Bitcoin Miners Pivot to AI, Doubling Valuations Amid Price Drop

Bitcoin miners have been shifting their focus towards artificial intelligence (AI) and high-performance computing (HPC), resulting in a significant increase in valuations. According to CoinShares, companies with HPC contracts trade at 12.3 times their enterprise value, while pure-play bitcoin miners are valued at just 5.9 times.

This divergence is attributed to the stability of long-term compute contracts compared to the volatility of mining revenue tied directly to bitcoin's price. Early adopters of this pivot, such as TerraWulf, IREN, and Cipher Digital, have more than doubled in value over the past year, while MARA Holdings, which lagged behind in shifting towards AI, fell 40%.

The industry has accumulated $70 billion in contracts related to AI and HPC by the end of the first quarter, with new deals continuing to land since then. Riot Platforms' 20-year lease with AI company Anthropic valued at $9.1 billion is one of the largest such agreements to date.

The bitcoin price drop has squeezed mining profitability across the board, with hashprice falling from $63 to around $31.80 per PH/s over the past year. The network hashrate has also dropped 21% as unprofitable miners shut down machines.