AIs Rise Threatens Bitcoin Mining: Experts Warn of Network Vulnerability

Krypto-Experte: "KI hat Bitcoin für immer gekillt"

A recent debate has emerged regarding the impact of the increasing shift of Bitcoin miners towards artificial intelligence (AI) on the security of the Bitcoin network. Skeptics warn that a withdrawal of miners could make the network more vulnerable to a so-called "51-percent attack," while proponents argue that Bitcoin's self-adjusting difficulty mechanism will make mining attractive again.

"KI hat Bitcoin für immer gekillt," said crypto influencer Ran Neuner. He believes that AI has become the biggest competitor to Bitcoin mining, as both sectors compete for the same resource: electricity.

Neuner pointed out that the revenue from Bitcoin mining per megawatt currently ranges from approximately $57 to $129, while AI data centers can earn up to eight times more, between $200 and $500 for the same amount of electricity. This significant difference in profitability is leading more miners to pivot towards AI.

Core Scientific secured loans of up to $1 billion for AI hosting earlier this month, and MARA Holdings has recently filed documents with the SEC indicating a partial sale of BTC as part of a shift towards AI. Additionally, Hut 8 signed a $7 billion AI infrastructure agreement with Google in December.

Cipher Mining has also reduced its hash rate to focus more on AI computing, and Bitmain co-founder Jihan Wu has transitioned from mining to the AI sector. Neuner stated, "If I were a miner, this would not be a difficult decision. That’s why more and more miners are leaving the network every day."

Currently, the profitability of Bitcoin mining, known as the hash price, is near an all-time low, putting companies like MARA under significant pressure. However, Bitcoin pioneer and cryptographer Adam Back argues that automatic difficulty adjustments will only push the least efficient miners out of the market, improving profitability for those who remain.

Neuner contends that the declining hash rate means fewer miners are securing the network, increasing the risk of a 51-percent attack. While such developments have occurred in previous bear markets, he believes this time is different due to a lack of energy resources.

Contradicting Neuner's view, Daniel Batten, a Bitcoin analyst specializing in ESG issues, argues that the data shows AI is dependent on Bitcoin for its expansion. He emphasizes that Bitcoin mining can tap into unused or surplus energy sources, serve as a flexible load in the power grid, and can be economically operated even with older hardware at low-cost locations. Therefore, he dismisses Neuner's statement as "nonsense."

Key Takeaways:

• AI is becoming a significant competitor to Bitcoin mining due to higher profitability from electricity usage.
• Major companies are pivoting towards AI, with Core Scientific and Hut 8 making substantial investments.
• The current hash price for Bitcoin mining is near an all-time low, raising concerns about network security.
• Contrasting views exist on the relationship between Bitcoin mining and AI, with some experts arguing for the interdependence of both sectors.

Sources:

• Krypto-Experte: "KI hat Bitcoin für immer gekillt"