Bitcoin miners are ditching crypto for the more profitable AI

The Bitcoin mining reward has been reduced after Bitcoin halving, and that’s driving some companies to shift from Bitcoin mining centers to artificial intelligence data centers.

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In a recent interview with CNBC, Houston-based tech company Lancium and Denver-based Crusoe Energy Systems announced a multibillion-dollar deal to build a 200-megawatt data center just outside Abilene, Texas. The new center is designed to meet the unique needs of AI companies, and it marks a departure for the two firms, which have raised hundreds of millions in recent years for Bitcoin mining infrastructure.

The first phase of the Abilene facility represents a small portion of a larger 1.2-gigawatt expansion plan. Lancium President Ali Fenn stated in an interview with CNBC that once fully operational, this will stand as one of the world’s largest artificial intelligence data center campuses. This development serves as the latest evidence of the increasing pace of the shift towards AI infrastructure, leaving Bitcoin mining in the rearview.

“Data centers are rapidly evolving to support modern AI workloads, requiring new levels of high-density rack space, direct-to-chip liquid cooling and unprecedented overall energy demands,” Chase Lochmiller, Crusoe’s co-founder and CEO told CNBC. 

What is the reason for leaving Bitcoin mining?

Bitcoin went through a significant technical event earlier this year called the ‘Bitcoin halving.’ This event reduced the reward for mining new Bitcoin by half. As a result of the halving, Bitcoin miners’ rewards for creating Bitcoin decreased from 6.25 Bitcoin to 3.125 Bitcoin.

The Bitcoin halving was built into Bitcoin’s code from the beginning to ensure scarcity and safeguard against inflation. However, following this event, some Bitcoin miners are finding it challenging to remain profitable using older Bitcoin mining equipment and are now looking into other business opportunities.

Similarities between Bitcoin mining and AI infrastructure

Bitcoin mining and AI infrastructure businesses share some similarities. Bitcoin mining companies operate extensive data centers that require energy consumption, hardware optimization, cooling, and technological advancements.

As the AI industry continues to grow and requires more capacity and Bitcoin miners seek new ways of generating and diversifying income, AI becomes a seemingly secure option for them. Earlier this year, Bitcoin miners like Core Scientific and Hut 8 invested millions in expanding their AI business and building out data center portfolios for AI.