In 2024, especially after the halving, the shares of Bitcoin Mining companies on the stock market did not have a good time. Added to this was the rise of Bitcoin spot ETFs, which captured all the attention of capital seeking crypto exposure.
The low profitability of mining companies starting in April and the stagnation of the BTC price caused capital to move away. It is worth mentioning that most of the mining industry entered a production deficit. Consequently, the price of BTC was below the cost of producing one BTC through the process known as digital mining.
This generated enormous capitulation in the sector, especially among medium and small companies. However, investors feared that this reality would extend to large publicly traded companies. All of this led to a general collapse in mining stocks.
This bleak outlook for these companies did not worsen, as many feared, thanks to the arrival of a lifeline called artificial intelligence. Mining firms understood that their computing power could be directed to meet the enormous demand for data solutions in the AI sector. This fact completely changed the outlook for Bitcoin mining companies’ shares on the stock market.
Big Bitcoin Mining Companies Shift Towards AI
The discovery that AI is a very profitable alternative led digital miners to make the change in an accelerated manner. Even some firms like Northern Data have plans to completely abandon the mining world to dedicate themselves completely to AI.
Other companies are undergoing a huge transition that makes analysis firms like Jefferies jump. Particularly, this financial firm places a buy rating on the shares of Core Scientific, one of the fastest moving towards AI.
Prior to Monday, Jefferies analyst Jonathan Peterson assigned a $19 price target to CORZ stock. This caused a significant rise in these shares on the first day of the week, with a return of 6.21%, according to data from Yahoo Finance. Before the opening of operations this Tuesday, the firm’s shares are priced at $14.20.
If Peterson’s price target is to be trusted, it can be said that despite the recent rallies, CORZ is a buying opportunity. Over the past three months, the return on these stocks is close to 40%. A similar reality is evident in the actions of other Bitcoin mining companies operating the shift towards AI.
Core Scientific shares are among those with the best projection. Source: Yahoo Finance
What will happen to the mining business if the shift towards AI continues?
Many analysts in the crypto world fear that a strong migration towards AI by mining companies could affect the security of the network. However, this is a remote possibility. Publicly traded mining companies occupy 29% of all hashrate, meaning that even migrating all of them would not compromise network security.
Furthermore, the abandonment of a significant portion of the mining companies would cause a drop in the difficulty of the network. As the activity becomes more profitable, other companies would take advantage of it to increase their equipment connections. In simple words, the space left by defecting companies will most likely be filled by others.
In this way, it can be said that the security of the Bitcoin network is not in danger with the departure of some digital mining firms.
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