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Mining 2.0: Crypto Miners Embrace Artificial Intelligence (AI) as the New Frontier

source-logo  cryptopotato.com 17 July 2023 18:37, UTC

Artificial Intelligence (AI) has become ubiquitous, making its presence felt across various sectors. Gradually infiltrating every aspect of human activity, this buzzword, although not entirely new, has captivated the minds of both seasoned tech gurus and novices alike.

The integration of the digital asset space and AI was inevitable. Industry players are actively exploring innovative approaches to integrate these two technologies. Hence, the pivot of crypto miners to this newfound tech darling is not surprising.

Miners have realized that AI-powered solutions hold the promise of addressing some of our most critical challenges. As we enter the next decade, it is abundantly clear that the digital future and AI are inextricably linked.

The ongoing AI boom is revitalizing the prospects of cryptocurrency miners, which have been reeling from the humbling market crash last year. This strategic shift has garnered its unique moniker: Mining 2.0

Crypto Miners Riding the AI Wave

Prominent players in the crypto mining industry are actively seeking greener pastures in the AI sector. One such is Hut8 which is expanding its horizon by venturing into non-mining services while simultaneously investing in high-performance data centers to cater to the growing demands of AI and computing requirements.

In a conversation with CryptoPotato, Hut8’s Erin Dermer said the company is “uniquely qualified to deliver on AI clients’ intensive workloads.”

Hut8 purchased five traditional high-performance computing data centers last year. Shortly thereafter, it moved some of its GPUs and supporting servers, previously mining Ethereum, into those data centers to perform VFX rendering and machine learning for its customers, primarily in the gaming and entertainment industries. Hut8 also revealed with clients, including XYZ AI, to deliver the computing power to support their text-to-graphic generative AI requirements.

Dermer said,

“We are very excited by the promise of AI and have been providing the computing infrastructure to deliver these high-demand computing services for some time. While we are still in the early days of AI adoption, we believe that whether we are mining Bitcoin or providing high-performance computing services, the common thread is in the computing infrastructure, and Hut 8 is actively pursuing both lines of business.”

The Challenge

As lucrative as it seems, it’s important to note that AI and crypto mining have distinct sets of requirements.

While crypto mining primarily relies on powerful computational resources and specialized hardware to solve complex mathematical problems, that’s not the case with AI, which typically emphasizes data processing, machine learning algorithms, and high-performance computing.

Therefore, although both fields can be profitable, it’s crucial to recognize and address the unique demands and challenges associated with each, including the need for tailored infrastructure, expertise, and investment strategies.

According to Bitcoin miner Xive’s CEO and co-founder, Didar Bekbauov, “only altcoin miners can switch to AI computations now” because they use GPUs – which not only help in crypto mining but can also be used for the computational workloads needed to train generative AI systems.

While speaking with CryptoPotato, Bekbauov shed some light on the subject and said,

“Almost 99% of all crypto mining is Bitcoin mining, where we use application-specific integrated circuit (ASIC) miners. They can’t be used for any other purpose, only mining Bitcoin. However, the technology behind data center construction and management both for crypto mining and AI are the same. So any large-scale miner potentially can build a data center for AI operations.”

The real challenge, however, is to determine the demand for computing power, Bekbauov explained.

“With Bitcoin mining, it’s easy, because all mined coins can be sold on exchanges whenever miners have needs. But with AI computing you need to find buyers of computing power to generate revenue, which can be hard.”

The Xive executive further added that Bitcoin miners can diversify their strategy by building out large facilities for AI data centers since miners already have experience in “connecting all the dots” in terms of “finding electricity capacities, building electrical and cooling infrastructure, supplying GPUs, maintaining data centers, etc.”

The Opportunity

Bekbauov highlighted the opportunity for miners to participate in the global need for computational power, which, according to the exec, has emerged as the world’s most important resource in the information age. The Xive co-founder, however, said the industry requires more transparency in terms of needs from AI companies, who can be perfect customers for data centers.

While the software side of AI is progressing faster on the front, the same can’t be said for the hardware side of things, which cannot catch up with the pace of AI developments.

“Users need to wait from 5 minutes to a couple of days to get their responses for prompts, especially with pictures and videos. Number of users is growing exponentially. But we can’t say the same for hardware which is used for supplying computing power to work on all of the demand.”