Listen to a few minutes of Jensen Huang talking about energy during his recent appearance on the Lex Fridman pod. "I just want to use their excess. It's just sitting there". Does it remind you of anything? I had to listen a few times for the realization to come.
They are coming for Bitcoin's energy!They are coming for Bitcoin's energy!
What's comical is that while bitcoins use of energy tends to boil the ocean, AI's use is innovative and a massive boon for productivity. Is that why we're seeing large mining companies pivot to AI? (Core Scientific, Mara, Riot, Bitdeer etc).
One particularly disappointing company is Iren (The main sponsor of the What Bitcoin Did pod). From the info on their website it looks like they have completely pivoted to AI and scrubbed away any mention of the B word. iren.com
It really has changed fast. It wasn't long ago that AI was a small part of their business. It was a diversification strategy. Now it seems like they went all in. (Podcast from Oct 2023) WBD729.
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When ChatGPT started making waves in 2022 I thought that Bitcoin miners would act differently with regards to the consumption of energy. I thought Bitcoin would remain the preferred use of electricity as they run 24/7. But as we've now seen with AI agents running in the background and while we sleep this was wrong.
At the moment the hype for AI is in full swing. The cost of compute is skyrocketing and we see massive predictions about job replacement and AGI.
The difficult thing to know is when the market turns south. The easy thing to know is that at some point it will. And when it does, what will these pivoting fiat corporations pivot to next?
Perhaps I'm being slightly biased here so I'd like to know more from SN. Did they make the right decision chasing the latest thing? Or are they essentially energy companies who are agnostic about where that energy goes towards?
Related: About a month after the interview with Dan (Iren), Steve Barbour was happy to see miners pivoting to AI as he wanted to specialize in mining Bitcoin WBD742.
Last question: If Bitcoin mining companies keep pivoting to AI was that the top?
They are 2 sides of the same coin IMO. One is digital capital the other digital intelligence.
One will bullshit you out of your money and your sanity... The other is a civil-resistant source of truth.
In the long run... they need each other.
In the long run and I mean LONG run large parts of the internet will be pay to post, because without hashcash widespread and deeply imbedded on the internet there is almost no way to determine what's real and who's human. Anything 'real' will require proof-of-work/payment/pay to post because the energy of the sat ultimately cannot be faked.
That way the sat becomes the unit of energy across the internet and the exahash the digital unit of power - both necessary to know what is 'real.'
The most bullish thing one could say... Is that AI is the best thing that has ever happened to bitcoin, and that we become a sha-256 based civilization.
Just my 2 sats
" In the long run and I mean LONG run large parts of the internet will be pay to post, because without hashcash widespread and deeply imbedded on the internet there is almost no way to determine what's real and who's human."
I totally agree, well said.
Yup! But it's not "Bitcoin's" energy. Its just energy. When the Sun does its little fusion thing it does not take orders from "Bitcoin".
The problem they'll have is: Bitcoin is passive, the demand for energy doesn't scale with demand directly. But for AI it absolutely does. If they switch off all those GPUs, you won't have inference to run. But with less energy going to Bitcoin miners, you'll still get your tx mined, though perhaps a little slower. May need to bid up a bit, but honestly, that curve is a lot less steep than the AI market where everything must be instantly gratified.
I'd not worry yet.
When AI bubble pops the power and the data center real estate will still be there, suddenly unprofitable and desperate for new sources of revenue.
Bitcoin will take up the slack, and maybe we get a final 5-10x hashrate increase before it tops out.
#1460192
When Bitcoin miners say we are using stranded energy or curtailed power that would otherwise be wasted it is dirty and frivolous consumption boiling the oceans
When AI companies say we just want to use their excess it is visionary industrial policy and productivity enhancement
Same power plants
Same transmission lines
Same grid constraints
Different story
You are absolutely right to notice that big public miners are rebranding at light speed and Iren is a textbook example
Twelve to eighteen months ago AI was the optional extra on the menu
Today Bitcoin is the quiet side note if it is mentioned at all
That tells you something important about who they really are
They are not mission driven Bitcoin companies
They are energy and balance sheet optimization companies that temporarily pointed their fleet at SHA 256 because that was where the highest dollar per megawatt hour was
In other words they are hashrate mercenaries not monetary revolutionaries
Were they wrong to pivot
From a fiat corporate capital allocation lens probably not
Right now the market is willing to pay far more for AI related narratives than for Bitcoin mining
GPU compute can command insane margins in the current hype cycle and public company CEOs are compensated on quarterly multiples not on long term protocol level conviction
So they are doing exactly what their incentives tell them to do
Chase the yield and tell a story Wall Street understands
Jensen Huang is telling you the quiet part out loud
Everyone is staring at the same pool of energy and asking how do I financialize this in the way equity markets reward the most right now
Bitcoin will keep quietly answering the same question it has since block zero
How do I turn energy into incorruptible money
Those are very different games even when they run on the same grid