Bit Digital to capitalize on AI as secondary revenue source
Bitcoin miners serving AI-curious customers is becoming a trend, with Hive Blockchain and Hut 8 the first to capitalize during the brutal summer months
Blue Planet Studio/Shutterstock modified by Blockworks
Bit Digital announced Monday the launch of a new business segment dedicated to serving clients interested in developing “generative artificial intelligence workstreams.” This move positions Bit Digital as the latest in a series of bitcoin miners venturing into the AI domain.
The business line was dubbed Bit Digital AI. The company has already signed a binding term sheet with an unnamed customer interested in building its own large-language model. Bit Digital will rent out as many as 4,096 Nvidia HGX H100 GPUs to this customer.
Nvidia introduced these GPUs last April. They are often used for AI workflows because of the high computing speeds they can support — up to 400 gigabits per second. These chips go for around $30,000 each, and Bit Digital has already bought 1,056 of them to rent out to this customer, according to a company press release.
But the company is making a bet that this capital outlay for the chips — funded by a mix of cash, digital assets, new equity issuance and potentially equipment financing — will pay off in the longer term.
In fact, Bit Digital expects this contract to generate $23 million to $27 million in annual revenue if it were to rent out the minimum number of GPUs: 1,024 to be exact. If it stepped up the number of GPUs to the maximum — 4,096 — Bit Digital expects to take home in excess of $250 million over the three-year contract term.
And revenue is something that’s on the minds of all major bitcoin mining CEOs, especially when the bitcoin halving event is about six months away. Bit Digital CEO Sam Tabar is no exception.
Read more: Galaxy mining head exits to consult miners ahead of halving
“This new venture is an excellent expansion of our platform. This business line aims to provide a non-correlated income stream that will help the Company weather potential downturns in its core bitcoin mining and ETH staking businesses,” Tabar said in a statement.
Bit Digital is certainly not the first to try and diversify away from bitcoin mining, which is inextricably tied to the price of the volatile digital asset. Hut 8 has cultivated clients working in the AI sector who have advanced computing needs. It has potentially taken this course out of necessity, since the firm experienced a 70% dip in bitcoin mining revenue during the first quarter of 2023.
So has Hive Blockchain, which rebranded itself to Hive Digital Technologies in light of its new focus on serving high-powered customers.
Bit Digital expects to receive the Nvidia GPUs by the end of 2023 at which point they’ll be eventually deployed at a datacenter. Revenue could start flowing in from this venture as soon as January 2024, according to Bit Digital.
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