Beyond BTC: Crypto Miners Get Brainy, Embrace AI After Block Reward Whacking

Must read

Crypto

The winds of change are blowing through the crypto mining industry. The highly anticipated halving event in April 2024, which sliced block rewards in half, has sent shockwaves through the ecosystem. Daily revenue for miners has plummeted by over 70% since the halving, forcing them to scramble for new avenues to secure their bottom line.

Enter Artificial Intelligence (AI). Buoyed by the success of projects like OpenAI’s ChatGPT, AI computing is experiencing a surge in demand. This, coupled with potentially higher profit margins compared to Bitcoin mining, is making AI an increasingly attractive option for miners.

Source: YCharts

AI: A Beacon Of Hope In A Volatile Sea

Companies like Bit Digital are leading the charge, with AI already contributing nearly 30% of their revenue. Other industry players like Hut 8 and Hive are also dipping their toes into the AI pool.

Adam Sullivan, CEO of Core Scientific, said:

“The shift to AI allows us to create a diversified business model with more predictable cash flows.”

This diversification is crucial in the face of the volatile nature of Bitcoin prices. By incorporating AI, miners are aiming to reduce their dependence on a single, often unpredictable, income stream.

Mass Exodus Or Miner Metamorphosis?

The impact of the halving isn’t limited to dwindling profits. Data suggests a potential shakeout within the mining community. A recent report indicates a significant drop in the Bitcoin network hashrate, a metric reflecting total mining power. This could signal a mass exodus of miners, particularly those with less efficient rigs struggling to stay afloat after the reward reduction.

BTCUSD trading at $70,910 on the 24-hour chart: TradingView.com

Further corroborating this theory is the recent flash in the Hash Ribbons metric. This indicator tracks the difference between short-term and long-term moving averages of hashrate, with spikes suggesting low mining activity or miner capitulation.

Crypto hedge fund Capriole Investments interprets this as a potential “tempting Bitcoin buy signal,” suggesting the market might be reacting to a decrease in mining pressure. 

Mining pressure refers to the pressure on crypto miners to sell their Bitcoin. Miners earn Bitcoin as a reward for securing the network and typically sell it to cover operational costs like electricity and equipment. When pressure decreases, it often indicates that miners are less compelled to sell their Bitcoin.

BTC price action in the last day. Source: CoinMarketCap

A Silver Lining For Long-Term Bulls?

Meanwhile, some analysts claim that institutional investors are showing renewed interest in Bitcoin, turning “risk-on” in their approach. This could be a sign of growing confidence in the long-term prospects of the cryptocurrency.

Featured image from The Motley Fool, chart from TradingView

Christian Encila

Christian Encila

They say journalists never truly clock out. But for Christian, that’s not just a metaphor, it’s a lifestyle. By day, he navigates the ever-shifting tides of the cryptocurrency market, wielding words like a seasoned editor and crafting articles that decipher the jargon for the masses. When the PC goes on hibernate mode, however, his pursuits take a more mechanical (and sometimes philosophical) turn. Christian’s journey with the written word began long before the age of Bitcoin. In the hallowed halls of academia, he honed his craft as a feature writer for his college paper. This early love for storytelling paved the way for a successful stint as an editor at a data engineering firm, where his first-month essay win funded a months-long supply of doggie and kitty treats – a testament to his dedication to his furry companions (more on that later). Christian then roamed the world of journalism, working at newspapers in Canada and even South Korea. He finally settled down at a local news giant in his hometown in the Philippines for a decade, becoming a total news junkie. But then, something new caught his eye: cryptocurrency. It was like a treasure hunt mixed with storytelling – right up his alley! So, he landed a killer gig at NewsBTC and Bitcoinist, where he’s one of the go-to guys for all things crypto. He breaks down this confusing stuff into bite-sized pieces, making it easy for anyone to understand (he salutes his management team for teaching him this skill). Think Christian’s all work and no play? Not a chance! When he’s not at his computer, you’ll find him indulging his passion for motorbikes. A true gearhead, Christian loves tinkering with his bike and savoring the joy of the open road on his 320-cc Yamaha R3. Once a speed demon who hit 120mph (a feat he vowed never to repeat), he now prefers leisurely rides along the coast, enjoying the wind in his thinning hair. Speaking of chill, Christian’s got a crew of furry friends waiting for him at home. Two cats and a dog. He swears cats are way smarter than dogs (sorry, Grizzly), but he adores them all anyway. Apparently, watching his pets just chillin’ helps him analyze and write meticulously formatted articles even better. Here’s the thing about this guy: He works a lot, but he keeps himself fueled by enough coffee to make it through the day – and some seriously delicious (Filipino) food. He says a delectable meal is the secret ingredient to a killer article. And after a long day of crypto crusading, he unwinds with some rum (mixed with milk) while watching slapstick movies. Looking ahead, Christian sees a future intertwined with NewsBTC and Bitcoinist. He says he sees himself “growing old” alongside these companies, sharing his expertise and passion with a community he values, and fellow editors – and bosses – he deeply respects. So, the next time you tread into the world of cryptocurrency, remember the man behind the words – the crypto crusader, the grease monkey, and the feline philosopher, all rolled into one.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

More articles

Latest article