Crypto Miners Get AI Boost | Billionaires Bandy Bitcoin Talk On X

The asset manager’s new short-term credit fund is hosted on the Ethereum blockchain.

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Mitchell Martin Senior Editor, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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BITCOIN MINERS HAVE THE POWER THAT AI COMPANIES COVET

Bitcoin miners have what artificial intelligence purveyors need: power. A number of the long-suffering mining companies now find themselves with the opportunity to sell data-center services to free-spending AI customers thanks to their access to electricity.

Many of the miners have built their operations to take advantage of inexpensive commercial power in places like Texas and North Dakota. AI providers need a lot of juice—a ChatGPT query takes 10 times the energy of a Google search—and 14 publicly traded U.S. miners can spare about 3.6 gigawatts of the 5 gigawatts they currently control, a JPMorgan report indicates. The miners also have an additional 4.5 gigawatts coming in the form of contracts for power plants under development. Having sufficient energy available is vital when you consider that building the high-performance computing (HPC) data centers that AI needs from scratch typically takes three to five years, with wait times for electrical-grid connections stretching up to six, according to the Lawrence Berkeley National Laboratory research center.

Those 14 bitcoin miners saw their aggregate market value soar by 32.5% in the month through July 3, a stark contrast with the 13.5% decline in bitcoin and a mere 4.9% rise in the S&P 500. It is not entirely smooth sailing; the HPC gear has stricter cooling and clean-air standards, but smaller AI players may not need to be as picky as their larger competitors and there’s a concept being developed that would concentrate on HPC and mine bitcoin only when there is excess power capacity.

While some bitcoin miners—among them Riot (RIOT), CleanSpark (CLSK) and Marathon Digital Holding (MARA)—are sticking with the pure-play route, competitors including Core Scientific (CORZ), Iris Energy (IREN) and Applied Digital (APLD) are working on adding HPC. “The truth is that AI companies can pay more for that power because they don't care,” says Kevin Dede, an analyst at H.C. Wainwright. “Their business model is stronger. With bitcoin mining, you have no idea what the price of bitcoin is going to be or how hard it's going to be to mine one, so you're taking a lot more risk.”

Full story: Why These Bitcoin Miners Are Becoming Summer’s Hot AI Stocks

IRS ROLLS OUT CRYPTO REPORTING RULES TO CURB TAX EVASION

The U.S. Treasury will require most cryptocurrency brokers to disclose information about user trades starting in 2026 for transactions executed the year before, a requirement introduced to ensure that “digital assets are not used to hide taxable income.” The department’s Internal Revenue Service said this is not a new tax—crypto investors were always supposed to pay tax on crypto trading profit, but the reporting is meant to make it easier to link traders to wallet addresses. For those traders who pay their taxes, the forms will simplify reporting, putting it on par with conventional securities. There is a new form for the report, 1099-DA, and the IRS is sticking with a draft released last year.

Decentralized exchanges, which are entirely automated and never take possession of the crypto being traded, are exempt from the reporting requirement for now, though the Treasury may add them later. Also exempted until further guidance is given are several transaction categories:

• Wrapping and unwrapping transactions

• Liquidity provider transactions

• Staking transactions

• Transactions described by digital asset market participants as the lending of digital assets

• Transactions described by digital asset market participants as short sales of digital assets

• Notional principal contracts (swaps).

The main rules were published as Notice 2024-56 and the exemptions are Notice 2024-57. Read more about the regulations here.

CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$59,744

1.8%

Ether (ETH)

$3,267

2.8%

Tether (USDT)

$0.9984

0.0%

Binance Coin (BNB)

$550

3.4%

Solana (SOL)

$140

3.2%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 4:00 p.m. on July 3, 2024.

BILLIONAIRES DELL, MUSK, SAYLOR SLING X POSTS ABOUT BITCOIN

Michael Dell has been sprinkling X (formerly Twitter) with posts about bitcoin that could be a harbinger of the computer maker he founded becoming a stockpiler of the senior crypto. Or he may just have too much spare time on his hands. “Scarcity creates value,” he postedon June 20. Later that day Michael Saylor, whose MicroStrategy is sitting on a hoard of 226,331 bitcoins worth more than $13 billion, replied “Bitcoin is Digital Scarcity,” and then Dell reposted that reply. Whether either statement is true is open to debate, but they seem to have each other’s attention.

Then on June 28, Dell posted a poll “The most important thing.” Leading the pack was Bitcoin at 43.1% of 64,035 votes cast, followed by Love and relationships, 39.2% and AI, 9.3%, which maybe tells you more about the kind of people that read Dell’s posts than about what is important. One of those readers is Elon Musk, the proprietor of X and founder of bitcoin-owner Tesla, who responded “Sentimental fool that I am, I tapped ‘Love and relationships.’”

Was Musk being cynical or romantic? Or was he just talking in code about bitcoin? Is Dell about to embark on a crypto shopping spree? Will Saylor ever stack enough sats? Stay tuned.

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