocurrencies such as ethereum classic (ETC), ravencoin (RVN) and ergo (ERG), the note said.
“However, mining these cryptocurrencies were not as profitable as mining ether due to their lower market caps and questions about their long-term viability,” analysts led by Nikolaos Panigirtzoglou wrote.
“With the rapid growth of AI, the increased demand for high performance computing is now opening a new and perhaps more profitable avenue for utilizing GPUs previously used for ether mining,” the analysts wrote.
Bitcoin miners are also trying to diversify in terms of geography, with Russia emerging as one of the global leaders second to the U.S., in terms of bitcoin mining power consumption, the report added.
Read more: Largest Crypto Miners Will Benefit Most From Capacity Growth: Bernstein
Will Canny
Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.
