AI Energy Squeeze Forces Crypto Miners to Pivot or Exit
An AI energy squeeze is intensifying crypto mining energy competition in regions such as Texas and Wyoming. Following the April 2024 Bitcoin halving and falling BTC prices, crypto mining firms face tighter margins as AI data centers outbid them for grid capacity, transformers and land. Morgan Stanley forecasts a US data-center power gap exceeding 45 GW by 2028, forcing crypto mining companies to either host AI workloads, lease power and facilities, or fully convert to general computing infrastructure. Leading miners like Iris Energy have secured Nvidia partnerships and a $9.7 bn AI cloud deal with Microsoft, galvanizing a 1,200% stock rally, while Hut 8, Core Scientific, Riot and Marathon are repurposing sites, investing in GPUs, onsite generation and renewables. The shift moves valuation metrics from EH/s of hash power to GW/MW of energy assets. As AI becomes a strategic priority backed by subsidies and tax incentives, crypto miners must accelerate transformation or risk liquidation amid this AI energy squeeze.
Bearish
The AI energy squeeze intensifies operational costs for Bitcoin miners, squeezing margins after the April halving and amid falling BTC prices. In the short term, higher energy bids by AI data centers may force smaller and under-capitalized miners to reduce hashing capacity or exit, potentially dampening network hashrate but pressuring seller supply if miners liquidate assets. Long-term, the shift towards energy assets and AI workloads could consolidate mining power among large firms and renewable-focused operators, reshaping industry valuation and reducing volatility in energy procurement. Overall, the increased costs and market consolidation tilt toward bearish pressure on BTC price as mining profitability becomes more uncertain.