Bernstein notes growing investor interest in bitcoin miners pivoting to AI
Quick Take
- Bernstein analysts noted that there is strong investor interest in bitcoin miners considering a shift to AI.
- The strategy involves operating AI data centers at the forefront while maintaining Bitcoin mining operations in the background.
Analysts at the research and brokerage firm Bernstein note significant investor interest in bitcoin miners shifting focus toward the artificial intelligence and high-performance computing (HPC) data center market.
"We are seeing significant investor interest in bitcoin miners pursuing AI/HPC, and the same investors are questioning if all miners should pivot to AI," Gautam Chhugani, Mahika Sapra and Sanskar Chindalia wrote in a note to clients on Monday.
This operation shift is known as the "Mullet" strategy: AI data centers in the front and bitcoin mining in the back. Monday's report described the current mining landscape as being almost equally divided between miners focused on bitcoin mining versus miners pivoting to become artificial intelligence data centers.
Such a strategy may require miners to incorporate AI-specific machines utilizing GPUs into their facilities, as ASIC mining machines are not suitable for AI training tasks.
Challenges in shifting focus to the AI data center market
However, the Bernstein report identified specific challenges for miners transitioning their operations to focus on the AI data center market. While bitcoin mining and AI data centers have similarities in terms of power capacity and high-density power specifications, Bernstein stresses that they have completely different business models.
"Bitcoin miners pursue a proprietary strategy of self-mining, and they are in the business of converting power to bitcoin at a cost lower than realized market price. Thus, the only thing that matters is growing bitcoin production/ hash rate market share and an aligned treasury strategy, which is to not sell bitcoin at a loss," the analysts added.
In light of the report argued that the leading bitcoin miners should stay focused on the bitcoin mining market share, grow the hash rate faster than the total hash rate, and not sell bitcoin at a loss.
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