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

<p>The 9%
decline 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, 19% less than in July. In contrast to the overall market trend, HIVE Digital has slightly improved its mining results.</p><p>However,
both companies are looking for 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.</p><p>Riot Follows Marathon's
Footsteps and Mines Fewer BTC</p><p>Finance
Magnates <a href="https://www.financemagnates.com/cryptocurrency/texas-heat-and-low-bitcoin-prices-hit-marathons-august-production/" target="_blank" rel="follow">reported
yesterday</a> (Wednesday) that the Texas heatwaves (along with high energy prices)
and the low valuation of <a href="https://www.financemagnates.com/terms/b/bitcoin/">Bitcoin</a> have negatively impacted the production of
Marathon Digital Holdings (NASDAQ: <a href="https://www.financemagnates.com/tag/marathon-digital/" target="_blank" rel="follow">MARA</a>). The report showed a 9%
month-over-month decline in BTC production to 1,072 BTC.</p><p>Following
Marathon's lead, Riot Platforms (NASDAQ: <a href="https://www.financemagnates.com/tag/riot-blockchain/" target="_blank" rel="follow">RIOT</a>) saw its month-over-month (MoM)
production shrink by 19%, from 410 BTC reported in July to 333 in August.
Year-over-year (YoY), the production declined by 11%.</p><blockquote><p lang="en" dir="ltr">Riot Produces 333 Bitcoin While Realizing Expanded Benefits of Power Strategy.“August was a landmark month for Riot in showcasing the benefits of our unique power strategy,” said <a href="https://twitter.com/JasonLes_?ref_src=twsrc%5Etfw">@JasonLes_</a> , CEO of Riot. “Riot achieved a new monthly record for Power and Demand Response…</p>— Riot Platforms, Inc. (@RiotPlatforms) <a href="https://twitter.com/RiotPlatforms/status/1699407832695841040?ref_src=twsrc%5Etfw">September 6, 2023</a></blockquote><p>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).</p><p>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 303% monthly increase and 709%
annual increase). This is a program run by ERCOT, which pays companies for
giving back electrical energy during times of highest network load.</p><p>"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."</p><p>HIVE Digital Increases BTC
Mining</p><p>At the same
time, HIVE Digital Technologies (NASDAQ: <a href="https://www.financemagnates.com/tag/hive-blockchain-technologies/" target="_blank" rel="follow">HIVE</a>) also published its August mining
report. In its case, monthly Bitcoin production increased to 274 BTC compared
to 263 BTC reported in July 2023. Comparing the results year-over-year,
however, we see a decline of nearly 6 BTC from 279.9 BTC.</p><p>On average,
HIVE produced 8.8 BTC per day throughout August or 74.7 BTC per Exahash.</p><p>"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.</p><p>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.</p><p>"Where
HIVE has been a technology leader in <a href="https://www.financemagnates.com/terms/c/crypto-mining/">crypto-mining</a>, 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.</p><blockquote><p lang="en" dir="ltr">As AI capability and adoption grow, many workloads will shift from local machines to GPU cloud <a href="https://t.co/W0ImtqnBBX">pic.twitter.com/W0ImtqnBBX</a></p>— HIVE Digital Technologies (@HIVEDigitalTech) <a href="https://twitter.com/HIVEDigitalTech/status/1699471312329019487?ref_src=twsrc%5Etfw">September 6, 2023</a></blockquote><p>Lower Revenues = New
Directions</p><p>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, <a href="https://www.financemagnates.com/cryptocurrency/the-new-digital-gold-rush-cryptocurrency-miners-eye-ai-horizons/" target="_blank" rel="follow">these firms are
exploring new avenues for revenue.</a> One emerging trend is the provision of
high-performance computing resources to the fast-expanding AI industry.</p><p>Riot
Platform (formerly Riot Blockchain) and Hive Digital Technologies (formerly
Hive Blockchain Technologies), <a href="https://www.financemagnates.com/cryptocurrency/crypto-miner-hive-announces-rebranding-wants-to-focus-on-ai/" target="_blank" rel="follow">have even rebranded</a> 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.</p><p>A recent
report from JPMorgan indicates that the shift could be lucrative. If the
promising results from initial tests hold up at scale, offering
high-performance computing (HPC) services to the AI sector could prove to be
more profitable than Bitcoin mining.</p><p>"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.</p><p>The development
direction should not surprise anyone, especially considering that in 2022, the
mining industry <a href="https://www.financemagnates.com/cryptocurrency/why-bitcoin-miners-made-6-billion-less-in-2022/" target="_blank" rel="follow">earned $6 billion less than in 2021</a>.</p>

This article was written by Damian Chmiel at www.financemagnates.com.