AI and Bitcoin: Energy Consumption Sparks Competition for Power Resources

 The girl in the picture was created by Artificial intelligence (AI)

Artificial intelligence (AI) and Bitcoin may seem worlds apart, but they share a critical commonality:

 both consume vast amounts of energy. 

This shared characteristic is increasingly placing Bitcoin miners and Big Tech companies at odds, as they vie for access to critical energy resources. 

By the end of the decade, data centers built by tech giants to support cloud computing and AI are projected to consume up to 9% of the total electricity generated in the United States.

Currently, with AI still in its early stages, this figure ranges between 1% and 1.3%. Meanwhile, the energy demands of Bitcoin mining, though smaller at around 0.4%, are significant due to the immense computational power required for mining and processing transactions on a proof-of-work blockchain like Bitcoin.

 

According to Reuters, the competition between Big Tech and mining companies for key energy assets is expected to intensify in the coming years. 

The situation is complicated by the fact that some miners are already willing to lease or even sell their equipment to tech giants, enabling these companies to power their rapidly expanding AI and cloud data centers.

 Before Bitcoin's last halving in April, cryptocurrency analysts had noted that one of the major changes anticipated with the event would be a shift of miners toward AI-related applications.

 

A case that highlights this emerging trend occurred earlier this year. 

Talen Energy owned Cumulus Data Assets, a 960-megawatt data center in Pennsylvania powered by a nearby nuclear plant. 

Both Amazon and Marathon Digital, the largest publicly traded Bitcoin mining company in the U.S., expressed interest in acquiring this energy asset. 

Ultimately, Amazon Web Services (AWS), the cloud services subsidiary of Amazon, secured the data center in a deal valued at $650 million. 

This acquisition provided AWS with enough electricity to power nearly every home in New Mexico.

 

Analysts predict that by the end of 2027, up to 20% of the energy currently used in Bitcoin mining will be redirected toward AI applications. 

They explain that the inevitable concentration of energy infrastructure by major tech players will force out individual miners who won't have access to the necessary electricity to continue mining. 

"The AI battle is a fight for survival and dominance among the world's largest and best-capitalized companies. They don’t care what they pay for electricity as long as they can access it," said Greg Beard, CEO of Stronghold Digital Mining.

 

From Bitcoin Mining to AI and Cloud

 

In a report, Morgan Stanley estimates that the pivot of miners with large energy assets toward renting or selling their equipment for AI or cloud use increases the value of their facilities by up to five times.

 This is driven by the relentless demand from Big Tech, where time is a critical factor.

 Purchasing or leasing a mining facility with at least 100 megawatts of capacity can reduce the wait time to launch a data center by about 3.5 years—a development that also leads to significant cost savings for the leasing company.

 "Approximately 90% of Bitcoin mines in the U.S. can be built in six to 12 months," explained CleanSpark CEO Zach Bradford, while clarifying that his company would maintain crypto mining as its core activity.

 

"There is significant interest from everyone—from Amazon to Google," noted Kerri Langlais, Chief Strategy Officer of Bitcoin mining company TeraWulf, which operates a mining facility in New York with a production capacity of up to 770 megawatts (MW). 

Earlier, in June 2024, it was revealed that Bitcoin mining company Core Scientific had reached an agreement with CoreWeave, a company backed by Nvidia, to lease its facilities for 12 years for $6.7 billion.

 Sources:

 Reuters

Morgan Stanley Report

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