Why Bitcoin Miners Aren't All Jumping on the HPC/AI Data Center Bandwagon

While some of the largest Bitcoin (BTC) miners are leveraging their infrastructure to operate high-performance computing (HPC) data centers

Bitcoin mining company Core Scientific Inc (Nasdaq: CORZ) will provide around 270 megawatts (MW) of power to CoreWeave Inc for hosting NVIDIA Corp (Nasdaq: NVDA) GPUs, used in high-performance computing (HPC) operations, under a 12-year agreement.

CoreWeave, which began as an Ethereum miner and pivoted to AI after the second-largest cryptocurrency switched from proof-of-work to proof-of-stake, will pay a minimum price per kilowatt-hour for the electricity. The company’s AI data center will be located at a Core Scientific data center in Georgia, and the parties expect to begin deploying GPUs in the second quarter of 2024.

“This agreement with CoreWeave further demonstrates the value proposition of our infrastructure and capabilities as we continue to execute on our strategy to diversify our revenue streams and drive long-term, sustainable growth,” said Core Scientific CEO Jamie McAvity.

Bitcoin miners pivoting to HPC data centers

Bitcoin miners in North America often have the infrastructure needed for HPC data centers, said McAvity. These miners have high-voltage connections and can fully power electrical transmission systems.

“Despite the differences between Bitcoin mining and HPC centers, there are some shared aspects. For example, both require a lot of power, efficient cooling systems, and high-speed internet connections,” he explained.

There is a shortage of infrastructure for HPC data centers, especially in the United States, where demand for AI model training centers is rising. Bitcoin miners that were established in 2018 and 2019 may already have the infrastructure required.

An example is Core Scientific’s deal with CoreWeave. Initially an Ethereum miner, CoreWeave transitioned to AI after Ethereum switched from proof-of-work to proof-of-stake.

Now valued at $19 billion, CoreWeave helps Core Scientific make substantial profits. McAvity highlighted that long-term contracts with high-profile companies make hosting HPC data centers highly lucrative.

The price per kilowatt-hour for HPC leases can range from 50 cents to a dollar, significantly higher than the 5-10 cents per kilowatt-hour from Bitcoin mining, resulting in tenfold revenue increases.

However, not all Bitcoin miners can adopt this model due to its challenges and costs.

“Bitcoin mining is volatile, while these HPC leases are stable high margins. We began entering the AI sector in 2019, repurposing traditional data centers for HPC/AI hosting. Not all Bitcoin miners have the infrastructure for such transitions,” said Russell Cann, Chief Development Officer at Core Scientific.

Cann also noted that Core Scientific’s partnership with CoreWeave is a natural transition, given their long-standing relationship.

“We began working with CoreWeave when they were still mining Ethereum. As they pivoted to AI, we had discussions on how to integrate their needs into our infrastructure. This agreement is the culmination of those efforts,” he said.

Specific requirements for HPC data centers

Cann further explained that Bitcoin miners with large energy needs can potentially host HPC data centers, but the switch from flexible to fixed loads is a significant leap.

“AI data centers require extensive network infrastructure, including access to high-throughput, low-latency fiber optic backbones. Many Bitcoin miners do not have this infrastructure,” he added.

While some Bitcoin mining sites meet the necessary requirements, Cann believes many will not transition to HPC data centers due to the substantial infrastructure and resources needed.

“We have 1200 MW of contracted power, divided between Bitcoin mining and HPC. We are evaluating new locations to support both operations. If other Bitcoin miners can afford the costs, they may follow our lead in benefitting from these agreements,” he said.

Despite the increasing demand for AI data centers, entering the sector remains challenging but potentially highly profitable for those who can succeed.

The above is the detailed content of Why Bitcoin Miners Aren't All Jumping on the HPC/AI Data Center Bandwagon. For more information, please follow other related articles on the PHP Chinese website!