Key Points
- Bitcoin miners are diversifying into AI to boost revenues, following a decline in mining income.
- Spikes in Hash Ribbons suggest potential miner capitulations, flashing a BTC buy signal.
Bitcoin miners are increasingly turning to artificial intelligence (AI) as a means to supplement their income, in the midst of a decrease in mining revenues. This comes as potential miner capitulations suggest a buy signal for Bitcoin (BTC).
Miners Diversify into AI
Companies like Core Scientific are significantly diversifying into AI in order to increase their revenue streams, following the halving event in April. The halving event reduced miners’ block rewards from 6.25 BTC to 3.125 BTC, effectively halving their revenue.
As of June 5th, the daily revenue for Bitcoin miners stood at $30.05 million, a decrease of over 70% from the record high of $107 million on the day of the April 2024 halving.
AI to Boost Miner Revenue
According to a recent report by CNBC, miners are now shifting their focus to AI computing due to its higher rewards and increasing demand, following the success of OpenAI’s ChatGPT AI model. Bit Digital, for instance, now earns 27% of its revenue from AI. Other miners like Hut 8 and Hive earn 6% and 4% respectively, of their revenue from AI.
Core Scientific CEO, Adam Sullivan, believes that the shift to AI will result in a “diversified business model and more predictable cash flows”. This could be a welcome change given the reported miner capitulations.
Are Miners Exiting Bitcoin?
In mid-May, a report found that Bitcoin’s network hashrate had dropped significantly, alongside potential miner capitulations amidst spikes in Bitcoin Hash Ribbons. Hash Ribbons track short and long-term moving averages of Bitcoin’s hashrate. Spikes in this metric indicate low mining activity or the exit of less efficient Bitcoin miners.
The Hash Ribbons signal has continued, with crypto hedge fund Capriole Investments referring to the latest flash as a ‘tempting Bitcoin buy signal’. Additionally, the Bitcoin miner reserve hit its yearly low of 1.8 million BTC, a level last seen 14 years ago. This suggests that miners were selling their holdings, likely through OTC (over-the-counter) markets.
Willy Woo’s claim that institutional traders were ‘risk-on’ and pivoting to buying perhaps supports the Hash Ribbons’ ‘buy signal’. However, it remains to be seen whether it is advisable to follow the professionals or wait for a range breakout before investing.
