After Ethereum stopped mining graphics cards in September last year, large miners saw a large part of their profits disappear. However, some of these companies are moving into the artificial intelligence (AI) industry.
One of them is Hut 8, a mining company listed on Nasdaq. In a conversation with Bloomberg published on Friday (19), the company revealed that its gross margin in the AI sector was 47% against just 17% in Bitcoin mining. A difference of 2.7 times in the first quarter of 2023.
For example, the British company XYZ AI, a customer of Hut 8, needed 200 video cards to support its software that converts texts into 3D objects. According to the co-founder of XYZ AI, the miner responded quickly to his needs.
Cryptocurrency miners revolve around AI
While the transition from cryptocurrencies to artificial intelligence seems easy, especially after the above example, other testimonials show that the situation is not so simple.
“It’s not as easy as mining, you can’t just scale linearly”Aydin Kilic, CEO of mining company Hive Blockchain told Bloomberg. “AI needs different servers, motherboards, CPUs, software and more powerful GPUs compared to cryptocurrency mining.”
“You orchestrate the GPUs on a supercomputer.”
In contrast, the ASICs used for Bitcoin mining are unfeasible to be used in AI as they are products made for a single purpose.
That is, mining companies can take advantage of their farm infrastructure, such as barns and the power grid, but they will still need to invest in advanced hardware and other details.
“The idea that you can just turn a Bitcoin miner into a GPU cluster is naive because the demand for GPU-based computing is different in terms of environmental and cooling issues”Hut 8 CEO Jaime Leverton told Bloomberg. “Finally, what do end customers expect, from an uptime and latency standpoint, [também] it is fundamentally different.”
The competition in AI is tougher
Another problem is competition. While miners compete with each other, without any outside giants, companies like Amazon and Microsoft are now rivals in the AI business.
At least some believe that the experience and structure of mining companies gives them a competitive advantage. Focusing on just two products can also help your services attract more customers.
Finally, there’s bad news for gamers looking for cheap video cards. After all, this demand for the AI sector could once again drive up the price of GPUs in the market.
Source: Live Coins

Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.