Driven by the AI boom, cryptocurrency companies have suddenly become the center of M&A transactions. Bitcoin mining companies have huge data centers that can be used across the United States with fiber-optic lines and a large amount of electrical utilities. They are the type of facility needed for compute-intensive AI operations, which means that cryptocurrency companies have a high demand for sites and technology.

Meanwhile, cryptocurrency mining companies need to diversify. In April of this year, Bitcoin's "halving" - a reduction in mining rewards that occurs approximately every four years - made the generation of new tokens less profitable. JP Morgan analysts wrote in a report earlier this month: "Some operators are feeling the financial pressure of the recent blockchain reward halving, which has cut industry revenue in half, and are actively exploring exit strategies."

As the booming AI industry requires more production capacity, Bitcoin miners are looking for new ways to get returns on their huge capital investments, and mergers, financing, and cooperation are rapidly coming together.

AI has become a "power-hungry beast".

With the prosperity of AI, electrical resources as a core component of AI infrastructure are attracting more and more attention. Without a doubt, AI is a high-energy-consumption field, and data centers and supercomputing centers are both "power-hungry beasts". Some experts estimate that by 2027, the annual electricity consumption of the AI industry may be between 85 and 134 terawatt-hours, which is almost equivalent to the annual electricity demand of a country like the Netherlands. A previous report by the International Energy Agency (IEA) also pointed out that the power consumption of data centers will increase significantly in the near future due to the demand for AI and cryptocurrencies.

Many industry insiders have also issued warnings about the energy crisis that AI may face. In January, OpenAI CEO Sam Altman admitted that the AI industry is facing an energy crisis. He warned that AI will need an energy breakthrough in the future because the power consumption of AI will far exceed people's expectations. Tesla CEO Musk also said at a conference at the end of February that the chip shortage may be over, but AI and electric cars are expanding so rapidly that the world will face a shortage of electricity and transformers next year. Nvidia CEO Huang Renxun even said bluntly: "The end of AI is photovoltaic and energy storage! If we only consider computing, we need to burn up the energy of 14 planets. Super AI will become a bottomless pit of power demand."

One key reason is that AI requires a lot of data, and the process of transferring data back and forth between storage chips and processors consumes a lot of electricity.

Bitcoin miner Core Scientific announces AI collaboration with Nvidia's "progeny" CoreWeave

On Tuesday, U.S. bitcoin miner Core Scientific announced an expanded agreement with CoreWeave, a cloud computing service provider owned by Nvidia. CoreWeave is a startup supported by Nvidia and one of its main suppliers of technology for running AI models. Core Scientific will provide 70 megawatts of computing infrastructure to support CoreWeave's operations.

Core Scientific said the deal will generate an additional $1.2 billion in revenue over the next 12 years on top of the existing $3.5 billion. Overall, the company plans to provide about 270 megawatts of infrastructure to CoreWeave by the second half of 2025, with the potential for an additional 230 megawatts of infrastructure at other core scientific sites.

Earlier this month, CoreWeave proposed to acquire Core Scientific for $1.02 billion. Shortly after they initially reached an agreement, Core Scientific rejected the offer. The company returned to the public market in January after bankruptcy and is currently valued at around $1.8 billion. Core Scientific CEO Adam Sullivan said at a news conference on Tuesday: "The world is changing, and many data centers built in the past 20 years are no longer fit to support future computing needs."

Hut 8 buys AI chip deployment-related services

On the day before announcing this news, Bitcoin mining group Hut 8 said it raised $150 million in debt from private equity firm Coatue to help it build a portfolio of data centers for AI.

Hut 8, headquartered in Miami, USA, is one of many crypto mining companies turning to AI. The company said in last month's Q1 earnings report that it has purchased the first batch of 1,000 Nvidia GPUs and reached a customer agreement with a VC-backed AI cloud platform. According to CoinShares data, 6% of Hut 8's sales come from AI.

Coatue partner Robert Yin said in a financing announcement:"A broader market is beginning to recognize the scarcity of high-quality electrical assets, and Hut 8 has established a deep pipeline of attractive expansion assets."

Hut 8 CEO Asher Genoot recently told the media that his company "has completed commercial agreements for our new AI vertical under GPU as a service, including a customer agreement that provides fixed infrastructure payments and revenue sharing".

Miner Bit Digital reduces its holdings of crypto and instead buys GPUs.

Bitcoin miner Bit Digital announced on Monday that it has reached an agreement with an unnamed customer to provide 2,048 Nvidia GPUs over the next three years, doubling the number of processors it provides to the customer. It is estimated that 27% of the company's revenues currently come from AI.

To fulfill the contract, Bit Digital ordered 256 servers from Dell Technologies and will soon deploy them in a data center in Iceland. The company said the contract is expected to generate $92 million in annual revenue. It pays for part of the cost of the GPU by selling some cryptocurrencies. Bit Digital said:"The company intends to provide funding for the transaction on the balance sheet in a mixture of cash and digital assets."

Bit Digital has also signed so-called sale-and-leaseback agreements for half of its new GPUs, which will correspondingly reduce the company's capital expenditures. Through the leaseback, another company owns these GPUs, Bit Digital leases them back, and generates revenue by providing technology to customers.

Although most recent crypto deals have involved miners, there is at least one notable exception. Earlier this month, trading platform Robinhood (HOOD.US) agreed to buy Luxembourg-based crypto exchange Bitstamp for about $200 million in cash.

Bitstamp has 50 valid licenses and registrations worldwide and is popular in Europe and Asia. The acquisition will help Robinhood, which focuses on retail trading applications, strengthen its crypto business and better compete with Coinbase (COIN.US), among others.

The deal will be completed next year as Robinhood faces regulatory challenges in crypto trading in the US. In May this year, the company said it had received a Wells notice about its crypto business. The US Securities and Exchange Commission (SEC) has also sued exchanges such as Coinbase. As of the end of Q1, Robinhood had $4.7 billion in cash and equivalents. The company's stock price has risen 75% this year.