30s Summary
The increased demand for cheap electricity from AI data centers could constrain growth in Bitcoin mining as it may limit the availability of affordable energy. This could potentially put a stop to the declining rates of ‘hashprice’, a measure of earnings for Bitcoin miners. However, the migration of Bitcoin mining to locales with fewer AI data centers is likely to offset any impact on overall profitability. Despite increased competition for energy, it is argued that bitcoin mining will not be completely thwarted.
Full Article
Growing AI data centers could be a good thing for bitcoin mining. These data centers, like miners, need lots of cheap energy which could mean fewer new mining sites being set up. Looking ahead, we might even see a point where cheap electricity becomes so scarce that the falling rates for mining – or “hashprice” – might stop.
AI data centers and bitcoin miners are battling for cheap electricity, and this could set a limit for hashprice. This metric is key for miners as it’s used to measure earnings. As Spencer Marr, president of bitcoin mining firm Sangha Renewables explained, any time a mining site is used for AI instead, hashprice doesn’t fall.
Hashrate, another term you might hear, is the total combined computer power backing a Proof-of-Work blockchain, like Bitcoin. Hashprice is the bitcoin’s a miner can expect to earn every time their machines perform a given number of computations (hashes).
Right now, Bitcoin’s hashrate is about 770 exahash per second (EH/s), with hashprice at around $61.12 per petahash per day. Hashprice has been decreasing as more people get into mining. Back in 2017, it wasn’t unusual for hashprice to be over $1,000.
As Marr puts it, miners like it when others decide to use cheap electrons for something other than Bitcoin mining because of its competitive nature. But will this drive bitcoin miners to other parts of the globe where there’s not as many AI data centers? Jaran Mellerud, co-founder of bitcoin mining hardware and hosting services firm Hashlabs Mining, thinks so. He asserts that reduced hashrate in one country will simply increase profitability for miners in another country, where they could grow more.
Ultimately, both Marr and Mellerud agree that, while there are a finite number of “rock bottom cheap electrons”, and while AI data centers aren’t easy or cheap to operate, the competition for electrons might just slow down the growth of hashrate, but it won’t stop it entirely.