In a race for dominance in the artificial intelligence (AI) and cloud computing sectors, U.S. tech giants, including Amazon.com Inc. AMZN and Microsoft Corp. MSFT, are competing for energy resources traditionally held by Bitcoin BTC/USD miners.
What Happened: The rapid growth of AI and cloud computing data centers has led to an unprecedented surge in power demand, outpacing grid expansions and causing a scramble for electricity. This has significantly impacted the energy-intensive cryptocurrency mining industry, Reuters reported on Wednesday.
Why It Matters: Greg Beard, CEO of Stronghold Digital Mining SDIG, stated, “The AI battle for dominance is a battle being had by the biggest and best capitalized companies in the world and they care like their lives depend on it that they win.”
By 2030, data centers could consume up to 9% of the total electricity generated in the U.S., more than double their current consumption, according to the Electric Power Research Institute.
As per analysts, 20% of Bitcoin miner power capacity could be redirected to AI by the end of 2027. Over the past year, bitcoin miners and AI data center owners have increasingly competed for the same power assets and contracts.
For instance, Marathon Digital Holdings MARA, the world’s largest publicly traded Bitcoin miner, was reportedly interested in a nuclear-powered data center owned by Talen Energy in Pennsylvania. However, Amazon, with a market capitalization more than 350 times the size of Marathon, secured the center.
Many large miners are shifting strategies from exclusively crypto mining to marketing their property and energy services to AI and cloud computing businesses. This shift could make their facilities up to five times more valuable, according to Morgan Stanley research.
However, the transition of electricity supplies and infrastructure to tech companies from crypto miners will not be seamless for most, several miners said. The high costs of building AI data centers could be a barrier to many crypto miners.
It is important to note that the energy consumption of the cryptocurrency mining industry has been a global concern. In 2023, the industry consumed an amount of electricity comparable to Australia's entire usage, according to a report from the Energy Information Administration (EIA). This has led to increased scrutiny from governments worldwide.
Moreover, the bitcoin mining industry faced a challenging second quarter of 2024 due to the fourth Bitcoin halving event that slashed their daily coin yields in half, according to a report by JPMorgan.
Price Action: At the time of writing, Bitcoin was trading 0.56% higher at $59,899, according to Benzinga Pro.
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Image via Midjourney
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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