Bitcoin

AI is bringing big tech data centers and Bitcoin closer together

Published

6 months ago

4 June, 2024

AI is bringing big tech data centers and Bitcoin closer together

Cryptocurrency It was once the bustling sector that drove a wave of development from data centers to mining facilities, but as that boom fizzled, many of the companies and project sites are turning to support the new hot topic: artificial intelligence.

A Bitcoin mine is just a data center, but cryptocurrency mining has evolved into a separate asset class, distinct from the broader data center sector that serves cloud providers and enterprise tenants. The two industries operate with fundamentally different business models, little overlap in terms of customers, and very different location and design considerations for new ventures.

But this dynamic is changing. A wave of investment The rise of artificial intelligence by the world’s biggest technology companies is prompting struggling Bitcoin miners to turn to traditional data center tenants, shifting their business models to hosting AI computing. At the same time, growing demand for AI has led to energy shortages that are changing the mathematics of development for data center providers and tenants, pushing them into places that were once exclusively the province of cryptocurrency miners.

“Before you looked down on these Bitcoin miners who were building in these lower-tier markets,” said Sarah Keller, Uberhead of global technical sourcing and supply chain at Bisnow, speaking at Bisnow’s DICE Northwest event last month. “Now, it’s an important part of the strategy.”

The last few years have been difficult for cryptocurrency miners.

The USA experienced a crypto mining construction boom between 2020 and mid-2022, a period in which miners snapped up thousands of megawatts of power rights and launched massive development projects destined to eclipse even the largest cloud data centers in use at that time. But this wave of bitcoin mining expansion stopped abruptly in 2022 when the value of bitcoin and other digital currencies plummeted more than 64%, triggering a wave of bankruptcies and consolidation across the industry.

Although cryptocurrency prices recovered new records this spring, many of the remaining companies are still fighting to stay afloat following an April adjustment in bitcoin blockchain, an event known as “The Halving”, which cut miners’ revenues in half in an instant. A significant number of miners are expected to shut down their machines in the coming months.

However, the darkest days of “crypto winter” coincided with the emergence of a new phenomenon that some crypto miners quickly saw as a lifeline: Generative AI.

The unexpected success of OpenAIin GPT Chat at the end of 2022 a Big Tech began AI arms racewith companies like MicrosoftGoogle and goal struggling to build the data centers needed to develop generative AI and integrate it into its various products and services. AI continues to drive unprecedented data center growth as the world’s biggest companies bet billions on an AI-centric future.

But the computing behind generative AI, especially the model training systems that underpin technologies like ChatGPT, is very different from the IT equipment most data centers are designed to support. In many ways, the infrastructure needs for AI computing more closely resemble crypto mining.

Just like crypto mining, AI training utilizes high-performance, power-intensive GPU processors that use much more power and produce much more heat than traditional data center servers. Like crypto mining, AI training is not “mission critical,” meaning it does not require multiple layers of redundancy to prevent power outages or other major failures that are essential to the design of conventional data centers.

Also like cryptocurrency mining, AI training does not need the fast data transfer speeds, known as latency, that traditionally require data centers to be located in areas with robust fiber optic networks and close to other data centers and large population centers.

As mining revenues decline, a growing number of cryptocomputing companies are turning to the AI data center gold rush.

CoreWeave, a New Jersey-based company that originally focused on cryptography and blockchain computing, has managed to transformed at an AI-focused cloud service provider offering access to GPUs for AI applications. In June 2023, the company signed a deal to provide AI computing to Microsoft, in a deal that could reportedly be worth billions.

CoreScientific, once one of the world’s largest bitcoin miners until its bankruptcy following the crypto crash in 2022, is leasing 16 megawatts to CoreWeave and plans to convert more of its infrastructure to power high-performance computing for AI.

Additionally, Iris Energy indicated that it is moving some capacity from the company’s five data centers in Texas and British Columbia to host AI training, while high profile mining companies such as Hut 8, Hive, and Terawulf have ongoing AI operations or plans for AI growth.

Still, experts warn that this shift from crypto data centers to AI is easier said than done.

Real estate considerations for the two sectors are similar, but there are also important differences. Many bitcoin mining facilities will need significant upgrades and design changes to attract AI tenants – capital projects that most miners have no experience executing.

AI hosting is also a completely different business model than cryptocurrency miningand some experts fear that miners are at a significant disadvantage to those with years of experience developing the skill sets needed for customer service. placing.

Managing Partner at Barkers Point Capital Advisors Barry Kupferberg compared this pivot to the owner of a mid-range apartment building in an upscale neighborhood trying to convert the property into a Four Seasons.

“You need access to capital and expertise to execute, and it’s not clear whether these crypto mining companies have either of those two parts,” Kupferberg said. “Some crypto mining companies will be able to pivot, but some will struggle.”

While legacy cryptocurrency miners are migrating to conventional data centers, data center developers and the industry’s largest tenants are starting to think more like cryptocurrency miners when it comes to where they build data centers.

As data center development records increasingly dire power restrictions In key industry markets like Northern Virginia, Silicon Valley and Atlanta, developers are now willing to build anywhere they can find hundreds of megawatts of electricity, even if those locations lacks network connectivity or proximity to population centers that would have made them the exclusive domain of cryptocurrency miners just two years ago.

In March, Amazon Web Services announced plans for a 15-building data center campus at a nuclear power plant in remote northeastern Pennsylvania, a project directly adjacent to a TeraWulf crypto mining facility. Over the past two years, AWS has launched a series of large-scale data center projects in rural locations such as Madison CountyMississippi and Louisa CountyVirginia.

Google and Microsoft also have major projects underway in locations far off the traditional data center map, in places like Mount PleasantWisconsin and Fort Wayne, India. And social media giant Meta announced this month which will develop an AI data center in Wyoming.

More and more, hyperscale Developers’ quest for power is leading them to undeveloped sites owned by crypto miners themselves, data center executives say.

The crypto gold rush that began in 2020 saw a flood of miners and speculators snapping up thousands of acres of land and securing grid interconnection deals with utility companies for thousands of megawatts of electricity. But much of this land and capacity remains undeveloped.

Now data center developers are keeping an eye on these sites. With wait times for new network connections from utilities now extending up to up to seven yearshyperscalers desperate for new capacity are willing to pay a significant markup to acquire sites where they can access power relatively quickly.

“There are miners that had ongoing development projects or additional capacity on their existing interconnects and are now looking at the premium that data center and hyperscale developers will pay to bring the projects online to reach their 20 gigawatts or 30 gigawatts. development goals,” said Austin Storms, co-head of mining at crypto-oriented financial services firm Galaxy.

“They are looking at this and thinking it might be prudent to sell some capacity or sell a development project while the economics of Bitcoin mining are very bad after the halving.”

Although third-party developer Tract recently is planning on a 2,200-acre campus in Nevada, at a site acquired from crypto firm Blockchain LLC, few such transactions have emerged so far. But Storms believes a series of large-scale acquisitions of crypto mining assets will be executed before the end of the year, including the sale of existing mining facilities – a trend that could accelerate if economic conditions drive greater consolidation in the mining industry. cryptographic.

“Hyperscalers are hanging around some of these mining facilities that have a lot of power,” Storms said. “It’s starting to heat up in the last few months. We haven’t seen many of these transactions execute, but I think there are a significant number in the pipeline that we will likely see in the coming months.”

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We are the editorial team of Chain Feed Staff, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Chain Feed Staff, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Bitcoin

Grayscale Unveils Bitcoin Mini Trust ETF

Published

4 months ago

31 July, 2024

Chain Feed Staff

Grayscale Unveils Bitcoin Mini Trust ETF

Bitcoin Currency

Grayscale Investments The Bitcoin Mini Trust began trading on Wednesday with a 0.15% expense ratio, offering a lower-cost option for bitcoin exposure in the market.

The Mini Trust, which has the symbol BTC and trades on NYSE Arca, is structured as a spin-off of the Grayscale Bitcoin Trust (GBTC). New shares will be distributed to existing GBTC shareholders with the fund contributing a portion of its bitcoin holdings to the new product. According to a company press releaseBTC’s S-1 registration statement became effective last week.

“The Grayscale team has believed in the transformative potential of Bitcoin since the initial launch of GBTC in 2013, and we are excited to launch the Grayscale Bitcoin Mini Trust to help further lower the barrier to entry for Bitcoin in an SEC-regulated investment vehicle,” said David LaValle, Senior Managing Director and Head of ETFs at Grayscale.

The Bitcoin Mini Trust’s debut comes amid growing interest in ETFs based on the current price of the two largest cryptocurrencies by market cap, bitcoin and ether. Spot bitcoin ETFs have generated nearly $18 billion in inflows since the first ones began trading on Jan. 11, though GBTC has lost nearly $19 billion in assets.

This fund differs from other funds because it is a conversion of an existing fund and has a 1.5% fee, the highest among spot bitcoin products that have received SEC approval this year.

Mini Bitcoin Trust Low Fee

On a Post X On Wednesday, Bloomberg senior ETF analyst Eric Balchunas noted the Bitcoin Mini Trust’s “lowest fee in the category…”

“[Important] to recognize how incredibly cheap 15bps is — about 10x cheaper than spot ETFs in other countries and other vehicles,” Balchunas wrote, adding that this pricing strategy reflects the competitive nature of the U.S. ETF market, which he referred to as the “ETF Terrordome.”

“This is what Terrordome does to fund [cost]. It reaches 1.5% [and] end in 0.15%, how to go from [a] country club to the jungle. But that’s why all the flows are here, investor paradise,” he noted.

Bitcoin was recently trading at around $66,350, virtually flat since U.S. markets opened on Wednesday.

Grayscale also offers two spot Ethereum ETFs, the Grayscale Ethereum Trust (ETHE) and the Grayscale Ethereum (ETH) Mini Trustwhose performance is based on ETHE. ETHE outflows exceeded $1.8 billion in its first six days of trading, while ETH added more than $181 million in the same period, according to Farside. The remaining seven ETFs generated about $1.2 billion in inflows.

The story continues

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Bitcoin

Bitcoin (BTC) Price Drops Below $65K After FOMC as Middle East Tensions Rise

Published

4 months ago

31 July, 2024

Chain Feed Staff

Bitcoin (BTC) Price Drops Below $65K After FOMC as Middle East Tensions Rise

Cryptocurrencies fell sharply on Wednesday as rising geopolitical risks captivated investors’ attention following the conclusion of the Federal Reserve’s July meeting.

Bitcoin (BTC) fell to $64,500 from around $66,500, where it traded following Federal Reserve Chairman Jerome Powell’s press conference and is down more than 2% in the past 24 hours. Major altcoins including ether (ETH)sunbathing (SUN)Avalanche AVAX (AVAX) and Cardano (ADA) also fell, while Ripple’s XRP saved some of its early gains today. The broad cryptocurrency market benchmark CoinDesk 20 Index was 0.8% lower than 24 hours ago.

The liquidation happened when the New York Times reported that Iran’s leaders have ordered retaliation against Israel over the killing of Hamas leader Ismail Haniyeh in Tehran, raising the risk of a wider conflict in the region.

Earlier today, the Fed left benchmark interest rates unchanged and gave little indication that a widely expected rate cut in September is a given. The Fed’s Powell said that while no decision has been made on a September cut, the “broad sense is that we are getting closer” to cutting rates.

While digital assets suffered losses, most traditional asset classes rose higher during the day. U.S. 10-year bond yields fell 10 basis points, while gold rose 1.5% to $2,450, slightly below its record highs, and WTI crude oil prices rose 5%. Stocks also rallied during the day, with the tech-heavy Nasdaq 100 index rebounding 3% and the S&P 500 closing the session 2.2% higher, led by 12% gains in chipmaker giant Nvidia (NVDA).

The different performances across asset classes could be due to traders’ positioning ahead of the Fed meeting, Zach Pandl, head of research at Grayscale, said in an emailed note.

“Equities may have been slightly underutilized after the recent dip, while bitcoin is coming off a strong period with solid inflows, while gold has recovered after a period of weakness,” he said.

“Overall, the combination of Fed rate cuts, bipartisan focus on cryptocurrency policy issues, and the prospect of a second Trump administration that could advocate for a weaker U.S. dollar should be viewed as very positive for bitcoin,” he concluded.

UPDATE (July 31, 2024, 21:30 UTC): Adds grayscale comments.

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Bitcoin

Donald Trump’s Cryptocurrency Enthusiasm Is Just Another Scam

Published

4 months ago

31 July, 2024

Chain Feed Staff

Donald Trump's Cryptocurrency Enthusiasm Is Just Another Scam

Former US President Donald Trump spoke at the Libertarian National Convention in May and lent his a strong support to crypto: “I will also stop Joe Biden’s crusade to crush crypto. … I will ensure that the future of crypto and the future of bitcoin is made in the US, not taken overseas. I will support the right to self-custody. To the 50 million crypto holders in the country, I say this: With your vote, I will keep Elizabeth Warren and her henchmen out of your bitcoin.”

Trump continued to court the cryptocurrency industry in the months that followed; he he appeared at the Bitcoin 2024 Conference in Nashville this week, along with independent presidential candidate Robert F. Kennedy Jr.’s parting words to Trump — “Have fun with your bitcoin, your cryptocurrency and whatever else you’re playing with” — were less than enthusiastic, but the industry itself remains packed with ardent Trump supporters.

This turnaround came as a surprise, given Trump’s previous strong opposition to cryptocurrency. When Facebook was floating its Libra cryptocurrency in 2019, Trump tweeted: “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.” Former national security adviser John Bolton’s White House memoir, The Room Where It Happened, quotes Trump as telling Treasury Secretary Steven Mnuchin: “Don’t be a trade negotiator. Go after Bitcoin.” [for fraud].” In 2021, Trump counted Fox Business that bitcoin “just looks like a scam. … I want the dollar to be the world’s currency.”

Why the change? There doesn’t seem to be any crypto votes. Trump’s “50 million” number comes from a poorly sampled push survey by cryptocurrency exchange Coinbase which claimed 52 million cryptocurrency users in the United States starting in February 2023. But one survey A survey conducted last October by the US Federal Reserve showed that only 7% of adults (about 18.3 million people) admitted to owning or using cryptocurrencies — down from 10% in 2022 and 12% in 2021. Many of these people are likely wallet owners who were left holding the bag after crypto plunged in 2022 — and are not necessarily new fans.

What Trump wants from the cryptocurrency industry is money. The cryptocurrency industry has already raised more than US$ 180 million to run in the 2024 US elections through his super PACs Fairshake, Defend American Jobs and Protect Progress.

Fairshake spent $10 million on taking Rep. Katie Porter in the primary battle for Dianne Feinstein’s California Senate seat by funding Porter’s pro-crypto rival Adam Schiff. This put $2 million to knock out Rep. Jamaal Bowman in the Democratic primary for New York’s 16th District in favor of pro-crypto George Latimer. In the Utah Senate Republican primary, Rep. John Curtis defeated Trent Staggs with the help of $4.7 million from Defend American Jobs. In Alabama’s House District 2, the majority of campaign expenses came from the cryptocurrency industry.

Fairshake is substantially financed by Coinbase, cryptocurrency issuer Ripple Labs, and Silicon Valley venture capital firm Andreessen Horowitz, or a16z. Silicon Valley was awash in cryptocurrencies during the 2021 bubble, and a16z in particular continues to promote blockchain startups to this day — and still holds a huge amount of bubble crypto tokens that he wishes he could cash in on.

Many in Silicon Valley would like an authoritarian who they think will let them run wild with money — while bailing them out in tough times. Indeed, Trump promised Bitcoin 2024 participants that he hold all bitcoins that the United States acquires. (Never mind that it is usually acquired as the proceeds of crime.) Silicon Valley explicitly sees regulation of any kind as its greatest enemy. Three a16z manifestos — “Politics and the Future” It is “The Techno-Optimist Manifesto” and 2024 “The Small Tech Agenda—describe co-founders Marc Andreessen and Ben Horowitz’s demands for a technology-powered capitalism unhindered by regulation or social considerations. They name “experts,” “bureaucracy,” and “social responsibility” as their “enemies.” Their 2024 statement alleges that banks are unfairly cutting off startups from the banking system; these would be crypto companies funded by a16z.

Trump’s vice presidential pick, Senator J.D. Vance, is a former Silicon Valley venture capitalist. He was once employed by Peter Thiel, who bankrolled Vance’s successful 2022 Senate run; Vance has been described as a “Thiel creation”. He has increased support for the Trump ticket among his venture capital associates. Vance is a bitcoin holder and a frequent advocate of encryption. He recently released a draft bill to review how the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) control crypto assets. In 2023, he circulated a bill to prevent banks from cutting out cryptocurrency exchanges.

Minimal regulation has been tried before. It led to the wild exuberance of the 1920s, which ended with the Black Tuesday crash of 1929 and the Great Depression of the 1930s. Regulators like the SEC were put in place during this era to protect investors and transform the securities market from a jungle into a well-tended garden, leading to many prosperous and stable decades that followed.

Crypto provides the opposite of a stable and functional system; it is a practical example of how a lack of regulation allows opportunists and scammers to cause large-scale disasters. The 2022 Crypto Crash repeated the 2008 financial crisis in miniature. FTX’s Sam Bankman-Fried was feted as a financial prodigy who would perform economic miracles if you just gave him carte blanche; he ended up stealing billions of dollars of customers’ money, destroying the lives of ordinary people, and is now in a prison cell.

U.S. regulators have long been concerned about the prospect of cryptocurrency contagion to the broader economy. Criminal money laundering is rampant in cryptocurrency; even the Trump administration has made rules in December 2020 to reduce the risk of money laundering from crypto. Meanwhile, the crypto industry has persistently tried to infiltrate systemically risky corners of the economy, such as pension funds.

Four U.S. banks collapsed during the 2023 banking crisis, the first since 2020. Two of them, Silvergate Bank and Signature Bank, were deeply embedded in the crypto world — Silvergate in particular appears to have collapsed directly from its heavy reliance on FTX and failed a few months after that. Silicon Valley Bank was not involved in crypto but collapsed due to a run on the bench due to panic among venture capital deposit holders, particularly Thiel’s Founders Fund.

Project 2025the Heritage Foundation mammoth conservative wish list The plan, which Trump and Vance have both endorsed and tried to distance themselves from at various times, emphasizes the importance of party loyalists, noting especially financial regulation. The plan recommends replacing as much of the federal bureaucracy as possible with loyalists and “trusted” career officials rather than nonpartisan “experts.” Vance defended in 2021 that Trump should “fire every mid-level bureaucrat, every civil servant in the administrative state” and “replace them with our people.” Loyalty will likely trump competence.

Crypto is barely mentioned directly in Project 2025 — suggesting it has little active support among the broader conservative coalition. But near the end of the manifesto is a plan to dismantle most U.S. financial regulations and investor protections put in place since the 1930s, suggesting the exemption the crypto industry seeks from current SEC and CFTC regulations.

Bitcoin, the first cryptocurrency, started as an ideological project to promote a strange variant of Murray Rothbard’s anarcho-capitalism and the Austrian gold-backed economy—the kind we abandoned to escape the Great Depression. Crypto quickly co-opted the “end of the Fed” and “establishment elites” conspiracy theories of the John Birch Society and Eustace Mullins. It’s a way for billionaire capitalists like Thiel, Andreessen and Elon Musk to claim they’re not part of the so-called elite.

If a second Trump administration were to limp along with financial regulators and allow cryptocurrencies to have free rein, it could help foster the collapse of the U.S. economy that bitcoin claimed to prevent. But Trump is more likely to be happy to take the crypto money and run.

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Bitcoin

Trump’s Bitcoin (BTC) Reserve Plan Seen as Just a ‘Small Token Stash’

Published

4 months ago

31 July, 2024

Chain Feed Staff

Trump's Bitcoin (BTC) Reserve Plan Seen as Just a 'Small Token Stash'

Donald Trump’s recent promise to create a “strategic national stockpile of Bitcoin” may not turn out to be as big a commitment as the hype surrounding the announcement makes it seem.

“Trump’s proposal is extremely modest,” said George Selgin, director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institutea Washington-based public policy group. “It doesn’t have much economic implication.”

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