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Cryptocurrency Miners Exploring Diverse Business Ventures, JPMorgan Reports

Aug 21, 2023 at 11:49 am

Bitcoin Miners Expanding Horizons: Venturing into AI Services and Geographic Diversification

In a recent research report, JPMorgan highlighted the evolving landscape of cryptocurrency miners, shedding light on their strategic shift towards novel business domains such as high performance computing (HPC) services catering to the burgeoning artificial intelligence (AI) sector. This transformation aims to mitigate their reliance solely on cryptocurrency activities.

Bitcoin (BTC) miners have recognized the potential of diversification, delving into new sectors like high performance computing to serve the rapidly advancing artificial intelligence market. This initiative marks their endeavor to decrease dependency on cryptocurrency-related activities, as outlined by JPMorgan in their research report released on Wednesday.

The financial resources necessary for these innovative endeavors have, in part, been derived from miners' sale of cryptocurrency coins in the recent quarters, according to the report's findings.

This strategic diversification has prompted certain bitcoin mining entities to rebrand themselves to reflect their expanded focus. Notably, Hive Blockchain Technologies (HIVE) underwent a transformation, becoming Hive Digital Technologies, and Riot Blockchain (RIOT) rechristened itself as Riot Platforms.

The pursuit of new revenue streams is not exclusive to bitcoin miners. The research underscores that former ether (ETH) miners have displayed a similar inclination towards exploring additional avenues. This is particularly evident in their engagement with high performance computing services. Following the Ethereum blockchain's transition to the Merge, there has been an influx of graphics processing units (GPUs) into the secondary market. This phenomenon has arisen due to GPUs that were once employed for ether mining losing their effectiveness.

As a response to this change, some ether miners opted to liquidate their GPUs to recuperate their investments. Others repurposed their equipment for purposes such as gaming, image and video rendering services, as well as for mining other proof-of-work cryptocurrencies like ethereum classic (ETC), ravencoin (RVN), and ergo (ERG), according to the research note. However, the profitability of mining these alternative cryptocurrencies was found to be comparatively lower due to factors like their smaller market capitalizations and uncertainties about their long-term sustainability.

Nevertheless, the growing prominence of artificial intelligence has ushered in a new dimension for GPU utilization. The rising demand for high performance computing in the AI sector has given a fresh lease of life to GPUs previously employed for ether mining. This transition could potentially open up more profitable avenues for miners in the long run.

Furthermore, bitcoin miners are adopting a geographic diversification strategy, with Russia emerging as a significant player in terms of bitcoin mining power consumption. The country's position comes second only to the United States, adding an interesting facet to the evolving landscape of cryptocurrency mining, as highlighted in the research report.

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