Crypto miners are struggling to keep up with the energy costs and power struggles in the market. According to a Bloomberg report on 10th December, AI companies are consuming a lot of electricity and data, which leads to intense competition in the market.
As a result, electricity prices have increased, and because AI companies are more profitable, they ultimately purchase more electricity from suppliers. Due to this, crypto miners are now compensating for this by locating alternative energy sources.
Bitcoin Miners Look For Alternative Energy Sources
Bloomberg argues that Bitcoin miners were the newest and most flamboyant players in the electricity industry a few years ago. They were purchasing megawatts for data centers and causing concerns about an overloaded power grid.
However the tables have turned now. AI giants have been using electricity and data centers for operations. The power tussle in the industry has resulted in crypto miners looking for alternative sources.
Crypto Miners Face Downturn in Revenue
Bloomberg’s today’s report coincides with UnoCrypto’s previous report about a downturn in Bitcoin mining revenue going down. Citing Coinshares data, Unocrypto had reported that in Q3, the Bitcoin mining sector is still facing significant obstacles this year as limited credit availability and growing production costs have an impact on profitability.
In anticipation of future price increases, miners have been aggressively building out their infrastructure in spite of these obstacles. Mining difficulty levels have reached all-time highs as a result of this expansion, which has increased miners’ production costs.
Bitcoin Halving Hurts Miner’s Revenue
Roughly every four years, the Bitcoin code automatically reduces the amount of new issuance of the biggest cryptocurrency in the world by half in order to create scarcity. Since Bitcoin mining companies are suddenly making significantly less money while maintaining the same level of operating expenses, the halving usually comes before a wave of bankruptcies.
If Bitcoin prices rise to $130,000 by 2026, a 1 MW project utilizing container storage, employing high-hash-rate miners, and costing roughly $0.74 million could yield a complete return on investment in 27 months.
This gap between the production and ROI has left many miners fetch low profits.
High Electricity Cost Forces Miners To Take Alternate Routes
Because mining profits are unpredictable, particularly in light of the Bitcoin halving events, mining companies are diversifying by pursuing ventures in areas such as artificial intelligence (AI). The change is a reflection of the industry’s overall quest for alternate revenue streams in order to stabilize earnings.
Many crypto miners have now turned to alternative ways to get revenue like lending systems to AI firms or rerouting their operations to align with the artificial intelligence industry.