Galaxy Digital explores AI potential in response to Bitcoin mining slowdown

Galaxy Digital is the latest Bitcoin mining firm exploring a shift to AI, driven by increasing competition and rising mining difficulty within the sector.

In its third-quarter earnings report released on Nov. 7, Galaxy announced a preliminary agreement with an undisclosed US hyperscaler—a large data center operator—to potentially convert its 800-megawatt (MW) Helios mining facility in West Texas for high-performance computing (HPC). Hyperscalers offer immense computing capacity to support demanding applications like AI.

Currently, the Helios facility has 200 MW in operation, and Galaxy is investigating the feasibility of securing an additional 1.7 gigawatts (GW) of power capacity for the site. However, moving forward with this AI-focused plan will depend on thorough due diligence and necessary approvals.

Other major mining companies, like Riot Platforms and Marathon Digital, are also considering AI expansions. Core Scientific, another prominent miner, is poised to generate over $8 billion through a 12-year partnership with AI-focused hyperscaler CoreWeave.

This strategy follows predictions by industry analysts that Bitcoin miners who embrace AI could unlock new revenue streams. Asset management firm VanEck projects that Bitcoin miners could see up to $14 billion in annual profits by 2027 if they devote 20% of their energy resources to AI computations.

Q3 results

Galaxy’s third-quarter results further underscore the challenges facing Bitcoin miners. The firm reported a 27% drop in Bitcoin production, mining only 176 BTC during the third quarter, while revenue from mining declined 23% to $18.5 million.

This downturn came despite an 11% increase in Galaxy’s hashrate, which rose to 6.2 exahashes per second (EH/s). Galaxy attributed these results to April’s Bitcoin halving event, the heightened mining difficulty, and seasonal curtailment of energy use.

Overall, Galaxy reported a net loss of $54 million for the quarter, though this marked an improvement from the prior quarter’s net loss of $177 million.

The company saw over 30% growth in operating revenue quarter-over-quarter despite industry-wide declines in trading volumes and a drop in Ethereum prices. Galaxy added that it recorded a net income of $191 million primarily due to strong operations and favorable market conditions for digital assets. As of Sept. 30, Galaxy’s equity capital stood at $2.1 billion.

Meanwhile, Galaxy remains on track with its reorganization plans to become a Delaware-based corporation listed on the Nasdaq, pending final SEC review and necessary approvals.