In the United States, local technology companies are currently actively using energy assets that are owned by bitcoin miners.
The mentioned activity is related to the desire of the specified firms to provide dwindling electricity supplies for their rapidly expanding data centers with artificial intelligence and cloud computing. The corresponding data centers are a major component in increasing the demand for electricity in the United States. It is worth noting that this tendency has been observed since the beginning of the current millennium. It also should be paid attention to the fact that the mentioned growing demand is outpacing the pace and scale of the expansion of the electric grid. Against this background, giant technology companies, including, for example, Amazon and Microsoft, are forced to save huge amounts of electricity.
Currently, in the United States, the electricity scramble is what can be called a complicating factor for the cryptocurrency mining industry. It is worth noting that the mentioned industry is energy-intensive. At the same time, for some miners, the current realities have become a kind of financial opportunity space. They make huge profits by leasing or selling their infrastructure and sites to technology companies to connect the power grid. At the same time, not all miners have become beneficiaries of the mentioned circumstances. Some of them lose access to electricity, which is necessary to continue their business.
Greg Beard, chief executive officer of Stronghold Digital Mining, says that the battle of artificial intelligence for dominance is a battle being had by the largest and most capitalized companies in the world. He also noted that these firms care about winning as if their lives depended on it. Moreover, Greg Beard says that, with a high degree of probability, these companies are not worried about what amounts they have to pay for power.
According to preliminary estimates, by the end of the current decade, data centers may begin to consume up to 9% of the total electricity generated in the United States. The implementation of this scenario will mean a doubling of consumption relative to the present indicators. Currently, technology companies are investing significant amounts in expanding their computing hubs. The forecast of an increase in electricity consumption of the mentioned functional facilities was published in May by the Electric Power Research Institute.
Data from the International Energy Agency indicate that the share of data centers in global electricity consumption is about 1%-1.3%. At the same time, a similar indicator of the cryptocurrency mining industry is at around 0.4%. It is also expected that the corresponding disparity will continue to show growth.
Analysts interviewed by the media predict that by the end of 2027, 20% of bitcoin miners’ capacities will be pivoted to artificial intelligence. Over the past year, the mentioned miners and owners of machine intelligence data centers have intensified their rivalry for the same energy assets and contracts.
Marathon Digital Holdings, the world’s largest publicly bitcoin miner, was among those eyeing a nuclear-powered data center owned by Talen Energy in Pennsylvania. This information was published by the media, referring to anonymous insiders who were aware of the relevant issue. Marathon Digital Holdings commented on the mentioned information, making a statement about its readiness to negotiate with any party intending to sell the data center. At the same time, in this case, interest in the facility located in Pennsylvania was not confirmed or denied.
Amazon, which has a market capitalization more than 350 times that of Marathon Digital Holdings, acquired Talen Energy’s data center as part of the deal announced in March. In this case, Amazon, which is an e-commerce giant, a significant player in the technology sector, and the owner of the best American delivery service, has secured enough electricity to meet the corresponding needs of almost all homes in New Mexico.
Currently, many large miners who own land and power hookups are shifting their strategy from exclusively crypto mining to marketing their property and energy services to companies operating in the artificial intelligence industry and the cloud computing area.
Kerri Langlais, chief strategy officer of bitcoin miner TeraWulf, which has a site in upstate New York that is capable of up to 770 megawatts (MW), says that everyone from Amazon or Google has shown interest in this firm.
The beginning of the excitement around the technological prospects for miners was recorded in June. The corresponding tendency became more active after the Core Scientific crypto miner, which was fresh out of bankruptcy, became the first to announce a major lease agreement for its facilities connected to the electric grid. The corresponding deal was concluded with CoreWeave, which is backed by Nvidia. This agreement is estimated at over $6.7 billion over 12 years. Then several miners said they would lease, or act as subcontractors to develop artificial intelligence data centers.
Currently, the construction of data centers with a capacity of up to 1000 MW is actively underway. It is worth noting that in the framework of the practice of previous years, the corresponding average indicator was fixed at around 20 MW. At the same time, it may take several years to connect new power supplies in the United States.
Special research by Morgan Stanley indicates that for crypto miners with large energy assets, repurposing operations for artificial intelligence and cloud computing can increase the value of their facilities by five times. Also, the published results of this research contain information that the buying or leasing of a space at a mine with a capacity of at least 100 MW can cut the waiting time for the launch of a data center by about three and a half years. In this case, there is an opportunity for technology companies to save billions of dollars.
At the same time, during communication with media representatives, some miners stated that the handoff of electricity supplies and infrastructure to players in the technology sector would not be an unhindered process for most. Besides, in this case, doubt was expressed about the very probability that an unhindered process is possible in principle.
CleanSpark chief executive officer Zach Bradford says that most bitcoin miners who announce plans to do artificial intelligence do not really know what they have to deal with. Also in this context, he noted that about 90% of bitcoin mines in the United States can be constructed in six months to a year. At the same time, the duration of the corresponding process for more sophisticated data centers is three years. Zach Bradford also stated that the mentioned mines will need to be rebuilt to add specialized cooling structures and other infrastructure that will be used for artificial intelligence or cloud computing.
It is worth noting that the large amounts of costs associated with the construction of a data center with artificial intelligence are a significant obstacle for many crypto miners.
