Bitcoin Miners AI Arbitrage Could Be A Game-Changer, Says VanEck

Bitcoin Miners faced a rough phase with the Bitcoin halving event in April this year. However, the rise of the artificial intelligence (AI) market could be a major game-changer for the Bitcoin mining industry, says VanEck head of Digital Assets Matthew Sigel.

Bitcoin Miners to Leverage AI Boom

In its latest report, VanEck’s Sigel noted the growing role of BTC miners in AI, high-performance computing (HPC), and the overall energy markets. Although the BTC mining industry faced some headwinds with the halving event, several investors are unaware that BTC miners have strong exposure to the booming AI sector.

As AI companies have huge energy requirements, the Bitcoin miners that have the necessary power resources can become the major suppliers. Amid this strong energy demand from miners and data centers, the wait time for grid connection in North America has exceeded four years, reported VanEck.

However, the BTC miners have been still catering to the immediate demand for AI and HPC operations. By drawing significant power loads and participating in grid balancing programs, miners can energize GPUs for AI within a year—much faster than the four-plus years required for new AI data center developments to come online.

VanEck’s Sigel stated that considering this time advantage, there’s a significant valuation gap between Bitcoin mining stocks and data center stocks trading in the market.

Bitcoin Mining Stocks Valuation Gap

Matthew Sigel said that investors should understand the potential opportunity that lies ahead with the AI/HPC boom. He points out how early movers like Core Scientific (NASDAQ: CORZ) have been able to capitalize on this opportunity.

Earlier this year in June, Bitcoin miner Core Scientific secured 12-year contracts with AI Hyperscaler CoreWeave. This deal seeks to provide 200 MW of infrastructure along with generating $3.5 billion in revenue, thereby highlighting the massive opportunity for the miners in the AI/HPC space.

Soon after this deal, the Core Scientific stock has seen a solid rally clocking 202% year-to-date gains as of date. On the other hand, top players like Marathon Digital and Riot Platforms have seen their stock prices go down by 30-50% this year in 2024.

Sigel stated that big players can adopt the Core Scientific strategy and leverage the AI boom. This will further help them improve their balance sheet by reducing the debt burden. Along with Core Scientific, other Bitcoin miners like Hive Digital, Hut8, and Bit Digital, are working on expanding the HPC capacity.

However, players like Marathon Digital, Riot Platforms, and CleanSpark have announced no plans for this. Instead, Marathon Digital recently announced a $300 million convertible note offering to buy 4,144 Bitcoins from the open market.