Miners Turn to AI as Bitcoin's High Price Becomes a Liability

Bitcoin miners are facing a paradoxical crisis where making money from mining has become harder than ever, despite the coin's high value. The annual amount of transaction fees on the Bitcoin network has fallen to $96 million-$114 million, which is the same level as in 2019 when the price was just $5,000.

The whole situation was described by Charles Edwards, founder of Capriole Investments, who pointed out that miners' revenue from processing transactions has shrunk to below 10% after the recent halving. With the current mining cost at around $62,650, the business's net margin has been reduced to a critical 5%, making it unprofitable for mining on older equipment.

Instead of going bankrupt, publicly traded mining companies have found a gold mine in high-performance computing (HPC) and AI. They are signing multibillion-dollar contracts with IT giants such as Microsoft and Nvidia, providing fixed and guaranteed dollar payments that can hedge against the decline of Bitcoin revenues every four years.