Core

2024

Bitcoin

April

In a recent interview with CNBC’s "Fast Money", Matthew Sigel, Head of Digital Assets Research at VanEck, discussed how artificial intelligence (AI) could transform the Bitcoin mining industry, particularly in 2024, where miners have struggled to keep pace with Bitcoin's performance. Sigel highlighted the potential for AI to boost profitability for miners and outlined the broader market dynamics affecting Bitcoin, according to <a href="https://www.cryptoglobe.com/latest/2024/08/how-ai-can-help-bitcoin-mining-companies-become-more-profitable-explains-vanecks-matthew-sigel/" rel="noopener noreferrer nofollow">Cryptoglobe</a>.
Sigel noted that while Bitcoin has surged by 35% this year, mining companies like Marathon Digital and Riot Platforms have underperformed. This divergence, he explained, challenges the traditional view of miners as high-beta plays, which should offer greater volatility and returns compared to Bitcoin itself. The underperformance has raised questions about the future of the industry.
AI, however, could be a game-changer. Several Bitcoin miners have already secured billion-dollar deals by repurposing their energy resources to power AI operations. Unlike central processing units (CPUs), AI relies heavily on graphics processing units (GPUs), which require more energy. Bitcoin miners, with their existing energy infrastructure, are well-positioned to support AI workloads with minimal additional investment. Sigel suggested that by reallocating just 20% of their energy capacity to AI, miners could potentially double their stock prices, even without changes in their Bitcoin mining operations.
Financially, many Bitcoin miners are struggling with debt and equity reliance. However, AI could help them secure more sustainable financing by lowering their cost of capital. This shift, Sigel argued, presents a significant opportunity for miners to enhance profitability and market positioning.
The broader market has also influenced Bitcoin's recent performance. Despite Bitcoin's struggles to keep up with gold, Sigel attributed this to several factors, including its correlation with the NASDAQ, forced selling by large holders, and seasonal patterns following the April 2024 halving event. However, he remains optimistic, predicting a recovery as the market adjusts to fiscal policies ahead of the U.S. presidential election.
Sigel also highlighted the stark valuation difference between <a href="https://ultramining.com/news/en/crypto-miners-shift-gears-ai-is-the-new-gold-rush/" rel="noopener noreferrer nofollow">data centers</a> and Bitcoin miners. Data centers, essential for AI, trade at over $30 million per megawatt of electrical capacity, compared to just $3 million per megawatt for Bitcoin miners. This valuation gap, he argued, presents an enormous arbitrage opportunity for miners willing to pivot toward AI.
Companies like <a href="https://ultramining.com/news/en/bitcoin-mining-giant-core-scientific-prepares-for-post-bankruptcy-comeback/" rel="noopener noreferrer nofollow">Core Scientific</a>, TeraWulf, and Iris Energy have already outperformed by aggressively moving into AI. As more miners follow suit, Sigel believes their stocks are poised to see significant gains, positioning AI as a crucial factor in the future of Bitcoin mining.

How AI Can Revolutionize Bitcoin Mining: VanEck’s Matthew Sigel Explains

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