Digital Currency Mining Companies' Shares Soar in August, Boosted by AI - JP Morgan
In a shift towards more flexible and sustainable energy use, Bitcoin mining companies are exploring new avenues beyond the cryptocurrency's mining operations. Hut 8, a leading Bitcoin miner, has announced plans to develop 1.53 gigawatts of new capacity across four U.S. sites, with the intention of using the energy for non-mining purposes.
This trend reflects the challenges faced by Bitcoin miners, who have had to sell coins or branch into different industries like high-performance computing for artificial intelligence to cover operational costs. The process of Bitcoin mining has become increasingly difficult and expensive, making diversification a necessary step for many companies.
One such company is Hive Digital Technologies (HIVE), which has a dual business model combining Bitcoin mining and high-performance computing (HPC). The company's HPC division provides a complementary revenue stream that grows with demand for compute power. HIVE's CFO, Darcy Daubaras, stated that each incremental exahash in production increases daily Bitcoin production and revenue potential for HIVE.
Compass Mining, another player in the Bitcoin mining sector, is focused on infrastructure that keeps Bitcoin mining competitive. The company helps clients secure power-ready sites, interconnection, and long-duration energy, with the flexibility to repurpose assets for HPC if and when demand matures.
The market cap of top publicly-traded Bitcoin miners, as tracked by JP Morgan, reached over $39 billion in August. The 13 U.S.-listed Bitcoin miners being tracked by JP Morgan include Hut 8, Core Scientific, TeraWulf, IREN, and Riot. However, JP Morgan analysts noted a decline in profitability compared to July due to the network hashrate reaching record highs.
Despite these challenges, Compass Mining believes that the environment is favorable for remaining focused on Bitcoin mining. Bitcoin was trading at $111,285, according to CoinGecko, a significant drop from its all-time high of $124,285 last month. BTC rose 2% over the past 24 hours but is down more than 10% since reaching its peak.
The Bitcoin halving in 2020 reduced the Bitcoin earned per block from 6.250 to 3.125. This halving event, which occurs approximately every four years, is designed to control the supply of Bitcoin and prevent inflation.
In addition to several Bitcoin mining companies making their facilities available to cover non-mining specific energy demands, this shift towards diversification and sustainability is a promising sign for the future of Bitcoin mining. As the industry evolves, it will be interesting to see how these companies continue to adapt and grow.
