Bitcoin miner Bitfarms Ltd (NASDAQ: BITF) (TSE: BITF) agreed to a USD$300 million loan from Macquarie Group to help develop its high-performance computing (HPC) data centers.
Correspondingly, this follows a trend where Bitcoin and cryptocurrency mining firms are expanding their portfolios towards other big ticket, big energy requiring items. These include high-performance computing and artificial intelligence.
The high operational expenses of Bitcoin mining push miners toward AI-driven revenue streams, leveraging existing infrastructure for more stable, diversified income. Accordingly, energy-intensive Bitcoin mining faces declining margins, prompting firms to repurpose data centers for colocation and HPC, ensuring sustainable long-term profitability.
Macquarie announced on April 2 that its private debt facility will provide Bitfarms with $50 million in initial funding for the Panther Creek data center project in Pennsylvania.
Macquarie will also release the remaining $250 million once Bitfarms meets “specific development milestones” at the Panther Creek location. Once developed, Panther Creek will boast a nearly 500-megawatt capacity fueled by several power sources.
Joshua Stevens, an associate director at Macquarie Group, stated that HPC tenants will seek out Panther Creek once construction begins.
The project is launching as AI applications drive growing demand for new sources of computational power and data storage capacity. Bitcoin miners are now racing to meet this demand and secure reliable revenue streams in a post-halving environment.
In the meantime, CEO Ben Gagnon told investors that Bitfarms expects its $125 million acquisition of Stronghold Digital Mining to provide much of the additional capacity.
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The Bitcoin halving changed everything
The Bitcoin halving reduced the block reward for mining new Bitcoin by 50 per cent. This event occurs approximately every four years and cuts miners’ revenue in half. This consequently makes it more challenging to maintain profitability without significant increases in mining efficiency or Bitcoin prices.
Industrial miners have responded by investing in more advanced hardware to stay competitive and reduce operating costs. Additionally, energy consumption is a major cost factor in mining operations and more so in terms of the halving. The halving has also intensified the pressure to secure cheap and reliable energy sources.
Miners have increasingly diversified their operations with the decrease in block rewards. They have shifting toward alternative revenue streams such as high-performance computing (HPC) and colocation services. Additionally, these shifts help miners offset the reduced rewards. This ensures they can stay profitable in the long term, especially during periods of price volatility or regulatory uncertainty.
In the final quarter of 2024, Bitfarms mined 654 Bitcoin at an average all-in cash cost of USD$60,800. Like other miners, Bitfarms has chosen to retain a significant portion of its mined Bitcoin. Furthermore, industry data shows it currently holds 1,152 BTC, placing it among the top 25 publicly traded Bitcoin investors.
Like Bitfarms, HIVE Digital Technologies Ltd. (CVE: HIVE) (NASDAQ: HIVE) (FSE: YO0), Core Scientific Inc (NASDAQ: CORZ), Hut 8 Corp (NASDAQ: HUT) (TSE: HUT), and Bit Digital, Inc. (NASDAQ: BTBT) have strategically pivoted toward AI and HPC. Hive executives said that the company has repurposed a portion of its Nvidia GPUs for these tasks. They explained that AI can generate over $2.00 per hour, compared to just $0.12 per hour from crypto mining activities.
