There is a modern debate underway about whether the continued shift from Bitcoin miners to artificial intelligence could impact Bitcoin’s security and its role as a store of value.
While some argue that miners fleeing the network will make it more vulnerable to a “51% attack”, others argue that it will simply cause the Bitcoin network to simply rebalance as designed, making it tempting for miners again.
“AI has killed Bitcoin forever” he said cryptocurrency trader Ran Neuner on Sunday, arguing that it has become Bitcoin mining’s biggest competitor as both industries compete for electricity.
“AI is willing to pay a lot more for this,” he added, explaining that Bitcoin (BTC) mining revenues per megawatt are around $57 to $129, but AI data center revenues per megawatt are up to eight times higher at $200 to $500 for the same electricity, so miners are starting to switch.
Earlier this month, Core Scientific secured a loan worth up to $1 billion for AI hosting, MARA Holdings recently filed with the SEC to signal its intention to sell some of its BTC as part of its AI initiative, and Hut 8 signed a $7 billion AI infrastructure deal with Google in December, Neuner argued.
Meanwhile, Cipher Mining lowered its hashrate to focus on AI calculations, and Bitmain co-founder Jihan Wu stopped mining and switched to artificial intelligence, he added.
“So if I were a miner, it wouldn’t be a difficult decision. And that’s why every day more and more miners are leaving the network.”
This sounds like a doomsday scenario for Bitcoin, but not everyone agrees.
Bitcoin pioneer and cryptographer Adam Back he argued that adjusting the difficulty will only overtake the least effective miners and profitability will improve.
“What’s happening to Bitcoin is simple: tick tock, next block! Hard correction down, the least efficient and AI switches come out, and Bitcoin mining profitability converges with AI profitability. QED.”
“If AI outbids miners for electricity, miners will simply shut down until the difficulty level improves and it becomes profitable again. That’s literally how Bitcoin works,” added investor Fred Krueger.
Bitcoin’s energy demand varies
However, Neuner argued that falling hashrates, which have fallen 14.5% since their peak in October, mean fewer miners can secure the network and a greater potential for attacks of 51%.
All this has happened before during bear markets, and automatically adjusting the network difficulty usually compensates, “but this time it’s different because we don’t have the energy anymore,” he said.
Related: Crypto Miners Must Use Their Bitcoins to Survive: Wintermute
Bitcoin ESG specialist Daniel Batten disagreed and he said it was the opposite because “evidence tells us that artificial intelligence is dependent on Bitcoin for its expansion.”
It wasn’t just about high demand and pricey energy, as Bitcoin mining could tap into stranded energy, act as a elastic load balancer for power grids, and leverage older equipment for cheaper energy, he argued.
One green candle to prevent AI competition extinction
Neuner said one way to ensure AI doesn’t eclipse Bitcoin will depend on whether BTC prices rise.
“I hope Bitcoin has one green candle. Maybe because of war, maybe because of regulation, who knows? But ultimately, if it has one green candle.”
“If you watch Bitcoin price action during this war, that’s exactly what’s happening,” he said, adding that the second scenario in which Bitcoin’s price continues to decline is “almost Bitcoin doomsday.”
Bitcoin has seen five monthly red candles in a row, which hasn’t happened since the 2018 bear market. However, March is currently looking green, with the asset gaining 8% so far this month, According to to CoinGlass.
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