Opinion: Mining companies seek to diversify revenue

Mining companies are exploring ways to diversify their sources of revenue. This conclusion was reached by Compass Mining analyst Anthony Power, The Block.

The expert explained the situation with expectations for the upcoming April 2024 halving.

Companies are considering the possibility of repurposing part of their operations to run data-centre facilities. There is growing interest in GPUs for AI applications, Power added.

«Bitcoin mining-related companies like Hut 8, Hive Digital and Iris Energy are buying GPUs or using those that were used for Ethereum mining before the transition to PoS», — the expert said.

According to him, there is the necessary infrastructure — cooling systems, security and access to cheap energy.

Such a pivot is driven by intensified competition — as the hash rate rises the difficulty also increases.

The stock market has not overlooked these factors — since the beginning of September the Valkyrie Bitcoin Miners ETF, which provides access to the mining industry, has fallen by 23%.

According to Power, companies are increasingly hedging hash rate or energy costs. This is achieved by choosing fixed tariffs and employing strategies to determine where and when it is profitable to mine digital assets.

«Some North American firms have relocated to Iceland and Sweden, where there is an abundance of hydro- and geothermal energy», — the expert explained.

As a reminder, Tether invested $420 million in Nvidia graphics processors. The GPUs will be the consideration for a 20% stake in the mining company Northern Data, which will lease them to AI startups.

Earlier, JPMorgan analysts lowered the cost of mining 1 BTC from $21,000 to $18,000.