AI's race for energy at odds with crypto mining
Companies competing for electricity supply
Laila Kearney"and Mrinalika Roy
Reuters
..... U.S. technology companies are pursuing energy assets held by bitcoin miners as they ace to secure a shrinking supply of electricity for their rapidly expanding artificial intelligence and cloud computing data centers.
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Those data centers are driving the fastest U.S. power demand growth since grid expansion and leaving giant technology companies like Amazon and Microsoft to scavenge for vast amounts of electricity. The electricity scramble is jolting the energy-intensive cryptocurrency mining industry.
..... Some miners are making huge profits leasing or selling their power-connected infrastructure and sites to tech, while others are losing access to the electricity needed to stay in business.
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"The AI battle for dominance is a battle being had by the biggest and best capitalized companies in the world and they care like their lives depend on it that they win," said Greg Beard, CEO of Stronghold Digital Mining, a publicly traded bitcoin mining company. "Do they care about what they pay for power? Probably not."
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Data centers could sue up to 9% of total electricity, generated in the U.S. by the end of the decade, more than doubling their current consumption, as technology companies pour funds into expanding their computing hubs, the Electric Power Research Institute said in May. [2024]
..... Currently, data centers account for about 1%-1.3% of global electricity consumption, versus crypt mining's roughly 0.4%, according to the International Energy Agency. That disparity is expected to grow. analysts expect 20% of bitcoin miners power capacity top pivot to AI by the end of 2027.
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Over the past year, [2024] bitcoin miners and AI data center owners have increasingly vied for the same power assets and contracts, executive form over a half-dozen publicly traded U.S. crypto mining companies told Reuters.
..... Marathon Digital Holdings, the world's biggest publicly traded bitcoin miner, was among those eyeing a nuclear-powered data center owned by taken Energy in Pennsylvania, two sources familiar with the situation said.
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"We are always willing to talk with anyone who is looking to sell a data center," Marathon said, without confirming specific interests in the site.
..... Amazon, with a market capitalization of more than 350 times the size of Marathon, brought the center in a deal announced in March [2024] and secured enough electricity to power nearly all the homes in New Mexico.
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Many large miners that own land and power hookups are shifting form exclusively crypto mining to marketing their property and energy services to AI and cloud computing businesses.
..... "We've gotten a lot of interest from everyone from an Amazon or Google,: said Kerri Langlais, chief strategy officer of bitcoin miner TeraWulf, which has a site in upstate New York that is capable of up to 770 megawatts.
..... The frenzy of tech prospects for miners kicked off in June, [2024] when crypto miner Core Scientific became the first to announce a major agreement to lease tis power-connected facilities to Nvidiabacked CoreWeve in deals estimated at over $6.7 billion over 12 years. Several miners have since said they would lease or act as subcontractors to develop AI data centers.
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New data centers. which have typically been around 20 megawatts today. But wait times to connect new power supplies in the United Stats can take several years.
..... For crypto miners with large energy assets re-purposing their operations for AI and cloud computing could make tier facilities as much as five times more valuable, Morgan Stanley research showed. Buying or leasing space at a miner with at least 100 megawatts of capacity can cut the wait times for a data center to launch by about 3.5 years, saving technology companies billions, Morgan Stanley said.
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Still, the hand-off of electricity supplies and infrastructure to tech companies from crypto miners will not be seamless for most, if at all possible, several miners said.
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"Most bitcoin miners that are out there saying they are going to do AI don't really know what they're getting into," said ClearnSpark CEO Zach Bradford, adding his company will stick with cryto mining as its core business.
..... About 90% of the country's bitcoin mines can be constructed in six to 12 months, versus three years for a more sophisticated data center, Bradford said. those mines he added, would have to be rebuilt to incorporate specialized colling structures and other infrastructure to be used for AI or cloud computing.
..... The high costs of building AI data centers would be a barrier to many crypto miners, who were largely barred from accessing, capital after a 2022 bitcoin price crash, said Sergli Gerasymovych, CEO of EZ Blockchain, which supplies equipment and services for crypto mining. this year, [2024] EZ Blockchain had a 10-megawatt project in the works with a South Carolina utility until the utility contracted for 100 megawatts with a hyperscaling AI company.
..... Hyperscalers include the world's biggest technology companies that operate massive global networks of data centers and cloud infrastructure.
..... "For them, it's about speed to market and they're just throwing money around,' Gerasymovych said. "What is there to compete with?"