Hive Digital expands focus from crypto mining to AI data centers

When Ethereum transitioned from a proof-of-work to a proof-of-stake mechanism in 2022,  crypto miner Hive Digital had to revamp its business model. The new purpose for its Nvidia graphic processing units (GPUs) was clear: artificial intelligence applications. 

The GPUs, purchased in a $66 million investment in 2021, are now being used to power AI workloads, marking a new direction in the company’s technological focus.

In an exclusive interview with Cointelegraph’s editor Sam Bourgi, Hive executives Frank Holmes and Aidan Killick outlined how the firm is leveraging infrastructure to meet the growing demand for AI computing power.

More revenue from AI

Hive’s AI bet has generated significantly higher revenue than crypto mining. According to Killick, the company’s president and chief operating officer, the Nvidia GPUs repurposed for AI tasks can generate up to $1 per hour, compared to $0.12 per hour in crypto mining.

Nvidia’s new H100 chips, designed for AI applications and coming to Hive’s data centers soon, could generate $2.50 per hour. “Institutions are much more interested in us with our AI than Bitcoin,” said Holmes, Hive’s chairman. 

The company’s data centers in the Canadian province of New Brunswick and Sweden are being upgraded with additional cooling and power redundancy to support the AI workloads. Finding cheaper and stable energy source alternatives is also part of the company’s strategy.

In July, Hive announced plans to build a 100-megawatt mining site in Paraguay — its first site in the country — expected to more than double its mining hashrate.

“Paraguay is a great frontier. It’s an immense opportunity for us. It’s all hydro energy, and we’d like to be leaders in grid balancing,” said Killick.

Bitcoin still holds a top place

The growth of the AI business does not mean Bitcoin (BTC) is no longer relevant. Although the AI strategy is “really good for running the business,” in Holmes’ words, the “long term is Bitcoin.”

Hive’s business strategy remains focused on maximizing return on investment (ROI) for its mining hardware.

“We mine our machines to not only repay but generate free cash flow until we hit their break-even, and then we upgrade,” Killick said.

According to the executive, the company reported profitable gross mining margins for the past three years, utilizing cash flow from operations to fund growth without significant shareholder dilution.

In the post-Bitcoin halving environment, many miners have struggled with profitability as hash prices have hit record lows of $40 per peta hash per day. For Killick, however, the prices were more like a “soft landing.”

“The reason why is because in this halving cycle, we have a brand new machine, the Bitmain S21, and that machine currently produces revenue of about $0,10 a kilowatt hour.”

The move to expand facilities in Latin America is also tied to the Bitcoin mining business. According to the executives, Hive’s goal with Paraguay is to achieve 2-3% of the global Bitcoin network. 

“We believe in Bitcoin, and we want green and clean coins in our balance sheet because we know they’re going to be more valuable,” noted Holmes. 

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