Beyond BTC: Crypto Miners Get Brainy, Embrace AI After Block Reward Whacking
06 June 2024 - 10:40PM
NEWSBTC
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. Related Reading: Altcoins: Analyzing Key Signs For A
Potential Boom – Or Bust 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. 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. 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. Related Reading: AVAX Primed To Break $100
Barrier As Bullish Signs Emerge 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
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