- Bitcoin miners like Core Scientific are expanding into the artificial intelligence (AI) business by partnering with cloud providers like CoreWeave and retrofitting their existing facilities to service AI clients.
- Core Scientific announced a $3.5 billion, 12-year deal with CoreWeave to provide infrastructure for AI use cases like machine learning, which is expected to generate over $3 billion in revenue.
- Many bitcoin mining firms are pivoting to AI operations as revenue from crypto mining plummets, taking advantage of their energy-intensive data centers and access to cheap power sources like nuclear energy.
Bitcoin miner Core Scientific is expanding its AI business through a $3.5 billion partnership with cloud company CoreWeave. This comes as many bitcoin mining companies have been struggling with plummeting crypto mining revenue and are looking to diversify into more profitable businesses like AI.
Core Scientific’s Pivot to AI
Core Scientific has quietly been moving into artificial intelligence over the past five years. The 12-year deal with CoreWeave will add over $3.5 billion in revenue for Core Scientific. Core Scientific will provide around 200 megawatts of infrastructure to support CoreWeave’s AI operations.
Many bitcoin mining facilities are ideal for AI operations as they are located in energy-rich data centers. Core Scientific CEO Adam Sullivan said the “best way to think about bitcoin mining facilities is that we are essentially power shells to the data center industry.”
Demand for AI Infrastructure Surges
Demand for AI compute and infrastructure has exploded after OpenAI unveiled ChatGPT in late 2022. This set off a rush of investment into AI models and startups. Meanwhile, bitcoin miners have been looking to supplement their income as bitcoin mining rewards were cut in half in early 2022.
Many miners are now retrofitting their massive data centers to service AI companies. According to CoinShares, some miners like Bit Digital, Hut 8, and Hive already generate a notable portion of revenue from AI services.
Challenges of Pivoting to AI
Transitioning to AI isn’t as simple as repurposing existing bitcoin mining infrastructure. The rigs used to mine bitcoin can’t be used for AI. Nearly everything besides some basic components would need to be rebuilt from scratch.
However, Core Scientific’s Sullivan says there are synergies between the two businesses. The bitcoin mining sites already have access to large amounts of power and fiber connectivity needed for AI.
The Future of Miners in AI
In the next few years, large publicly traded miners are expected to more than double power capacity for both mining and AI expansions. Many are choosing to power these operations with cheap, renewable energy like nuclear.
TeraWulf and other miners are slowly building up their AI capacities to generate more stable revenue streams, as bitcoin mining remains volatile. However, bitcoin mining is expected to remain a notable part of their business models for now.
Conclusion
With bitcoin mining profits plummeting, miners are pivoting to the lucrative AI market. Companies like Core Scientific have been quietly preparing for this shift for years. While not a simple transition, massive bitcoin mining infrastructure presents an ideal starting point for scaling up AI operations. This allows miners to diversify into a new high-growth market, while still maintaining their core bitcoin mining operations.
