Expert Predicts Bitcoin's 'Death' Due to Miners Switching to AI

The profitability of AI hosting is dramatically outpacing Bitcoin mining, prompting concerns that the latter could face severe challenges. Trader Ran Neuner highlighted that AI is generating nearly eight times the revenue for energy compared to traditional Bitcoin mining, a trend he believes is detrimental to the Bitcoin network.

AI has killed Bitcoin forever. It has become Bitcoin mining’s biggest competitor. Both industries compete for the same resource: electricity. Right now, AI is willing to pay much more for it.

According to Neuner, Bitcoin miners earn between $57 and $129 per megawatt, while AI data centers can receive between $200 and $500 for the same energy. He pointed out several signs of this shift within the industry:

• Core Scientific has secured a $500 million loan to establish AI data centers.
• MARA Holdings plans to liquidate a portion of its Bitcoin holdings to focus on AI.
• Hut 8 has entered into a $7 billion deal with Google for AI infrastructure.
• Cipher Mining has scaled back its hashrate to support neural networks.
• Jihan Wu, co-founder of Bitmain, has shifted entirely to AI ventures.

If I were a miner, the choice would be obvious. That’s why more participants are leaving the network.

Neuner also noted a significant 14.5% drop in Bitcoin's hashrate since October, raising concerns about the network's security and the potential for a 51% attack, given the exodus of miners. He suggested that Bitcoin's only hope for competing with AI may rest on a rising price.

I hope Bitcoin shows one green candle. Maybe due to war, maybe due to regulation.

Counterarguments

However, some experts disagree with Neuner's dire assessment. Adam Back, CEO of Blockstream, argued that mining difficulty will adjust, allowing only the least efficient miners to exit the market.

What happens to Bitcoin is simple: tick tock, next block! Difficulty adjusts downwards, and Bitcoin mining profitability will align with AI profitability.

Analyst Willy Woo echoed this perspective, asserting that the competition among Bitcoin miners, rather than electricity prices, is the key determinant of profitability. Investor Fred Krueger added that miners may temporarily shut down until conditions improve, which is a typical cycle.

Furthermore, ESG expert Daniel Batten claimed that the expansion of AI is inextricably linked to Bitcoin, arguing that Bitcoin mining can optimize energy usage and aid in the development of AI infrastructure.

In March, analysts from Wintermute warned that unless Bitcoin miners adapt by incorporating AI hosting or managing Bitcoin reserves as working capital, they may struggle to survive in this evolving landscape.