On August 19, Matthew Sigel, Head of Digital Assets Research at VanEck, discussed the evolving dynamics between Bitcoin mining and artificial intelligence (AI) during his appearance on CNBC’s “Fast Money.“
Sigel emphasised the disparity in 2024 performance between Bitcoin and Bitcoin mining companies such as Marathon Digital and Riot Platforms.Â
While Bitcoin saw a 35% rise year-to-date, mining companies remained stagnant. Historically, Bitcoin miners are high-beta stocks expected to outperform Bitcoin in bullish and bearish markets. However, that hasn’t been the case this year, leading to speculation about their underperformance.
AI as the Solution for Bitcoin Miners
Sigel suggested that AI might be able to help Bitcoin miners. As AI running on GPUs uses a lot more energy than AI running on regular CPUs, miners have entered into multibillion-dollar revenue partnerships to support AI initiatives.
Sigel emphasised that these agreements can help lower the financing expenses of miners who are struggling financially or who have a lot of debt. Sigel thinks that without compromising Bitcoin mining revenues, miners’ stock values may quadruple if they devote just 20% of their electrical capacity to AI.
Sigel also compared the future of Bitcoin miners to data centres and spoke about how they could profit from shifting towards AI operations.
Bitcoin miners trade for only $3 million per megawatt, whereas data centres, which are necessary for artificial intelligence, cost over $30 million per megawatt. Miners who successfully integrate AI are likely to experience huge advantages, despite the shift being difficult.
The Comparison Between Gold & Bitcoin
There is now a clear performance gap between Bitcoin and gold, with Bitcoin trailing behind while gold is reaching new heights. Sigel ascribed this to some causes, such as problems with expansion, sales of assets by the government, and creditors clearing out sizable holdings from bankruptcies.
Additionally, there is a seasonal pattern in which Bitcoin performs poorly right before the US elections and right after a halving event that happened in April. Despite these challenges, VanEck is upbeat and keeps purchasing Bitcoin.
Businesses that have actively sought AI-related transactions, such as Core Scientific, TeraWulf, and Iris Energy, have outperformed the market in 2024.
VanEck believes that the industry will continue to witness lower capital expenses and better stock performance as additional miners follow suit.
Despite near-term market difficulties, Sigel offered a positive view for Bitcoin miners, especially those utilizing AI. The future development of the sector may depend critically on the convergence of AI and Bitcoin mining.