European crypto mining company Northern Data is planning to refocus a part of its operations towards AI. According to reports, Northern Data, a company based in Germany, is thinking about selling up its Bitcoin mining division in order to shift to a pure-play AI approach.
Northern Data declared on Monday that it has begun “talking with interested parties about a potential divestment of its cryptocurrency mining business, Peak Mining.”
The move is largely in tandem with global crypto miners who have been hurt by large electricity costs, less incentivized mining operations and an overall overburdening cost of crypto mining operations.
Where Will Northern Data Use Its Proceeds?
The company also stated that it planned to use any potential sale profits to fund the acquisition of additional data centers, the purchase of GPUs, and the development of its AI product platform.
The action was taken months after Tether supported Northern Data’s $233 million stock offering to obtain money for additional Nvidia GPU purchases and the growth of the company’s high-performance computing business in the US and Europe.
Before the halving event, the company mined 447 BTC in the first quarter of 2024, with an average energy and operating cost of $28,500 per BTC. This suggests that the realized hashrate at that time was 2.82 EH/s.
In order to increase its capacity for mining Bitcoin, Northern Data has acquired two 300 megawatt sites in Texas since last year. Even though it stopped releasing monthly production updates earlier this year, the business just confirmed that it is still on target to achieve a hashrate of 7.9 EH/s by the end of 2024.
Why Are Bitcoin Miners Across The Globe In Distress?
Right now, cryptocurrency miners all across the world are struggling. The payout rate is currently 90% lower than it was before the Bitcoin halving, which was meant to help accelerate the entire sector.
Bitcoin miners compete to solve difficult mathematical puzzles in order to build the Bitcoin blockchain and earn rewards in the form of new BTC.
In April, their incentives were halved to 3.26 Bitcoin per block in an attempt to slow down the production of new Bitcoins. The Bitcoin Halving is a technological modification that occurs about every four years.
As a result, miners’ earnings per transaction dropped from around $192 in March to only $60 in May, and they have had difficulty keeping up ever since.
According to CNBC, even the largest miners in the world, such as Marathon Digital, are shifting their business models to reap the benefits of AI in the future.