As the bitcoin gold rush dries up, crypto miners are finding it hard to make ends meet. But for many there’s a silver lining—the facilities they’ve set up are perfect for Silicon Valley’s latest obsession with artificial intelligence.
Crypto mining can be a profitable but highly volatile endeavor. It involves creating massive datacenters packed with specialized computer chips and using them to solve the mathematical puzzles underpinning the security of various cryptocurrencies. In exchange, the miners win some of that cryptocurrency as a reward.
Most miners make the bulk of their money from bitcoin. But earlier this year, an event called “the halving” seriously hit earnings. Every four years, the bitcoin protocol halves the mining reward—that is, how much bitcoin miners receive in exchange for solving math puzzles—to increase the scarcity of the coin. Normally, this causes the price of bitcoin to jump in response, but this time around that didn’t happen, severely impacting the profitability of miners.
Fortunately for them, another industry with a voracious appetite for computing has arrived just in time. The rush to train massive generative AI models has left companies scrabbling for chips, data center space, and reliable access to large amounts of cheap power, things many miners already have in abundance.
“It [normally] takes 3-5 years to build an HPC-grade data center from scratch,” JPMorgan analysts wrote in a recent note, according to the Financial Times. “This scramble for power puts a premium on companies with access to cheap power today.”
While crypto mining and training AI aren’t exactly the same, they share crucial similarities. Both require huge datacenters specialized to carry out one particular job, and they both consume large amounts of power. But because miners have been playing this game for a long time and most AI companies have only started trying to train truly massive models since the launch of ChatGPT less than two years ago, the companies have a big head start.
They’ve already spent years scouring the country for places with abundant cheap power and plenty of space to build large datacenters. More importantly, they’ve already gone through the time-consuming process of getting approvals, negotiating power licenses, and getting the facilities up and running.
The rapid expansion in demand for AI training is straining grids in some areas, and so, many jurisdictions in North America have implemented long waitlists for new datacenters, according to Time. Already, roughly 83 percent of datacenter capacity currently under construction has been leased in advance, says Bloomberg.
This means the biggest bottleneck for many AI companies is finding the hardware to train their models, and that presents a new opportunity for crypto miners. “You’ve seen a number of crypto miners that were sort of struggling that have actually made a full pivot away,” Kent Draper, chief commercial officer of crypto miner IREN, told Time.
Converting a bitcoin mine into an AI training cluster isn’t a straight swap. AI training is typically done on GPUs while bitcoin mining uses specialized mining chips from Bitmain. But often, it’s not so much the chips AI companies are after, but the infrastructure and power access the mine has already set up.