Bitcoin Miners For AI Help? 🆘
Bitcoin Miners For AI Help? 🆘
Miners may start leasing their services to tech giants. Biden trying to kill crypto, Cardano's creator. Gensler’s favourite crypto project underwater. Crypto's India comeback. Dorsey predicts BTC $1M.
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Bitcoin miners are traditionally reliant on Bitcoin rewards.
A new opportunity is emerging: AI computing.
They are starting to build their own AI fleets.
By leasing their computing power to tech companies developing AI tools, miners can earn predictable income independent of Bitcoin's volatile price.
AI vs Bitcoin mining: Which consumes more energy?
Are Bitcoin miners Diversifying with AI
AI as a Hedge Against Volatility: Brian Dixon, CEO of crypto hedge fund Off The Chain Capital. He sees major tech companies partnering with miners to leverage their computing power for AI tasks.
"Miners are going to have a huge opportunity moving forward with AI compute. These tech behemoths need this AI compute."
Potential Acquisitions by Tech Giants: The big tech companies like Google and Amazon might acquire miners for their AI clusters. However, both Hut 8 and Hive have denied any interest in being acquired.
Early Movers: Hive and Hut 8: Several mining companies are already exploring AI.
Hive Digital Technologies has repurposed over 10% of its graphics processing units (GPUs) for AI and aims for $100 million in annual AI revenue by 2025.
Hut 8 is also investing in AI with a recent $40 million GPU purchase.
Competition for Resources: The mining and AI industries compete for resources like high-performance chips and land with low electricity costs.
AI and crypto mining are driving up data centres’ energy use
Electricity consumption is ballooning as cryptocurrencies and AI take hold, according to a new report from the International Energy Agency.
AI's growing energy demands
AI's thirst for computing power, what the the lessons from Bitcoin miners.
AI's Massive Energy Hunger: The Problem.
Will lead to a surge in electricity consumption, exceeding the needs of a small country within just a few years.
This raises concerns about how to power these demanding systems efficiently.
Learning from Bitcoin Miners: Geographical Flexibility.
Tech companies traditionally have data centres in prime locations, but with AI's growth, these areas are reaching capacity.
Bitcoin miners have experience operating in less conventional locations. Terawulf's Nazar Khan highlights the need for geographical flexibility, pointing to areas with data-centre-ready infrastructure that haven't been previously utilised.
Importance of Advanced Facilities: Finding cheap power.
Operating in remote areas
Iren Energy's Lincoln Tan suggests advanced facilities that can withstand extreme environmental conditions to minimise downtime. Adopting liquid cooling systems, used by some miners, which are more efficient than traditional air cooling.
"Beyond the hardware, the most important thing is actually having really good facilities that can withstand the heat, the cold and the dust of operating in remote environments."
AI's Power Consumption: Compared to Others.
Traditional data centres are less energy-intensive than Bitcoin mining.
Riot Platforms' Pierre Rochard clarifies that AI facilities will likely fall somewhere in between, and encourages exploring liquid cooling solutions due to its efficiency gains.
AI vs Bitcoin: The Bigger Energy Culprit.
Despite criticism of Bitcoin's energy use, AI is poised to become a much larger consumer of global electricity.
Infrastructure Development. The Challenge.
The rapid development of AI far outpaces the construction of data centres needed to support it.
Building new facilities takes years, and miners are already securing deals for future power capacity.
Iren Energy's Tan sums it up nice, "good things take time."
Block That Quote 🎙️
Charles Hoskinson, co-founder of Ethereum and creator of Cardano (ADA).
"The Biden administration has engaged in a coordinated effort to kill crypto."
Hoskinson called the latest developments as "Operation Chokepoint 2.0."
Read: SEC Can't Stop Suing 👨⚖️
“This November, if you vote for Joe Biden as a cryptocurrency holder, please understand that the intent of this administration is to destroy the American cryptocurrency industry … Understand that. It’s unambiguously clear.”
He went all out on a X livestream.
Algorand Investors Underwater
Investors in Gary Gensler’s favourite crypto project are the biggest losers.
Mass Losses for ALGO Holders
90% of investors in Algorand's ALGO token are currently underwater on their investment, according to data from IntoTheBlock.
Only 7% are in profit, making ALGO the cryptocurrency with the most holders in loss among those tracked by the platform.
A Promising Project That Lost Steam
Founded in 2017 by MIT professor Silvio Micali. Layer-1 blockchain Algorand was once lauded for its technology.
The ALGO token is down 95% from its all-time high.
Gensler's Comments on Algorand Revisited
SEC Chair Gary Gensler, a former MIT professor, praised Algorand's potential in presentations during his time teaching at MIT.
Gensler's praise of Algorand has come under scrutiny after the SEC argued ALGO is a security.
The Security Debate: Is ALGO a Security?
The SEC's classification of ALGO as a security creates uncertainty for investors.
The Algorand Foundation disagrees with the SEC's assessment.
In the Numbers 🔢
$6.58 trillion
Cryptocurrency trading volume for April 2024.
The first decline in seven months, as geopolitical tensions, slowed ETF inflows and uncertain macro economic trends impacted cryptocurrency trading activity, according to a report by CCData.
Combined spot & derivatives volume drops 44% to $6.58 trillion.
A sharp drop from March's record high of $9.12 trillion,
Derivatives trading falls most 47.6% to $4.57 trillion.
Spot market volume also dipped, 32.6% decline to $2.01 trillion.
Bitcoin Loses Momentum: Shed nearly 15% of its value in April, falling below $60,000 and snapping its seven-month winning streak.
The sell-off reflects a broader risk aversion in the market.
Renewed tensions in the Middle East, reduced expectations of rapid Fed rate cuts, and a strengthening dollar index.
Binance Market Share Dips: Maintained its position as the largest crypto exchange by volume, but its combined spot and derivatives market share dipped to 41.5%.
The exchange's spot market trading volume also suffered, declining 39.2% to $679 billion in April, marking its first decline since September 2023.
The decline in Binance's market share might coincide with news of its founder and former CEO, Changpeng Zhao, receiving a four-month prison sentence for violating U.S. money laundering laws.
$71M Crypto Attack: Most Funds Recovered
An attacker tricked a user into sending them a massive amount of cryptocurrency, 1,155 Wrapped Bitcoin (wBTC), which was worth $71 million at the time.
It was an Address Poisoning … Dusting Attack attack. Attackers spam high-value wallets with similar addresses, tricking victims into sending crypto.
The attacker then converted the stolen wBTC to Ether (ETH).
However, the value of ETH dropped since the attacker acquired it.
What happened next, is just plain sweet.
Despite the drop in ETH value, the attacker surprisingly returned a significant portion of the stolen funds.
The victim received approximately 22,960 ETH, worth $65.7 million, which represents over 96% of the original value in USD.
Blockchain data shows the victim's wallet receiving multiple ETH transfers starting on May 10th.
These transfers, totalling over 225 transactions, came from various accounts and ranged from 29 to 67 ETH each.
Initially, the victim agreed to let the attacker keep 10% of the stolen funds. However, the attacker ultimately returned more than 90%.
Blockchain security firm Match Systems and exchange Cryptex claim involvement in negotiations that led to the full recovery.
Unanswered Questions and Shifting Trends: Despite frequent multi-million dollar exploits, security firm CertiK reports April having the lowest scam-related losses since March 2021.
Avraham Eisenberg's conviction for fraud related to the Mango Markets exploit, despite returning some funds, might be discouraging attackers from accepting bounties.
The Surfer 🏄
Twitter and Block co-founder Jack Dorsey has long been a champion of Bitcoin, in an interview with Pirate Wires, he called it a fascinating ecosystem and movement, and predicted that Bitcoin will hit $1 million in 2030.
American banking giants Wells Fargo and JP Morgan, report holding shares of several spot Bitcoin ETFs in filings with the US Securities and Exchange Commission (SEC). JP Morgan purchased $760,000 worth of shares of Bitcoin ETFs. Well Fargo has little exposure around $143,000 worth of shares.
Binance and KuCoin have been approved by India's anti-money laundering unit, months after being banned for operating illegally. KuCoin paid a $41,000 fine and has resumed operations. Binance's financial penalty is still to be determined after a hearing with the Financial Intelligence Unit and expected to resume operations after paying the fine.
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