Bitcoin is up 7% in the last five days. Do you know what that means? Bitcoin mining is back (until the price of Bitcoin drops 5% in a five-day period again, after which it be like that again).

As the price of bitcoin has surged, the share prices of four of the five largest publicly traded mining companies (measured by total hash rate, or computing power spent to secure the Bitcoin network) have risen by double-digit percentages.

The only laggard, Iris Energy Ltd (IREN), the fifth largest of this quintet, fell 15% after a report published last week by Culper Research in which the firm disclosed a short position in IREN. Culper’s reason for making a bearish bet: the researchers’ view that Iris’s Childress, Texas, site is unsuitable for artificial intelligence (AI) or high-performance computing (HPC).

(Perhaps if the price of bitcoin continues to rise, the unsuitability of IREN sites for revenue-generating activities other than bitcoin mining may fall by the wayside as the company shifts resources back to bitcoin mining.)

In any case, what “bitcoin mining is back” really means is “bitcoin mining actions are back”, because on a pure basis “are there more miners now?”, known pool hashrate has increased only slightly over the past five days (from 663,618 exahashes per second to 668,659 Eh/s) instead of increasing by 7% as would be expected.Note: There is no “perfect” data point for hashrate.) Of course, the hash rate not reacting immediately and proportionally to a rise in the price of bitcoin is good for public companies.

But if you look at the narrative around bitcoin mining and check out what mining companies are saying in interviews or public filings, you’ll find that while they’re still focused on bitcoin mining, there’s a lot of noise about other seemingly unrelated or tangentially related things.

Last week I wrote about how both AI and Bitcoin use a lot of energy and not only that, it seems like it’s simple for Bitcoin mining facilities to be retrofitted for the next big thing: AI (or HPC, if you want to avoid the backlash against the AI ​​hype).

Investors like this adaptability. By Will Canny and Aoyon Ashraf of CoinDesk“Private equity (PE) firms are finally seeing value in bitcoin (BTC) miners, thanks to the growing demand for data centers that can power artificial intelligence (AI)-related machines.”

JPMorgan Research suggests the same thing, and interestingly, the investment bank’s research says that IREN (the company Culper considers “not AI-ready”) is best positioned to capitalize on this resource shift trend.

Will Foxley, co-founder of Blockspace Media and host of The Mining Pod, has expressed skepticism about claims that Bitcoin mining facilities are suitable for transitioning to support AI computing.

“A lot of these bitcoin miners are just talking about how they can do AI when in reality they can’t,” Foxley told CoinDesk.

I’ve argued this before making it public is stupid. One reason is that it requires a company to shift from a mindset focused on short-term quarterly profits, when longer-term goals (such as perpetual growth or existence over the next decade) should be the focus. It also means that if a company is struggling, everyone knows about it, which can make it vulnerable.

Mining companies were facing difficulties in 2022. Core Scientific (CORZ) has declared bankruptcy. And all this was before Bitcoin halving in April 2024 This cut deeply into miners’ revenue prospects. It was tough for miners in general, and since there are a ton of public mining companies, competitors could pinpoint exactly who was struggling. Riot Platforms (RIOT) tried to take advantage of this situation and made a public takeover bid for a smaller mining company, Bitfarms (BITF). Since BITF is public, RIOT didn’t have to go to BITF’s leadership and ask nicely. Instead, RIOT bought up a bunch of BITF stock in a hostile takeover attempt. This might have worked out well if RIOT had been correct in assuming that its operation was better and more efficient than BITF’s, but we’ll never know because acquisition attempt failed definitively.

There are other financial tricks out there that could boost shareholder returns (or sink them if they don’t succeed; RIOT’s stock is down 25% this year). One example is getting acquired by mutual agreement, which is what Coreweave tried to do after it struck its AI deal with Core Scientific. The offer was rejectedbut it’s telling that an AI company with growth aspirations would look at a bitcoin mining company and think, “Wait a second, we need to expand our operations quickly before the AI ​​boat passes us by, and the bitcoin miners have warehouses that we could repurpose for our use, so we should buy them.”

“I think some of these bitcoin companies are sitting on attractive power contracts and if you’re a big data center hyperscaler like Coreweave, what’s a few billion dollars to tear down a bitcoin mining site and launch a new AI data center?” Foxley said. “Of course the acquisition would be expensive, but you’re betting that the longevity of the power contract pays you back based on both the multiple you’re going to get from being a public AI company and the revenue from just being an AI company.”

Coreweave certainly can’t be the only AI company thinking this.

At least that’s what most people thought until Marathon (MARA) revealed that it was mining a relatively obscure cryptocurrency called Kaspa since September 2023. Kaspa is, by most measures, a completely random crypto that happens to be mineable. Marathon had access to space and electricity to throw at it, it seemed profitable, and so the company did it because profitable activity is good.

“By mining Kaspa, we can create a diversified revenue stream from Bitcoin that is directly tied to our core competencies in digital asset computing,” Adam Swick, Marathon’s chief growth officer, said in a statement.

I believe that mining Kaspa, and potentially other coins, is more of a novelty than a concrete change in the industry, because I doubt that another proof-of-work cryptocurrency will gain prominence.

But Marathon’s action further highlights the broader point: Bitcoin miners are suffering from a lack of revenue and profitability, and are looking beyond Bitcoin mining to make up the difference.

Please note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

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