Bitcoin mining operations may offer more favorable prices per megawatt, potentially turning into profit-making machines for their owners. Recent activity around data center markets highlights the lower electricity prices negotiated for mining.
Bitcoin miners, long vilified for being climate vampires may be about to turn into industry cash cows. Demand for high-quality data centers with minimal downtime rose in 2024, and some of the existing crypto mining farms may have found a new profitable niche.
In September, Blackstone finalized one of the largest data center deals of the year. AirTrunk, the leading Australian data center operator, was acquired in a $16B deal made jointly with the Canada Pension Plan Investment Board.
So far in 2024, data center deals have totaled about $36B, almost touching the 2021 peak of $42B. The recent acquisition brings focus on a key aspect of data centers, the energy required to operate them.
Bitcoin miners sitting on competitive energy contracts
At the time of the deal, AirTrunk carried 800 MW of capacity, with the potential to extend to 1GW for clients in the Asia Pacific region. The sheer power capacity puts the deal at $20M to acquire access to that level of power supply.
A rough comparison notes some of the available Bitcoin data centers could go as low as 3M per megawatt to gain access to the same data center spot.
One possible issue with Bitcoin mining farms is their regions and locations, as well as potential connectivity. As of 2024, nearly 40% of the global mining power is located in the USA. Some regions have a much lower density of mining operations, but around 15% of all hashing power per month is still located in China.
Marathon Digital, a rapidly growing mining operation, already controls 584MW in mining centers, with 3% of the capacity built on directly owned sites. The company also added smaller mining centers at a much lower acquisition price of $437K per megawatt.
Core Scientific is one of the first mining operations to pivot into AI, with another large center expected in early 2024. Core Scientific recently negotiated a 12-year contract for a 200 MW facility and will exercise its first option with a 70 MW AI data center.
Core Scientific will retrofit one of its 100MW mining facilities to host CoreWeave’s Nvidia GPU operation for AI tasks. Over the course of the 12-year contract, Core Scientific calculates an additional income of $4.7B from the two main contracts with Core Scientific. The latest data center is expected to turn to active operations in the second half of 2025.
Mining operations are using their high rack density and cooling solutions to meet the demand for new types of data centers. After the updates, Coreweave will carry 270MW in high-density infrastructure, suited for the latest generations of chips for task-specific applications.
Core Scientific also sits on a total of 1.2GW of contracted power and can divert up to 500 MW for alternative computation needs outside of mining.
Core Scientific is still engaged in mining for its own reserves, producing 4,506 BTC in the year to date, valued at $255M. Hypothetically, BTC could be more valuable than AI-based contracts, though it also contains market risk, and not all coins can be sold without price slippage. Miners are also facing difficult decisions on whether to divest the coins or sell for operational expenses, with AI income used as a diversification tool.
At those price ranges, mining data centers may be much cheaper to build and operate. Industry-wide estimates for greenfield data center investments may run up to $7M to $12M per MW.
Not all Bitcoin mining operations could be converted to data centers, as some operations rely on sporadic availability of energy, such as excess solar or hydroelectric power. However, some of the available stable and reliable locations could assign a part of their space and electricity contracts to AI-specific tasks.
Smaller centers may also try less formal types of decentralized computation, where global buyers can bid for GPU power. Former Ethereum miners or other graphic card owners may retain an early advantage, after buying some of the most advanced NVIDIA GPUs.
The trend toward combining crypto mining and AI centers stems from a shift of hashrate to the USA. Compared to the unfavorable climate in China, US mining pools and operations may find themselves closer to both electricity resources and investors.
The mining operations that manage to transform into high-uptime data centers may be sitting on much higher potential earnings in the next decade, as predictions see data center usage to grow at 10.9% annually.
Cryptopolitan reporting by Hristina Vasileva
Source: https://www.cryptopolitan.com/bitcoin-miners-profit-cheap-energy-for-ai/