Comparison of Private Equity Investments in Bitcoin Mining Companies Utilizing Several Methods

CoinDesk reports:
Bitcoin miners have caught the attention of private equity firms for their data centers that can power artificial intelligence-related machines.
In an interview with CoinDesk, Adam Sullivan of Core Scientific revealed that private equity firms have taken several approaches to finance their AI-related partnerships.
“Suddenly, private equity is chasing data center space; even firms that haven’t necessarily done data centers before are evaluating this space,” Sullivan said.
Bitcoin miners can assist AI companies by housing machines in existing data center infrastructures instead of the AI companies building these facilities themselves.
“Currently, one of the biggest constraints (on data centers) is finding sites with over 100 megawatts of power and installed with high-voltage substation transformers, which are hard to come by and happen to be the standard for positioning Bitcoin mining farms over the past four years,” Sullivan noted.
Retainna Lin, Global Marketing Manager at Bitdeer, told Blockhead during Singapore’s inaugural SuperAI event that the company is venturing into AI by utilizing CPUs once used for Bitcoin mining, now rendered surplus.
According to CoinDesk, JPMorgan Chase stated that this interest further validates Bitcoin mining’s involvement in high-performance computing and could “usher in a new era of mergers and acquisitions for miners.”
Additionally, the Bitcoin halving event in April this year has also piqued private equity firms’ interest.
Core Scientific explained, “The halving has also caught the attention of private equity firms, who view this event as an opportunity to consolidate small firms and integrate their existing infrastructures into their own.”
Private equity firms are providing funding to Bitcoin miners to help cover the high costs of repurposing these data centers, Sullivan said.
“Many of these Bitcoin mining companies are now focused on constructing Bitcoin mining facilities, and these private equity firms are looking for potential returns, seeking ways to extract economic value from some of these potential conversions (from mining to HPC),” he added.
Powering these facilities also requires substantial energy. According to Just Energy, the energy consumption of all cryptocurrencies combined amounts to 0.4% to 0.9% of the world’s annual electricity usage, or 1.2 to 2.4 trillion kilowatt-hours per year. This energy usage exceeds the total sum of all data centers worldwide.
Bitcoin mining’s energy sources include fossil fuels (43%), hydroelectric (23%), wind (14%), nuclear (8%), solar (5%), and other renewable sources (2%). However, the cryptocurrency industry, along with other sectors in technology, is reconsidering greater use of nuclear energy.
As demand for their services increases, cryptocurrency exchange Kraken is now considering nuclear energy to power its data centers. Although the exchange has no plans to build its own reactors, it is exploring partnerships with nuclear power vendors that have small modular reactors (SMRs).
Vishnu Patankar, Chief Technology Officer of Kraken, explained, “With institutions entering the crypto asset category and activities happening on-chain, the demand for reliable fiat on-ramps continues to grow. Enhancing our energy resilience means we strengthen direct pathways into the crypto ecosystem, supporting its ongoing growth.”