Cryptocurrency mining used to be a popular trend among tech enthusiasts and investors for years. It has died out in the last couple of years as cryptos changed and started to use proof of stake rather than proof of work.
However, the surge in AI businesses has recently powered and instructed a growing interest in crypto mining. This article will go in-depth into how the two are connected and why many investors believe that crypto mining is back and can be lucrative again.
Crypto Mining Companies On the Rise
The five biggest crypto mining companies are on the rise when it comes to share value. These five companies dominate the market in terms of computing power and hash rates. The experts claim that there are a few reasons for this rise and that it’s not connected to the crypto value on the market.
The first one is the fact that the mining is back, and the investors are reacting to it. The second is about diversification in the mining industry. The computing power of these companies can also be used for AI and other commercial services beyond crypto, and the value shows it.
Mining Altcoins
Not all altcoins can be mined. For instance, popular altcoins such as Cardano are based on the stake of proof principle, similar to Ethereum. Proof of Stake is a consensus mechanism used in blockchain networks, including some cryptocurrencies, as an alternative to the Proof of Work mechanism. PoS is designed to be more energy-efficient and scalable than PoW.
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Participants (also called validators) need to “stake” a certain amount of cryptocurrency by locking it up in the network. This staked amount serves as collateral, allowing them to validate transactions and create new blocks. Users can buy Cardano coins and earn passively simply by holding on to the asset and using it for staking.
Proof of stake is also easier to scale as the coin gains more users and provides a more decentralized approach than proof of work.
On the other hand, the altcoins that are similar to blockchain can be mined using a proof of work mechanism. These are growing in popularity alongside Bitcoin itself.
How AI Fits in the Picture
AI and crypto mining have one thing in common that’s often overlooked. The two require a lot of energy to operate smoothly, and with increased adoption in both areas, the numbers can only go up. Using the same infrastructure for both purposes is, therefore, a smart move.
Investors prefer adaptability in their investments since they can use it to diversify. This means that most of the mining companies that are now on the rise can be used in both industries in the years to come. The alternative uses will be especially welcomed during dip periods, such as the one we’re seeing for crypto right now.
State of the Mining Companies
A lot of the mining companies have gone public in the last couple of years. There are financial experts out there who have cautioned against it. Companies that go public need to keep providing value to their shareholders at all times, and mining may not be able to operate in that way.
However, since the companies are publicly traded, it provides a good window into how the mining industry is doing or how investors perceive it.
Bitcoin miner Core Scientific’s shares surged as much as 40% in pre-market trading after cloud computing firm CoreWeave signed a 200 megawatts artificial intelligence deal and was also reported to have offered to buy the mining company in an all-cash offer.
Even though it’s just one deal between two companies, it’s a sign of the overall state of things – other AI companies may soon follow along.
JP Morgan Research
JP Morgan has published research in this regard following the CoreWeave deal. It states that a wave of potential investors are interested in the mining technology for its dual uses. It also points out a few companies that will play a big role in the new mining wave.
Iris Energy (IREN) will be the first to take advantage of these changes in the mining market, as it’s best positioned to do so. Cipher Mining (IFR) has a smaller pipeline but a good operational history and lower power costs, so it’s one of the companies to watch.
Riot Platforms (RIO) is one of the businesses with the proper infrastructure in this field, but at this point, it will focus on mining alone and doesn’t plan to venture into AI. Marathon Digital (MARA) and CleanSpark (CLSK) seem to be the most expensive when it comes to power costs and, therefore, the worst positioned to move to AI uses.
To Sum Up
Crypto mining businesses are gaining traction on the stock market, and many feel it shows that mining is back as a lucrative proposition. The computing power used to mine cryptocurrencies can also be used to power AI, and many claim that’s what attracts investors towards it.
The companies that have the computing power aren’t equally suited to transition from crypto to AI ventures. The cost of energy is the biggest obstacle for many. Media is already reporting about a few companies that will dominate the field for a while.
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