30s Summary
Galaxy Digital is considering repurposing its mining power for high-performance computing (HPC) due to lessened profitability and increased competition following the Bitcoin halving event. The shift may benefit both miners and AI firms, diversifying revenue streams for the former and expediting increased operations for the latter. The move to HPC started when Core Scientific partnered with cloud-computing firm CoreWeave, which pressured other companies to follow suit. Despite increased total mining power, mining activity revenue fell by almost a quarter last quarter due to Bitcoin’s halving event and other operational challenges.
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Galaxy Digital has inked a non-binding agreement with an unnamed US-based firm. This could enable Galaxy Digital to repurpose all its 800 megawatts of mining power for high-performance computing purposes. This strategy has been triggered by the Bitcoin halving event which has reduced profitability and intensified competition in the mining sector. Currently, Galaxy Digital operates only 200 megawatts out of its approved 800 megawatts capacity. It is also considering another 1.7 gigawatts for possible permission.
The reason for turning to artificial intelligence (AI) is straightforward. Miners have ready-to-use power capacities that quicken the deployment process in comparison to developing a data centre right from the beginning. This makes the deal beneficial for both miners and AI firms. Miners can diversify their sources of revenue away from a sector that is highly competitive, while AI firms can increase their operations rapidly to meet growing demand.
The shift to high-performance computing (HPC) commenced when one of the biggest miners, Core Scientific (CORZ), entered into a massive deal with cloud-computing firm CoreWeave. The company’s share price soared leading to other companies being pressurised by investors to follow the same path. As a result, many firms have invested heavily in AI computations instead of focusing solely on mining Bitcoin.
Revenue derived from mining activities fell by almost a quarter in the last quarter in spite of total mining power, or hashrate, rising by 11%. This was due to the Bitcoin halving event, more difficult mining operations, and seasonal reductions in operations.