Can Bitcoin Miners ‘Do’ AI? Not Really

Bitcoin miners are attempting to pivot to synthetic intelligence with various resultsgetty
The bitcoin trade–notably its area of interest mining sector–isn’t any stranger to hype trains. Now, a brand new one has rolled up: synthetic intelligence.

Chat-GPT and different giant language-model packages (usually dubbed AI, even when that’s technically not the proper time period) are making waves throughout workplaces and on-line areas this 12 months. So naturally AI references are popping up in crypto press releases and headlines.

For instance, some miners have publicized that they’re seizing alternatives in AI to place out of date {hardware} to work. But that doesn’t imply that every agency is performing the identical features or on the identical degree or scale as AI knowledge facilities. In truth, they’re performing a lot completely different duties than these wanted to energy the companies that individuals generally consult with as AI, however some miners could also be throwing the time period simply round to money in on the craze.

Can Bitcoin Miners Provide AI companies? It’s Complicated
Over the previous few months, HIVE, Hut 8, and different Bitcoin miners have publicized new high-performance computing (HPC) / AI methods. Most of those miners have laptop {hardware} that was rendered out of date by Ethereum’s change to a proof-of-stake community consensus mechanism, which ended ether mining, and a few have marketed the flexibility to now hire out their computing energy for high-performance computing (although Hut 8 has been doing so since 2022).

High-performance computing is a catchall for any variety of data-center duties. When miners speak about HPC, nonetheless, they’re particularly referring to issues like cloud computing or graphics rendering. Hut 8 earned $4.5 million from such companies in Q1 and $4.3 million in Q2, whereas a pilot program for HIVE generated $200,000 throughout Q1, however the miner didn’t point out any HPC income for Q2 in its SEC filings. Hut 8 has a contract with British Columbia’s Interior Health company to supply high-performance computing companies till 2028. The firm bought the 6 megawatt facility that gives these companies when it acquired the data-center operations of Toronto-based TeraGo in 2022. HIVE didn’t reply to a request to specify precisely what kind of high-performance computing its GPUs carried out in the course of the Q1 pilot program.

These usually are not the identical kinds of computations that prepare AI fashions or energy Chat GPT. Miners don’t have the correct computing tools to assist this sort of work, nor have they got the correct electrical and community infrastructure (AI computing wants a community bandwidth of not less than 1 terabyte per second, an amazing step up from industrial-scale mining farms, which normally have speeds of 1 gigabyte per second).
The value of constructing a real AI knowledge heart will be anyplace from 10 to twenty occasions the worth per megawatt of a brand new bitcoin mining web site (a megawatt can energy about 200 Texas properties, in line with electrical energy authority ERCOT). Additionally, the facility value for such a facility can be double what miners pay now, maybe as excessive as 15 cents per kilowatt/hour. Bitcoin miners within the U.S. usually pay 5-8 cents.
Riot Platforms estimates that its forthcoming top-of-the-line bitcoin mining facility close to Corsicana, Texas, will value $833,000 per megawatt of energy capability to assemble the primary part of 400 megawatts.The prices of working a HPC facility dwarf these of a bitcoin minerTurner & Townsend and Riot public funds
Compare this value to a mean for HPC knowledge facilities in North America calculated from Turner & Townsend’s 2022 knowledge heart index value: $9.5 million/MW.
The value comes from the complexity of those knowledge facilities. They require a a lot increased caliber {of electrical} infrastructure and networking gear, to not point out that they want considerably more room, superior cooling and extra highly effective backup turbines in case of energy outages to make sure 99.99% uptime. Simply put, these miners don’t have the funds or the market prowess to construct or retrofit an AI or perhaps a conventional knowledge heart (working example: Microsoft invested $10 billion in OpenAI).
This value is only for a conventional high-performance datacenter, not essentially one that’s souped up with the capabilities that drive engines like Open AI’s Chat-GPT and Microsoft’s Bard.
Miners May Attempt High-Performance Computing, But Not AI
Bitcoin mining corporations have been born from sudden-pivots to the enterprise line, however at this stage of their growth, these corporations must be cautious when making an attempt to bottle technological hype in sectors like HPC/AI.
Two of the biggest public bitcoin miners as we speak, Riot Platforms and Marathon Digital, introduced bitcoin mining enterprise traces in 2017, however the corporations have been public lengthy earlier than they received concerned with cryptocurrencies. Marathon Digital was previously Marathon Patent Co., making its {dollars} from shopping for and promoting varied technological patents. Riot was a pharmaceutical firm.
Both corporations have grown to rank among the many largest bitcoin miners on the earth, so the pivot’s paid off.
But it might be extraordinarily troublesome and costly for a significant bitcoin miner to retrofit its mining farms to develop into AI knowledge facilities (which is why Hut 8 bought knowledge facilities for its healthcare sector operations). It can be value noting that, within the conventional data-center market, miners can be competing with probably the most highly effective tech corporations on the earth: Google, Amazon and Microsoft.
Applied Digital is a particular case: it’s a data-center firm that additionally hosts bitcoin mining tools on behalf of purchasers. That distinction is necessary, as a result of it is simpler for conventional data-center operators to slap a container of bitcoin mining rigs on-site than for a miner to construct a middle from scratch. The AI Hype Wave of 2023 lifted Applied Digital’s inventory value to as excessive as $10.24, though the inventory has retraced considerably to $5.68 on the time of writing. Applied Digital and mining shares typically are on a sizzling run proper now, as evidenced by the chart under, so we advise warning to traders who’re contemplating these equities.Bitcoin mining shares have surged together with the underlying asset this 12 months, however many have been seeking to AI to recapture their bullish momentumTradingView
Decision Points
We would wait till the hype dies off and the market figures out which corporations are effectively positioned to seize and revenue from the AI wave.
For the miners, these that may provide graphics rendering companies will, however none of those corporations will likely be using their mining {hardware} for Chat-GPT. So don’t drink the Kool-Aid while you see AI in a headline or press launch – it’s not what you suppose.

https://www.forbes.com/sites/colinharper/2023/08/30/can-bitcoin-miners-do-ai-not-really/

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