JPMorgan Report Shows Crypto Miners Are Diversifying Business Interests

Republished By Plato

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Bitcoin mining companies are branching into fresh business domains, diversifying into high-performance computing services for the rapidly expanding artificial intelligence sector. The objective behind this shift is to decrease their dependence on the cryptocurrency market, according to a recent research report by JPMorgan.

The analysis underscores that miners have been partially funding these novel endeavors by liquidating their digital coins over the past few quarters.

Several entities engaged in Bitcoin mining have rebranded their identities to mirror this strategic diversification. An example is Riot Blockchain, which adopted the name Riot Platforms, and Hive Blockchain Technologies rechristened itself to Hive Digital Technologies.

The notion of pursuing alternative revenue streams is not restricted to BTC miners alone; even former ether miners have displayed a proclivity for offering HPC services, particularly after the Ethereum Merge. This process has led to a surplus of graphics processing units on the market, stemming from the diminished utility of GPUs employed in ether mining.

A portion of the ether miners opted to liquidate their GPU assets as a means of recouping their investments. Others re-utilized their machinery for diverse applications such as video and image rendering and gaming, as well as the mining of extra proof-of-work cryptos such as ergo, ravencoin and ethereum classic.

The JPMorgan analysts acknowledged that the profitability of mining these substitute cryptos is lower compared to ether, given their smaller market capitalizations and apprehensions about their sustainability in the long run. Nonetheless, they emphasized the potential for more substantial profits in light of the escalating demand for AI and HPC services.

Beyond their focus on diversifying their business activities, miners are also striving to broaden their geographical reach, with Russia emerging as a prominent contender in this regard, second only to the United States in terms of BTC mining power consumption. The report highlighted that Russia’s power producers have been grappling with challenges attributed to the Ukraine conflict and economic downturn, resulting in a surplus of energy resources. Capitalizing on this, Russia offers notably more cost-effective energy options to Bitcoin miners, supported by its colder climate.

This transition toward AI appears to be a logical progression, especially after a lackluster 2022. During the previous year, the global mining industry’s revenues fell short by $6 billion compared to the record-breaking achievements of 2021.

Addressing prospects, JPMorgan analysts cautioned that the forthcoming Bitcoin halving might subject miners to trials involving reduced rewards and heightened costs. Miners with lower electricity expenses are poised for a more favorable post-halving scenario, whereas those burdened by higher costs could encounter difficulties.

It remains to be seen how other actors in the crypto mining space such as Bit Mining Ltd. (NYSE: BTCM) will evolve in tandem with the changing climate surrounding hi-tech crypto mining.

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