Bitcoin Miners Diversify Ahead of the Upcoming Halving: JPMorgan Report
The New York-based asset management firm JP Morgan announced that the key players in the crypto mining sector are exploring new business opportunities to gain a competitive edge ahead of the April 2024 Bitcoin halving.
The asset manager mentioned that lately, Bitcoin miners are investing in replacing the old hardware with new tools to boost the hash rates. The preparation made Bitcoin miners ahead of the next BTC halving, aims at increasing the firm profitability.
Preparations Made by Bitcoin Miners Ahead of Next Halving
A statement issued by JPMorgan analyst Nikolaos Panigirtzoglou revealed that crypto miners are leveraging artificial intelligence technology to boost computing power and increase their profitability. The analyst noted that the Bitcoin miners had utilized the returns generated from the sale of Bitcoin in the preceding quarters to expand to the growing AI sector.
Panigirtzoglou admitted that the Bitcoin mining activities and AI development project requires improved computer chips to train large language models.
The ongoing AI craze has compelled major exchanges and businesses to invest in upgrades. A few months ago, Applied Digital released an AI-oriented cloud service and agreed to facilitate AI cloud computing at its data center. Similarly, the Australian-based computer application company Iris Energy announced plans to host HPC services.
The JPMorgan group noted that the former Ethereum miners have broadened their product line to offer HPC services. The analysts observed that the graphic processing units (GPUs) had lost their utility after the Ethereum migration to proof of stake from the proof of work model.
During the Ethereum transition in September 2022, the analyst stated that the supply of GPUs exceeded the demand. However, with the latest development of AI and the growing interest in HPC, Bitcoin miners can explore profitable ways to use GPUs.
Bitcoin Miners Seeks to Expand to Russia
According to the JPMorgan team, Bitcoin and Ethereum miners have conducted beta trials to offer HPC services powered by GPUs. The analyst noted that the miners yielded high returns from the completed beta tests.
The profit generated from the beta test inspired the miner to obtain over 100MW power grids on long-term contracts. The miners anticipate that the profits will surpass the return secured from Bitcoin mining if the beta test is conducted on a large scale.
Irrespective of this, the analyst noted that the Bitcoin miners are lately widening their geographic presence. The JPMorgan team noted that most Bitcoin miners are pursuing Russia due to its market suitability.
The report argued that the Russian-Ukraine war has adversely affected economic activities in the two countries. The unfavorable business environment has also affected the operation of power producers in Russia.
A recent study illustrated that Russia has an excess energy supply. Despite the cool climate in Russia, the country will offer cheaper energy for Bitcoin miners.
In an earlier report, the JPMorgan team announced that the upcoming Bitcoin halving could expose the miners to high operation costs and lower rewards. The analyst argued that Bitcoin miners with access to cheaper electricity costs would be well positioned for the next halving.
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