Six months after the Bitcoin halving, mining companies are turning to AI, and stock prices are soaring
As the days of "mining" become increasingly difficult, major mining companies are seeking new paths. After signing a series of cooperation agreements with AI companies, Core Scientific's stock price has surged nearly 300% in six months. TeraWulf, a mining company developing AI data centers, has also seen its stock price double this year
Due to the "halving" leading to a reduction in mining rewards, more and more mining enterprises are seeking new ways to survive. Six months after the halving of Bitcoin, mining enterprises are turning to AI.
On October 20th, it was reported that the U.S. Bitcoin miner Core Scientific's stock has almost tripled since announcing a series of multi-billion dollar contracts with the AI startup CoreWeave. This mining enterprise will transform some of its data centers to host over 200 megawatts of GPUs for CoreWeave.
The stock price of TeraWulf, a mining enterprise developing AI data centers, has also doubled this year. Other Bitcoin mining enterprises embracing AI such as Iris Energy and Bit Digital have generally outperformed their peers who focus on holding Bitcoin.
As mining becomes increasingly challenging, major mining enterprises are seeking transformation. Leading Bitcoin miners are replacing some mining equipment with devices used to run and train AI systems. These companies believe that the income from AI training is more stable and secure than the volatile cryptocurrency market.
Since the launch of Bitcoin in 2009, mining rewards have halved four times. The first halving occurred in November 2012, reducing the reward from 50 BTC to 25 BTC. The subsequent two halvings took place in 2016 and 2020. Most recently, in April 2024, mining rewards halved again to 3.125 BTC per block.
Some mining enterprises stick to Bitcoin, with poor stock performance
While many mining enterprises are actively turning to AI, some companies remain focused on mining and holding Bitcoin.
For example, mining enterprises like MARA Holdings, Riot Platforms, and CleanSpark are staunch "hodlers" of Bitcoin (Hodl is an industry term meaning to hold cryptocurrency for the long term). They hold onto the Bitcoin they mine and hope that this asset will continue to appreciate in the future.
However, the stock performance of these companies has been quite poor. The two major publicly traded Bitcoin mining enterprises, MARA and Riot, have seen their stock prices drop by 17% and 36% respectively this year.
Nevertheless, analyst Paul Golding from Macquarie Capital USA believes that pure Bitcoin mining still has a place in the current market, especially in expanding mining capacity to create economic value Morgan Stanley has given "outperform" ratings to MARA, Riot, Core Scientific, Iris Energy, CleanSpark, and Cipher Mining.
According to Morgan Stanley's analysis, Bitcoin miners are no longer limited to traditional mining operations. They can also leverage their own power and computing resources to flexibly transition into hosting centers for high-performance computing (HPC) and AI computing, thereby opening up new sources of revenue. By partnering with or directly acquiring these mining companies, tech giants can gain valuable power resources to expand their computing power and further drive the development of their AI business