Riot Pivots to Electricity and HIVE to AI as Bitcoin Mining Profits Plummet

by Damian Chmiel
  • Crypto miners are reporting lower BTC production output.
  • In the search for revenue, they sell electricity or computing power to AI firms.
mining

A decline of 9% in Bitcoin's (BTC) price in August has negatively impacted the production results reported by publicly listed cryptocurrency miners. This is confirmed by Riot Platforms, which produced 333 BTC last month, which is 19% less than in July. In contrast to the overall market trend, HIVE Digital has slightly improved its mining results.

However, both companies are pursuing profits away from the mining business. Riot is focusing on energy sales, which is bringing the company record revenues, while HIVE is looking towards supporting the artificial intelligence industry.

Riot Follows Marathon's Footsteps and Mines Fewer BTC

Finance Magnates reported yesterday (Wednesday) that the Texas heatwaves (along with high energy prices) and the low valuation of Bitcoin have negatively impacted the production of Marathon Digital Holdings (NASDAQ: MARA). The report showed a month-over-month decline of 9% in BTC production to 1,072 BTC.

Following Marathon's lead, Riot Platforms (NASDAQ: RIOT) saw its month-over-month (MoM) production shrink 19%, from 410 BTC reported in July to 333 in August. Year-over-year (YoY), the production declined 11%.

Both entities have their data centers in Texas. As Riot reports, the region recorded record heatwaves in August, causing energy demand and prices to skyrocket. Riot reduced its energy usage by over 95% during the hottest periods, transferring energy to the Electric Reliability Council of Texas (ERCOT).

The company did not make money on Bitcoins, but it did earn a record $31.7 million for 'Power Credits' and 'Demand Response Credits' (a monthly increase of 303% and an annual increase of 709%). This is a program run by ERCOT, which pays companies for returning electrical energy during times of the highest network load.

Source: Riot
Source: Riot

"Riot achieved a new monthly record for Power and Demand Response Credits, totaling $31.7 million in August, which surpassed the total amount of all Credits received in 2022," Jason Les, the CEO of Riot, commented. "Based on the average Bitcoin price in August, Power and Demand Response credits received equated to approximately 1,136 Bitcoin."

HIVE Digital Increases BTC Mining

At the same time, HIVE Digital Technologies (NASDAQ: HIVE) published its August mining report. In this case, the monthly Bitcoin production increased to 274 BTC compared to 263 BTC reported in July 2023. Having compared the results year-over-year, we see a decline of nearly 6 BTC from 279.9 BTC.

On average, HIVE produced 8.8 BTC per day throughout August or 74.7 BTC per Exahash.

"Our focus has been to upgrade our fleet of ASICs, as well as find new generation ASICs available for immediate delivery, so they can be quickly installed to realize cash flow return on invested capital," Aydin Kilic, the President and CEO of HIVE, commented.

The company also admits that it increasingly wants to focus on using its high-performance Supermicro servers to provide computational power in the artificial intelligence (AI) sector.

"Where HIVE has been a technology leader in crypto-mining , our team with the knowledge and experience of operating a fleet of approximately 150,000 GPUs during the Ethereum mining era, now aspires to apply their expertise to the Company's long-term blue-sky vision to implement our 38,000 Nvidia GPUs for HPC and AI workloads," Kilic added.

Lower Revenues = New Directions

Several years back, many companies listed on stock exchanges underwent significant transformations to tap into the burgeoning cryptocurrency mining sector. However, as the returns from these ventures start to diminish, these firms are exploring new avenues for revenue. One emerging trend is the provision of high-performance computing resources to the fast-expanding AI industry.

Riot Platform (formerly Riot Blockchain) and Hive Digital Technologies (formerly Hive Blockchain Technologies), have even rebranded to signal their evolving business models. The cryptocurrencies they have mined and stockpiled have been instrumental in funding their forays into new markets, particularly those driven by the AI boom.

A recent report from JPMorgan indicates that the shift could be lucrative. If the promising results from the initial tests can scale up, offering high-performance computing (HPC) services to the AI sector could prove to be more profitable than Bitcoin mining.

"With the rapid growth of AI, the increased demand for high-performance computing is now opening a new and perhaps more profitable avenue for utilizing GPUs previously used for ether mining," JPMorgan commented in the research.

The development direction should not surprise anyone, especially considering that in 2022 the mining industry earned $6 billion less than in 2021.

A decline of 9% in Bitcoin's (BTC) price in August has negatively impacted the production results reported by publicly listed cryptocurrency miners. This is confirmed by Riot Platforms, which produced 333 BTC last month, which is 19% less than in July. In contrast to the overall market trend, HIVE Digital has slightly improved its mining results.

However, both companies are pursuing profits away from the mining business. Riot is focusing on energy sales, which is bringing the company record revenues, while HIVE is looking towards supporting the artificial intelligence industry.

Riot Follows Marathon's Footsteps and Mines Fewer BTC

Finance Magnates reported yesterday (Wednesday) that the Texas heatwaves (along with high energy prices) and the low valuation of Bitcoin have negatively impacted the production of Marathon Digital Holdings (NASDAQ: MARA). The report showed a month-over-month decline of 9% in BTC production to 1,072 BTC.

Following Marathon's lead, Riot Platforms (NASDAQ: RIOT) saw its month-over-month (MoM) production shrink 19%, from 410 BTC reported in July to 333 in August. Year-over-year (YoY), the production declined 11%.

Both entities have their data centers in Texas. As Riot reports, the region recorded record heatwaves in August, causing energy demand and prices to skyrocket. Riot reduced its energy usage by over 95% during the hottest periods, transferring energy to the Electric Reliability Council of Texas (ERCOT).

The company did not make money on Bitcoins, but it did earn a record $31.7 million for 'Power Credits' and 'Demand Response Credits' (a monthly increase of 303% and an annual increase of 709%). This is a program run by ERCOT, which pays companies for returning electrical energy during times of the highest network load.

Source: Riot
Source: Riot

"Riot achieved a new monthly record for Power and Demand Response Credits, totaling $31.7 million in August, which surpassed the total amount of all Credits received in 2022," Jason Les, the CEO of Riot, commented. "Based on the average Bitcoin price in August, Power and Demand Response credits received equated to approximately 1,136 Bitcoin."

HIVE Digital Increases BTC Mining

At the same time, HIVE Digital Technologies (NASDAQ: HIVE) published its August mining report. In this case, the monthly Bitcoin production increased to 274 BTC compared to 263 BTC reported in July 2023. Having compared the results year-over-year, we see a decline of nearly 6 BTC from 279.9 BTC.

On average, HIVE produced 8.8 BTC per day throughout August or 74.7 BTC per Exahash.

"Our focus has been to upgrade our fleet of ASICs, as well as find new generation ASICs available for immediate delivery, so they can be quickly installed to realize cash flow return on invested capital," Aydin Kilic, the President and CEO of HIVE, commented.

The company also admits that it increasingly wants to focus on using its high-performance Supermicro servers to provide computational power in the artificial intelligence (AI) sector.

"Where HIVE has been a technology leader in crypto-mining , our team with the knowledge and experience of operating a fleet of approximately 150,000 GPUs during the Ethereum mining era, now aspires to apply their expertise to the Company's long-term blue-sky vision to implement our 38,000 Nvidia GPUs for HPC and AI workloads," Kilic added.

Lower Revenues = New Directions

Several years back, many companies listed on stock exchanges underwent significant transformations to tap into the burgeoning cryptocurrency mining sector. However, as the returns from these ventures start to diminish, these firms are exploring new avenues for revenue. One emerging trend is the provision of high-performance computing resources to the fast-expanding AI industry.

Riot Platform (formerly Riot Blockchain) and Hive Digital Technologies (formerly Hive Blockchain Technologies), have even rebranded to signal their evolving business models. The cryptocurrencies they have mined and stockpiled have been instrumental in funding their forays into new markets, particularly those driven by the AI boom.

A recent report from JPMorgan indicates that the shift could be lucrative. If the promising results from the initial tests can scale up, offering high-performance computing (HPC) services to the AI sector could prove to be more profitable than Bitcoin mining.

"With the rapid growth of AI, the increased demand for high-performance computing is now opening a new and perhaps more profitable avenue for utilizing GPUs previously used for ether mining," JPMorgan commented in the research.

The development direction should not surprise anyone, especially considering that in 2022 the mining industry earned $6 billion less than in 2021.

About the Author: Damian Chmiel
Damian Chmiel
  • 1388 Articles
  • 28 Followers
About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1388 Articles
  • 28 Followers

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